Construction Industry Performance and the Growth of South African Economy: Any Causal Relationship?
The Construction industry is a vital sector of any nation, contributing immensely to economic growth. This study examines the causal relationship between the performance of construction industries and the Gross Domestic Product in South Africa for the period 1995-2018. The Secondary data sourced from Bloomberg, McGregor’s database and the World Bank’s database were analysed using Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP), Dickey-Fuller general least squares (DF-GLS) unit root tests and the Ng–Perron test techniques for unit root test, co-integration and granger causality. The results revealed that the variables were found to be stationary as indicated by the three tests thus, the establishment of a short-run equilibrium relationship for the variables. Moreover, it was established that there exists a bi-directional relationship between Gross Domestic Product and Construction industry performance in South Africa. Therefore, the need for more investment in infrastructure by the government was recommended as the viability of construction industries would create employment opportunities that allow for the development of other sectors of the economy through the multiplier effect and such. The activities and operations of construction industries should be made easier through the provision of favourable business settings.
Keywords: Causality; Construction Industry; Performance; Gross Domestic Product; Causal Relationship