Did you know construction has a significant impact on the macro economy? It contributes to a country’s GDP and per capita GDP. In developing countries, the share of construction value added as a percentage of GDP is around 3-5%, while in more developed countries it is 5-8%. Construction activity is highly correlated with economic growth. However, this relationship is not linear. As a country develops, the share of construction in GDP actually follows an inverted U-shape. This means that in the initial stages of development, the share of construction output in GNP increases, but starts to decline in the more mature stages. Eventually, the volume of construction output will decline accordingly. So, the contribution of the construction industry to economic growth is not indefinite. However, even in developed countries, construction output still grows, but at slower rates than the economy as a whole.
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