Construction Sector Contribution to Economic Stability: Malaysian GDP Distribution

Wesam Salah Alaloul, Muhammad Ali Musarat, Muhammad Babar Ali Rabbani, Qaiser Iqbal, Ahsen Maqsoom and Waqas Farooq
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Wesam Salah Alaloul: Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Perak, Malaysia
Muhammad Ali Musarat: Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Perak, Malaysia
Muhammad Babar Ali Rabbani: Department of Civil Engineering, Sarhad University of Science & Information Technology, Peshawar 25000, Pakistan
Qaiser Iqbal: Department of Civil Engineering, Sarhad University of Science & Information Technology, Peshawar 25000, Pakistan
Ahsen Maqsoom: Department of Civil Engineering, COMSATS University Islamabad Wah Campus, Wah Cantt 47040, Pakistan
Waqas Farooq: Department of Electrical Engineering, Sarhad University of Science & Information Technology, Peshawar 25000, Pakistan

Sustainability, 2021, vol. 13, issue 9, 1-26

Abstract: The construction sector exerts an exceptional impact on economic development all over the world. Adequate buildings and infrastructures made by the construction sector ensure that a country reaches certain targets like social development, industrialization, freight transportation, sustainable development, and urbanization. This study aims to determine the construction sector’s connectivity with other sectors through complex linkages that contribute immensely to the economy and gross domestic product (GDP). The data were collected from the Department of Statistics Malaysia and the World Bank from the year 1970 to 2019, and the Pearson correlation test, the cointegration test, and the Granger causality test were conducted. The vector error correction model (VECM) was created for short-term and long-term equilibrium analysis and impulse response function (IRF) was performed to study construction industry behavior. Afterwards, the forecasting was done for the year 2020 to 2050 of the Malaysian economy and GDP for the required sectors. It was revealed that some sectors, such as agriculture and services, have forward linkages while other sectors, such as manufacturing and mining, are independent of construction sector causality, which signifies the behavior of the contributing sectors when a recession occurs, hence generating significant revenue. The Malaysian economy is moving towards sustainable production with more emphasis on the construction sector. The outcome can be used as a benchmark by other countries to achieve sustainable development. The significance of this study is its usefulness for experts all over the world in terms of allocating resources to make the construction sector a sustainable sector after receiving a shock. A sustainable conceptual framework has been suggested for global application that shows the factors involved in the growth of the construction industry to ensure its sustainable development with time.

Keywords: construction sector; economy; intersectoral linkages; VECM; forecasting; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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