ABSTRACT
The construction industry is a significant contributor to the process of development in developed and developing countries. The construction products (roads, railways, schools, offices, shops, factories) provide the necessary public infrastructure and private physical structures for many productive activities such as services, commerce, utilities and other industries. The industry is not only important for its finished product. It also employs a large number of people (directly and indirectly) and therefore has an effect on the economy of a country/region during the actual construction process.
This paper examines work done to determine the detailed effects of investing in construction. The effects considered are those on the micro-economy of the people directly employed by the construction industry through to the macro-economy of the region.
The work is based on surveys, which were carried out in Indonesia to investigate how the money invested in construction flows through the economy. It also examines at which point in the construction process income is received, and at which point it is spent. The results of these surveys were analysed using statistical methods and were used to build a system dynamics model.
A system dynamics is a methodology for analyzing and understanding how complex systems change over time. This technique is developed to model the effects of the construction process on the local economy. Its use to compare labour intensive and equipment based construction methods. It was found that the construction sector provides a very important contribution to the national and local economy through its job generating ability for local people as multiplier effects. A system dynamics model developed is able to predict the effects of changes in policy on expenditure in the micro scale.
Key words: construction industry, system dynamics, labour intensive construction, micro and macro economy
"THE EFFECTS OF THE CONSTRUCTION PROCESS ON THE LOCAL ECONOMY IN INDONESIA: A SYSTEM DYNAMICS APPROACH"
Download
The construction industry is a significant contributor to the process of development in developed and developing countries. The construction products (roads, railways, schools, offices, shops, factories) provide the necessary public infrastructure and private physical structures for many productive activities such as services, commerce, utilities and other industries. The industry is not only important for its finished product. It also employs a large number of people (directly and indirectly) and therefore has an effect on the economy of a country/region during the actual construction process.
This paper examines work done to determine the detailed effects of investing in construction. The effects considered are those on the micro-economy of the people directly employed by the construction industry through to the macro-economy of the region.
The work is based on surveys, which were carried out in Indonesia to investigate how the money invested in construction flows through the economy. It also examines at which point in the construction process income is received, and at which point it is spent. The results of these surveys were analysed using statistical methods and were used to build a system dynamics model.
A system dynamics is a methodology for analyzing and understanding how complex systems change over time. This technique is developed to model the effects of the construction process on the local economy. Its use to compare labour intensive and equipment based construction methods. It was found that the construction sector provides a very important contribution to the national and local economy through its job generating ability for local people as multiplier effects. A system dynamics model developed is able to predict the effects of changes in policy on expenditure in the micro scale.
Key words: construction industry, system dynamics, labour intensive construction, micro and macro economy
"THE EFFECTS OF THE CONSTRUCTION PROCESS ON THE LOCAL ECONOMY IN INDONESIA: A SYSTEM DYNAMICS APPROACH"
Download
