THE CONSTRUCTION INDUSTRY

IN DEVELOPING COUNTRIES
FredMoavenzadeh
ProfessorofCivilEngineering
JanetAnnKochRossow
GraduateResearchAssistaat
TECHNOLOGYADAPTATIONPROGRAM
MassachusettsInstituteofTechnology
Spring1975
(SecondPrintingSpring1976)
--
PREFACE
oneofaseries ofpublications
whichdescribe
Thisreport is
variousstudiesundertaken
underthesponsorship
oftheTechnology
Adaptation
Programat theMassachusetts
Institute
ofTechnology.
In1971theUnitedStatesDepartment
of State,through
the
AgencyforInternational
Development,
awarded
theMassachusetts
Institute
ofTechnology
agrant,thepurpose
ofwhichwastoprovide
inconjunction
withinstitutions
support
forthedevelopment
atM.I.T.,
inselected
developing
countries,
of capabilities
usefulinthe adap-
tationoftechnologies
andproblem-solving
techniques
totheneedsof
AtM.I.T.,
theTechnology
Adaptation
Program
provides
those
countries.
themeansbywhichthelong-term
objective
forwhichtheA.I.D.grant
wasmade,canbe achieved.
This reportpiesents
astate-of-the-art
reviewof theconstruc-
tionindustry
inthedeveloping
countries.
It discusses
theroleof
construction
intheprocess
ofdevelopment
andits importance
to
economic
growth,
employment
creation,
andincomegeneration
andre-
distribution.
Theissues facingthe growthof aviableindigenous
construction
industry
inthe developing
worldare considered
withinthe context
of
the activities
involved
inthe creation
of constructed
facilities
Theenvironment
planning,
design,
construction,
andmaintenance.
withinwhichthe industry
has developed
is alsoexamined.
Foreach
constructioa
activity
the reportreviews
available
capabilities,
the
various
resources
neededforthedevelopment
of anindigenous
industry,
andsomepossible
means of accommodating
theseneeds.
Inordertoprovide
aspecific
focus forthe discussions,
the
authorsutilized
information
available
onfiveemerging
nations
at
different
stagesofdevelopment
-- Colombia,
Korea,Iran,Kenya,and
Thesecountries
differed
notonly ineconomic,
social,and
Ethiopia.
political
structure
andintheirextentofdevelopment,
butalso
presented
awidevariation
intheavailability
ofnatural
resources.
apoten-
Thereportreviewsmulti-national
construction
firmsas
tlalmeansfor thetransfer,
adaptation,
anddevelopment
of appropriate
technologies
toless industrialized
countries,
considering
thefirms'
nature,
the scope oftheiractivities,
andtheirevolving
roleinthe
development
process.
Opportunities
available
tothedeveloping
coun-
tries forusingthemulti-nationals
as avehicle for thedevelopmental
process
andpossible
incentives
for suchuseare alsodiscussed.
IntheprocessofmakingthisTAP-supportedstudy,someinsight
hasbeengainedintohowappropriatetechnologiescanbeidentified
andadapted totheneedsof'developingcountriesperse, andit is ex-
pected that the recommendations developed will serve as a guide to
otherdevelopingcountriesforthesolutionofsimilarproblemswhich
maybeencounteredthere.
FredMoavenzadeh
ProgramDirector
May 1976
Cambridge,Massachusetts
ACKNOWLEDGMENTS
This studywassponsoredbytheM.I.T.TechnologyAdapta-
tionProgramwhichis fundedthroughagrantbytheAgencyfor
International
Development,
UnitedStatesDepartmentofState. The
views andopinionsexpressedinthis report,however,are thoseof
the authorsanddonotnecessarily
reflectthoseofthesponsors.
TheauthorswishtothankDr.MargaretScottGaines for
editingthemanuscript,
andMs. SusanBurkhardtforherassistance
indatacollectionandcollation.
