Construction Value Chains and Their Productivity Growth

Tero Kuusi, Juha-Matti Junnonen and Martti Kulvik

No 79, ETLA Working Papers from The Research Institute of the Finnish Economy

Abstract: Abstract The construction industry has suffered from low growth in recent decades. Motivated by the economic importance of the industry, we revisit the construction productivity puzzle by analyzing the construction value chains of 12 European countries with data from the World Input–Output and EU KLEMS databases. We decompose construction-related value-added and productivity contributions to the construction industry and the rest of the value chain, and show that the traditional focus on the construction industry is restrictive. There is a substantial amount of construction-related value-added generated in other industries, and the productivity growth in the construction value chains has, for the most part, been seen in them. Furthermore, we show that there is a strong, long-term relationship between construction-related patents and the improvement of total factor productivity in the value chains, but the value chains typically suffer from low efficiency in the use of information technology.

Keywords: Construction; Productivity; Global value chains; Organization of production; Production management; Industrial structure and structural change (search for similar items in EconPapers)
JEL-codes: D24 L16 L23 M11 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2020-04-23
New Economics Papers: this item is included in nep-eff, nep-eur and nep-ict
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