Input structure of the construction industry: A cross-country analysis, 1968-90

During the past several decades, globalization has led to the integration of product markets. Rapid increases in cross-border economic, social, technological and cultural exchange have become the key elements of knowledge diffusion and thus technology spillovers among countries. As a result, the debate as to whether absolute convergence occurs at the cross-country level has increasingly attracted the attention of researchers. The aim of this study is to examine the changes in the input structure of the construction industry in nine developed countries between the late 1960s and 1990 and to evaluate whether convergence occurs at input industry level. The analysis of the technical coefficients for 35 industries reveals that, across countries and over time, not only the key inputs but also the new high and low input industries are similar. The estimation of variance factors on the other hand suggests that (1) during the sample period, the input structure of the industry is dominated by divergence rather than convergence; (2) among the input industries, services in particular tend for convergence; and (3) manufacturing inputs provide a mixed picture where only a few inputs show convergence and the remaining inputs show in general weak divergence.