TABLE OF CONTENTS
Page
Acknowledgments
Table of Contents
Summary
iv
Chapter 1: Introduction 1
1.1 ConstructionandNationalDevelopment 2
1.2 PurposeandScopeofthe Report 5
Chapter2: TheRoleofConstructioninEconomicDevelopment 7
2.1 Construction'sRoleintheEconomy 8
2.2 TheNatureofConstruction 28
Chapter3: IssuesintheDevelopment ofthe Construction
Industry
inEmerging
Nations
53
3.1 Planning
54
3.2 Design
71
3.3 Construction
80
3.31Management
80
3.32Capital
87
3.33Labor
94
3.34Materials
126
3.4 Maintenance
155
3.5 ConstructionIndustry'sEnvironment 158
Chapter4: Multi-NationalFirmsinConstruction 163
4.1 NatureandOrgani~ationofMulti-Nationalsand
TheirRoleinConstructionin DevelopingCountries 164
4.2 TheNatureofMulti-Nationals'Operations
inDevelopingCountries 190
ii
Page
Potential
RoleofMulti-Nationals
inthe
4.3
Development
ofthe Indigenous
Construction
Industry
ofDeveloping
Countries
200
Chapter5: SummaryandRecommendations
208
208
5.1 Summary
209
5.2 Recommendations
AppendixA: Additional
Tablesand Figures--Chapters
1through4 Al
AppendixB: References
CitedforChapters1through 4
Bl
Cl
AppendixC: Bibliography
iii
SUMMARY
Itis arguedin this reportthatthe constructionindustryplays
amajorroleineconomicdevelopmentinthelessindustrializednations
sinceit constitutesasignificantportionofbothgrossnationalpro-
ductandofemployment. Indeed,thecreation ofphysicalfacilities
constitutes morethanone-halfofthe grossdomesticinvestmentof
bothdevelopedanddevelopingnations. Theconstructionindustryalso
plays akeyroleinsatisfyingawiderangeofphysical,economic,and
socialneeds and contributes significantlytothe fulfillment ofvari-
ousmajornationalgoals. The industry'ssize,thenatureofits
operation, andits presenceineverydevelopmentalactivitymakeit an
attractiveareaforthetransfer,adaptation,anddevelopmentoftech-
nologiesconsistantwiththe developmentalgoals ofemergingnations.
Theplanningissues facingthedevelopmentof the construction
industryinclude (1)the availabilityoflocalplanningcapabilitiesand
the nature of the information base niecessary for a sound planning analy-
sis, and (2) the financing of the construction project, the various bi-
lateraland multilateralaid andloansourcesandtheiravailability,
andthe constraints eachimposes on the constructionprocess. The
report sets forththe argumentthatlocalplanningcapabilitiesmaybe
substantiallyincreasedbytheuseofcomputerplanningtechniques;
the financingof constructionappears tobeamajorsourceof complica-
tions inthe selectionanddevelopmentof appropriateconstruction
technology.
Majorissuesinthedesignstageincludethe shortage ofexperi-
encedmanpowerand therolethat designplaysindictatingconstruction
iv
technology. Education,theuseof computerizeddesigntechniques,and
standardizationofdesigns aresuggestedaspossiblemeansofincreas-
ingthedesigncapabilitiesofthe developingcountries. Increasing
designer'ssensitivitytolocalconditions,andtheuseofplans,speci-
fications, andbuildingcodeswhichareperformancebasedcouldencour-
age the developmentanduseofdesignstrategiesmorecompatiblewith
localneedsandconditionsthanis currently thecase.
Inthe constructionphasetheissuesaredividedintoand
discussedin fourresource categories-- management,capital,labor,
andmaterials. Managementmanpowerisinveryshortsupplyinalmost
alldevelopingnations,andmanagement trainingandeducationis time-
consuminganddifficultbecause it reliesprimarilyonon-the-job
training. Thedevelopmentoflocal educationalcenters, theuseof
expatriates as a training mechanism, and the use of computers are sug-
gested as possible means of alleviating the problem of educating local
managers. In addition, contractual arrangements, bidding practices, and
themannerofselectingcontractorsall requiresubstantialimprove-
ment.
Financingproblemsarisebothforworkingandinvestmentcapital.
Highinterest rates, lackofadequatecreditwithequipmentandmate-
rialssuppliers, theunavailabilityofrentalequipment,lengthydelays
inpayments, and thepracticeofwithholdingaportionofthepayment
as aguarantee againstpoorworkmanshipare seriousissues facinglocal
contractors inmostdevelopingcountries.
