Demand and Supply Trends and Construction Industry Development: A Case Study in the Sri Lankan Construction Industry
The construction sectors in the developing countries (DCs) have recently demonstrated
numerous trends towards globalisation, raising considerable concern in the field.
However, the nature of the effect of demand on supply characteristics of the domestic
industry has not been sufficiently discussed with respect to what development measures
are needed in the context of constraints that originate locally to accommodate the global
trends in DCs. This paper therefore analyses reasons for these trends and attempts to
identify the necessary industry developments to benefit from them locally. For this
purpose, the Sri Lankan construction industry has been taken as a case study and a
demand and supply framework is being used to analyse the case. The analysis reveals
that while government policies contribute intrusively in stimulating demand side trends,
the role of the contracting firms together with project delivery process and project
procurement process are also subject to change as a result of these demand
determinants. In this context, the main focus is concentrated on corporate
developments, while wider industry development is also necessary to support them. As
a consequence, both institutional reforms and capacity building are required to enhance
firms’ technological and managerial capacity. The necessity for these development
measures reflects in partly the underdeveloped framework of the construction industry in
DCs. Nevertheless, they could still foster indigenous construction capacity within the
context of global trends.
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