International Trade in Services.pdf - DSpace at Khazar University

Building Empires Overseas 179
Figure 6.2. Construction Services: Market Share by Sector
telecommunications
1.1%
power
5.5%
other
6.6%
building
23.8%
transportation
25.6%
industrial
4.9%
manufacturing
2.3%
petroleum
25.8%
water/sewer/waste
4.4%
Source: ENR (2008).
companies changes from year to year, signaling significant market contestability
(UNCTAD 2000a). Three dominant market segments—transportation, building, and
petroleum extraction—make up approximately three-fourths of the overall market
(figure 6.2). Input-output analysis indicates that the sector has one of the highest
backward links in OECD economies, which reflects its reliance on inputs of domestic
goods and services (Pietroforte and Gregori 2003).
The largest client segment for the construction sector is often the public sector.
According to Mburu (2008), government procurement accounts for almost 50 percent
of construction expenditures in many developing countries. These investments
cover the building of roads, bridges, ports, housing complexes, and public utility
infrastructure such as water, sanitation, and electricity. Demand for some of these
projects is supported by official development assistance that may have strings
attached in the form of rules and preferences in the procurement process. The market
for projects financed by official development assistance is dominated by multinationals
that possess the expertise, market intelligence, and financial wherewithal to take
charge of the project process. Local companies are engaged as subcontractors. The
corporate client segment invests primarily in industrial and commercial real estate,
and investments are sensitive to the business cycle and the costs of capital. The
household client segment covers residential building and is mainly served by local
small and medium-size enterprises. Informal sector activity often makes up a large
share of investment.