Theissuesinvolvedin manpowerrequirements forthe construction
phasehavebeenofmostinteresttodevelopmenteconomists. Theabun-
danceoflaborindevelopingcountriesandthelabor-intensivenature
ofconstructionactivitieshaveledmanyresearcherstoinvestigate'
the possibilityofsubstitutinglaborfor capitalin certainareas of
construction. Theimmobilityofthe laborforceandthe remoteness of
manyconstructionsitesfrompopulationcenters, however,coupledwith
theerraticavailabilityoflaborbecause ofaseasonalreturn to agri-
culturalproduction,workers'poorhealthandinadequatenutrition,
theirlackofindustrialdisciplineandlowproductivity,;mdthe fact
thatmany constructionactivitiesrequirehighlytrainedworkersall
appeartobeimpediments to laborsubstitution.
Thedevelopingcountries are concernedalsowithconstruction
materials -- theiravailabilityinlocalmarkets, theirproductionat
thelocallevel,andtheirqualityand its control. Manybuilding
materialssuchas cementandsteelarebulky, andtheirpriceis sensi-
tivetoboththescaleofproductionand totransportationcosts. The
developmentof localbuildingmaterialsindustries,therefore,issub-
jecttothe availabilityofmanpower,capital,markets,andnecessary
rawmaterials.
Themaintenanceof constructed facilities generallyisconsidered
alowpriority itemindevelopingcountries,afactwhichresults in
substantiallossesin revenueandinareducedlife forthe facility.
Maintenance,however,is ahighlylabor-intensiveactivitywhich,if
properlyorganizedand administored,mayresultinsubstantialemploy-
ment foraratherunskilledgroup oflaborers. Closelyassociatedwith
the questionofmaintenanceis that of thestagingofconstruction,a
processwhichcanresultinthemoreeffectiveuse ofresources aswell
as inreducedcosts.
Theregulatoryenvironmentwithinwhichthe constructionindustry
vi
operatesis extensive. Buildingandrelatedcodes are generallypro-
ceduralratherthanperformance
basedandareoftenborrowedfromthe
developedcountrieswithlittleornomodification
for localconditions.
Theestablishment
intheemergingnationsofsometypeofcentralized
agenciesorinstitutes,
like thoseinEurope,todevelopbuildingand
relatedcodes,toencourage,support,andperformresearchinthe area
ofconstruction,
andtocollect,evaluate,anddisseminate
information
tothe industryissuggestedas apossiblemeansofalleviatingsome
ofthedifficulties
inthis area.
As faras the role ofmulti-national
construction
firms inthe
processofdevelopmentisconcerned,abriefoverviewoftheirnature
isfollowedbyareviewoftheircurrentoperationsin
andorganization
developingcountries andanexamination
oftheirpotentialas avehicle
for thetransfer,adaptation,anddevelopmentof technologies
appropri-
atetolocalconditions inspecificemergingnations.
Jointventuringwithorsubcontracting
to localfirms are alter-
natives tomulti-naticaals
workingalone intheconstruction
of facili-
Jointventuringand subcontracting
ties indevelopingcountries.
normallyinvolveeducatingunskilledlaborers andthedevelopment
of
middlemanagementonthelocallevel, and for this reasontheyare im-
anindigenous construction
industry.
portantelements inthe growthof
The reportmakesseveral suggestionsaimedat encouraging
the
multi-nationals
torespondmore directlyto theneedsofadeveloping
countryformanpowertrainingand usingtechnologies
appropriate
to
Thesesuggestions
includebothrestrictions
that
localconditions.
require,andeconomic incentivesthatencourage,jointventuringor
subcontracting,
theubeand trainingoflocalmanpower,andtheuseof
vii
local materials and equipment. In the construction phaae, for example,
the contractor may be required to guarantee a minimum level of local
employment,aminimumlevel ofinvolvementoflocalcontractorsor
subcontractors, amaximumvalueofexpatriatesalaries, andsoforth.
