The construction sector (CS) is an economic barometer that mirrors the state of the economy. Therefore, the construction sector is susceptible to economic impacts. This study investigated the impact of economic shocks (measured with the Gross Domestic Product (GDP)) on construction sector performance. The study used econometric methodology which involves several sequential procedure including unit root test, cointegration test, causality and exogeneity tests. The data used was the Annualized time series data about GDP and construction sector. The data were extracted from the United Nations Statistics Division database based on the year 2010 US Dollars price over a forty seven (47) year period (1970-2016). The study found that the GDP significantly caused the construction sector output in all tests investigated. The study concluded that the construction sector significantly responded to economic shocks in both the short and long run. The study recommended that government should develop a policy framework that supports a concurrent development of the economy and the construction sector in Nigeria.
Purpose
The construction sector (CNS) occupies a very unique position in any economy depending on whether developed or developing economy. The size and linkages of the CNS are expected to be high to help push or pull the economy from developing to developed economy through elaborate forward and backward linkages, a cardinal aim of developing economies. This paper aims to investigate the forward and backward linkages of the CNS in the Nigerian economy.
Design/methodology/approach
In contrast to the traditional input–output analysis to assess sectoral economic performance and production interdependence, this paper used econometric techniques, including unit root test, cointegration test and Granger causality test to analyze the data. Time-series data (TSD) for the study were extracted from United Nations Statistical Department database.
Findings
The result indicated that the CNS has low forward linkages but high backward linkages to virtually all the sectors of the Nigerian economy. Thus, the outputs of construction mainly satisfy the manufacturing and other activities.
Originality/value
The paper gives an insight into the construction on backward linkages but less extensive forward linkages. The paper recommends a massive local content development of sector to deepen backward and forward linkages and thus helps pull or push weak sectors out of stagnation.
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