Estimating the Importance of Civil Construction for the Brazilian Economy Through Hypothetical Extraction of the Input-Output Matrix

Guilherme Antônio Correa Cunha, Gustavo Jose de Guimaraes e Souza, Mathias Tessmann, Joilson De Assis Cabral and Luiz Augusto Magalhaes

Applied Economics and Finance, 2023, vol. 10, issue 3, 1-10

Abstract: This paper aims to undertake a systemic analysis of civil construction to verify whether public investments made from 2007 onwards were able to increase the sector's productive linkages in the Brazilian economy. For this, the hypothetical extraction method of the input-output matrix and the official matrices of the country from 2005 and 2015 are used. The results show that the importance of the productive structure of the construction sector - total extraction - exceeds 7.42% of GDP in 2005 to 10.06% in 2015. This fact reveals that the civil construction sector in 2005 was the seventh most important moving to the fourth in 2015 in a total of twelve sectors considered. Another important finding lies in the fact that despite the construction sector presenting an increase in the complexity of its productive structure, it showed strong backward linkage, but low forward linkage, in both analyzed periods. Through these results, it is possible to conclude that the tax exemption of some inputs, reduction of real estate interest, expansion of credit for housing through public housing and infrastructure policies may have been essential for the increase in the complexity of the sector's productive chains between the years' from 2005 and 2015. Such findings are useful for the scientific literature that investigates the sector by bringing evidence to Brazil and to policymakers given that possibly the construction sector can be used as a strategy to promote and stimulate economic activity in times of crisis.

Date: 2023
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