Promoting investment in the Turkish construction sector: a structural path analysis

Abstract

The construction sector in Turkey boomed in the period between the turn of the millennium and the onset of the global crisis. This paper studies the employment generation effects of growth of this sector, taking into account that it not only depends on domestic production factors but also on imported inputs. In order to unravel the interactions of the construction sector with the rest of the economy, structural path analysis of both labour and imported intermediate input demand generation is used based on the 2002 and 2009 WIOD data for Turkey. The findings indicate that labour linkages weakened between 2002 and 2009, while import linkages became slightly stronger. The sectors that have played key roles in this are identified, as are the linkages between these. The findings have implications for the persistent unemployment and current account deficits in Turkey.