Thepossiblityofprovidingsomejobcontinuity formulti-nationals
issuggestedas an additionalincentive toencouragethe establishment
ofmorepermanentlocaloffices and the fullerutilizationoflocal
resources. In addition,theroleofthe governmentinstabilizing
constructiondemandthroughthenationalplanningofconstructionis
discussed.
viii
CHAPTER1
INTRODUCTION
Amajorproblemfacing theworldduringtheremainderofthe twen-
tiethcenturyis the narrowingofthe economicgapbetweenthedeveloped
andthedevelopingnations. Unfortunately,the developedcountries,
alreadyfar aheadinpercapitaincome,are drawingstillfurtheraway
fromthe lessdevelopednations,thusworseninganalreadyexplosive
situation.
Althougheconomicandsocial change in the developingcountries
dependsprimarilyupontheactionsofthepeople and their governments,
thecooperationofthe developedcountries,especiallythroughbilateral
andmultilateralfinancial andtechnical assistanceandothercoopera-
tivearrangements,isvital. Inrecentyearsthenatureofthis coope-
ration,itsobjectives andgoals, and its modesofoperationhavebeen
reexaminedbymanyinstitutionsconcernedwithinternationalassistauce
programs. Ithasbecome clear, forexample,that financial assistance
insupportofasinglespectacularprojectwillnotcontributesignifi-
cantlyto the developmentprogramofacountry; inmanyinstancesthe
operationandmaintenanceofthe projectmaysimplydrainthelimited
resourcesofthe local government. It is generallyagreed that the
roleofinternationalassistanceprogramsshouldbeshiftedmoretoward
institutionbuildingindevelopingcountries andless toward single,
short-termspectacularprojects. Thisshift inemphasisrequiresan
understandingof thepoliticaland socialstructuresofdevelopingna-
tions aswellas theeconomicand technicalresourcesavailableinva-
rioussectorsof theeconomy.
1
Onemajorsectorofthe economywhichisreceivingincreasingat-
tentionas apossibleareafor thedevelopmentofbetterinstitutional
structurein theemergingnationsisconstruction,anindustrypresent
ineverydevelopmentalactivity. Constructioncontributestoeconomic
developmentbysatisfyingsome ofthe basicobjectivesofdevelopmentin-
cluding output generation, employment creation, and income generation
and re-distribution. It also plays a major role in satisfying basic
physicaland socialneeds,includingtheproductionofshelter,infra-
structure, and consumergoods.
1.1 ConstructionandNationalDevelopment
Amajorobjectiveofdevelopment is economicgrowth. Duringthe
earlydevelopmentalprocesseconomicgrowthseems tobegenerallyhigh,
and construction,alongwithmanufacturing,tends toplayanincreas-
inglyimportantrole inthe economywhileagriculture'simportancede-
clines; oncearelativelyhighlevelofdevelopmentis achieved,how-
ever,economicgrowthappears toslow,and construction'srole tends
to stabilizeorevendeclineslightlywhiletheothersectorscontinue
as before.
Whileconstruction'sdirect contributionstodevelopmentaresig-
nificant,it also stimulatesasizeableamountofeconomicgrowth
throughbackwardand forward linkages. Construction's
requirementsfor
goods andser':ices fromotherindustriesare considerable;the develop-
mentof the constructionindustrythereforestimulatestheseancillary
industries, thusencouragingfurthereconomicgrowth. Indeveloping
countriesthe constructionofphysical facilitiesmakesupmorethan
onehalfof gross domesticinvestment andtendstobeconcentratedon
2
basicinfrastructurein agriculture,mining,transportation, communica-
tion,andutilities. Infrastructural servicesmakesomecontribution
toGDP,buttheyalsostimulatethedevelopmentofother industries
which,inturn,contributemoredirectlyto economicgrowth. Oncethe
basicinfrastructureis created,moreeffort canbedevoted toconstruc-
tionformanufacturing,commerce,andservicesandtothe buildingof
dwellingsand institutionalfacilities.
Construction'scontributionsto employment creationarenaturally
parallelto its contributionstooutput generation. Acommon condition
ofunderdevelopment isunemploymentandunderemployment. Inthepast,
thequestionofemploymentwas generallyneglectedbecauseof theappa-
rentconflictbetweeneconomicgrowthand employmentcreation. Theex-
tenttowhichgrowthandemployment creationshouldbebalancedinde-
velopingcountries is amatterofimportanceand necessarilydepends
largelyuponlocaleconomic,technical,social,,and politicalconditions.
