Management and Innovation for a Sustainable Built Environment ISBN: 9789052693958 20 – 23 June 2011, Amsterdam, The Netherlands PATTERNS OF STRUCTURAL CHANGES IN CONSTRUCTION? TULLIO GREGORI Università di Trieste, Italy gregori@libero.it ROBERTO PIETROFORTE Worcester Polytechnic Institute, USA roberto@wpi.edu Abstract The changing role of construction at various stages of development has been at the core of debate in the field of construction economics. It has been argued that the construction industry should follow the pattern of manufacturing, its primary supplier, rather than services, even if early studies suggested an S-shaped relationship with GDP per capita. The presented analysis stems from this well known literature and again it focuses on the link between construction share in value added and development measures. The conventional view that GDP per capita suffices is critically discussed and new variables that help the explanation of such a relationship are introduced. Discussion builds upon the comparison of standard cross country regressions in the 1970 and in 2005. Even if explicative power is quite weak it is shown that in recent years construction has been linked with new variables such as market size and population density. Keywords: Construction, development stages, structural change. INTRODUCTION Structural analysis is a central tenet in growth economics since the seminal work by Lewis (1954) and the many contributions by Kuznets (1956, 1957), and Chenery and his collaborators (Chenery, 1960, Chenery and Taylor, 1968, Chenery and Syrquin, 1975). One research thrust follows a micro approach that focuses on market structure, income and resource allocations among individuals or price differences (Leamer, 1984). Differently most of early literature focused on macroeconomics and long run processes (Chenery, 1986). Chenery and Syrquin referred to development pattern as “any significant aspect of the economic and social structure associated with a rising level of income or other index of development” (1975, p. 4). For instance, Agénor and Montiel (2008) argue that developing countries tend to be more open and capital importers, while advanced ones have a larger public sector. Furthermore, as development develops further, current account deficits and capital account surpluses usually decrease, while openness increases. Value added and employment growth and shares, in addition, have been extensively analyzed. Fisher (1939) and Clark (1940) predicted a sequence of stages in the course of development. First of all, the share of agriculture should decrease as industrialization takes place. The primary sector produces basic goods whose demand is quite income inelastic. When an economy takes off