Ramachandra, Thanuja and Rotimi, James Olabode Bamidele and Rameezdeen, Raufdeen
(2013)
Direction Of The Causal Relationship Between Construction And The
National Economy Of Sri Lanka.
Journal of Construction in Developing Countries , 18 (2).
pp. 49-63.
ISSN 1823-6499
Abstract
Causal relationships between construction and national economies have received
considerable attention in the past. However, the results of research on this topic provide
contrasting views about the nature of the relationship. This paper investigates the direction of
the causal relationship between construction and the economy of a developing country, Sri
Lanka, using empirical data for selected economic and construction indicators for the
period 1990 to 2009. The pattern of the causal relationship was determined using the
Granger causality test. The findings reveal that national economic activities precede
construction activities for all indicators except construction investment. The study therefore
concludes and strengthens the body of knowledge concerning the causal relationship
between the construction sector in Sri Lanka and the national economy tending towards a
uni-directional relationship, with the national economy inducing growth in the construction
sector and not vice versa.
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