The constructionindustrycouldplayanimportant role inresolving
this conflictbecause it istechnologicallyflexible,implyingthatmany
ofits operationscanbemademoreorless labor-intensivedepending
uponconditionsin the countryat the time.
Closelyalignedwiththe questionofemploymentcreationis that
ofincomegenerationandre-distribution. Ausual concomitantof un-
derdevelopmentis lowper capitaincome,aconditiongenerallymade
evenmoreseriousby theaccompanyinginequitableincomedistribution.*
Throughthemanydirectandindirectmeansbywhichconstructioncrea-
tes employment italso generates income. Sincethe constructionindus-
SeeTableA1.1inAppendixA.
3
tryasawholeis largelymadeupofsmallfirms, itprovidesentre-
preneurialopportunitiesformanysmallbusinessmen,therebyhelpingto
re-distributeincome. Theworkerswhoareemployedinconstructionit-
self,however,maynot dosowellsincewagesinless industrialized
nationsare low. Inthe earlystagesof developmentwagesinconstruc-
tiongrowmoreslowlythan those inmanufacturing,althoughasdevelop-
mentprogressestheytendto risefasterthanthoseinmanufacturing
andsoonto exceedthem.
Constructionplaysavitalroleineconomicgrowthanddevelopment,
butitis also importantintermsofsatisfyingbasicphysicalandso-
cialneeds, the firstofwhichisshelter. The standardofhousingis
animportant componentinanation'swelfare,andatleast 35percent
of all constructioninatypicaldevelopingcountryis inthe formof
dwellings. Inmanyof thesenations,however,the existingproblem
ofprovidingadequatehousingworsensas developmentprogressesbecause
the populationtends tomove fromruralto urbanareas. Apossible
rangeofsolutionsproposedtoalleviate theseandotherhousingprob-
lems includemeasuressuchas thefollowing: (1) thedevelopment and
constructionoflow-costhousingforsaleorrental; (2)arrangements
for low-costcreditsorsubsidies; (3)materialand technicalaid for
familiesundertakingself-helpconstruction; (4) nationalizationofthe
constructionandbuildingmaterials industriesand operations;and (5)
thedevelopmentand useofefficientconstructiontechniques suitable
for usinglocallyavailablelabor,materials,andequipment. Anaddi-
tionalpossibilitymightbethe channelingoflimitedresourcesinto
the upkeepand improvement oftheexistinghousingstock.
Closelyrelatedto society'sneedforshelteris its needforba-
4
sicinfrastructuralservicessuchaswatersupply,wastedisposal,;o-
wer,transportation,andcommunications. Communitydevelopmentalsoin--
volvesestablishingvarious institutional, commercial,andmanufacturing
services. Sinceitis theconstructionindustrywhichcreates thephy-
sicalfacilitiesrequiredtomeetthesevariedsocialneeds, construc-
tion thushasanimportantimpactonsocialaswells- economicgrowth
anddevelopment.
Althoughconstructionplays avitalroleinachievingbalancedeco-
nomicand socialdevelopment, fewnationaldevelopmentplansexplicitly
considerconstructionin termsofdefiningtargets orconsideringthe
industry's relationto othersectorsofthe economy. Anexamination
ofmorethanfortydevelopmentplansfor countriesatvariousstages
ofeconomicgrowthinthemid-sixtiesrevealedonlyalimitedconsidera-
tionoftheroleofconstruction (2). Developmentplansingeneralare
Whiletheymaydevoteone
concernedlargelywiththe publicsector.
ormoresectionsto socialprogramsandothers to transportation,com-
munication,or generalinfrastructure, theydonotestablishthe con-
Their concernwith
structionrequiredto meetthesetargetedneeds.
industrialdevelopmentalso isoftenlimited,and cementis usuallythe
onlybuildingmaterialto receiveanyattention.
1.2 Purposeand ScopeoftheReport
Thepurposeof thisreportis to provideastate-of-the-artreview
oftheconstructionindustryin developingcountries, and toidentify
thepotentialsand thebarriersthatexist for the transfer,adapta-
tion,and developmentofan indigenousindustry.
Chapter 2identifiesthe role that the constructionindustryhas
5
played
andcontinues
toplayinthedevelopment
process
by examining
its impacts
onand its contributions
totheeconomic
development
of
Theissues
facing
the growth
of thein-
less industrialized
nations.
dustry
inthesecountries
arereviewed
inChapter
3within
the context
ofthemajor
activities
involved
intheproduction
of constructed
faci-
Chapter
4ex-
lities--planning,
design,
construction,
andmaintenance.
amines
theroleofmulti-national
firms inconstruction
asanexample
.ansfer,
adaptation,
and develop-
ofthemechanisms
available
forthe
Itreviews
the rolethese
firms
mentoftechnology
inemerging
nations.
haveplayed
and continue
toplayinproviding
developing
nations
with
assistance
inacquiring
thebasic
technology
ofconstruction.
Chapter
5concludes
thereport
withasummary
and somerecommendations.
Thisreport
relies
largely
uponavailable
literature
forits data,
While
although
the investigators
contacted
afewfirms intheindustry.
muchof the report
isdirected
at developing
countries
ingeneral,
our
efforts
particularly
inthe areaof datacollection
wereconcentrated
onfiveemerging
nations
at different
stages
of development.
Thesein-
cludeColombia,
Korea,
Iran,Kenya,
andEthiopia;
andtheyofferagood
cross-section
ofdeveloping
countries
intermsbothoftheircurrent
stages
of economic
growth
andofthenatural
resources
available
to
them.
b
CHAPTER2
THEROLEOFCONSTRUCTIONINECONOMICDEVELOPMENT
The constructionindustryinbothdevelopedand developingcountries
maybeviewed as thatsectorof the economywhich, throughplanning,de-
sign,construction,maintenanceand repair,andoperation,transformsva-
rious resources intoconstructedfacilities. The types ofpublicandpri-
vatefacilitiesproducedrangefromresidentialandnonresidentialbuild-
ingstoheavyconstruction,andthesephysical facilitiesplay acriti-
calandhighlyvisiblerole inthe process ofdevelopment.
Themajorparticipantsfromtheconstructionindustryinclude the
architects,engineers,managementconsultants,generalcontractors,heavy
constructioncontractors, special tradecontractorsorsubcontractors,
and constructionworkers, alongwiththe owners, operators, andusers of
the constructedfacility. Buildingfinanceand insuranceagencies, land
developers, realestatebrokers,andmaterialand equipmentsuppliers
andmanufacturers, amongothers, arealso involvedinconstructionbut
aregenerally consideredas distinct frombutancillaryto the construc-
tionindustry. The government interactswith theindustryas purchaser,
financier,regulator,andadjudicator. The regulatoryenvironmentwith-
inwhichthe constructionindustryoperatesis also important andinclu-
des, forexample,buildingandrelated codes,licensingrequirements,
safetylegislation,and financialinstitutionoperatingrules.
Mostdeveloping,aswellas developed,countries putover55 percent
of theirgrossdomesticinvestment intothe creationofthe physicalfa-
cilities, includinginfrastructure, sonecessaryfordevelopment (10,26).
Moreover,the constructionindustryplays akeyroleinsatisfyingawide
rangeofphysical,economic,andsocialneedsandcontributes significantly
to the fulfillmentofvariousmajornationalgoals. Theindustry'ssize,
thenatureof its operation,andits presenceineverydevelopmentalac-
tivityhavemadeconstructionanattractiveareaforexperimentationin
enhancingtheeffectiveness ofinternationalassistanceandcooperative
works.
2.1 Construction's Roleinthe Economy
Amajordifficultyindoingaquantitativestudyofthe construction
industry isalackofaccurate,detailed,and comparabledata. In large
part,this is dup tothe diversenatureof the industryinterms of, for
example,its largesize; fragmentation; geographicandproduct-typedis-
persion; relianceonalaborforce, materials,and equipmentwhichare
widelyusedby otherindustries; andits associationwithnumerous ancil-
laryindustries. In developingcountriesinparticularafluctuatingde-
mandmarket,whichmaybedistortedbysinglebutlargeprojectsand
construction's sensitivityto politicalandeconomicuncertainty,im-
pairstatistics,alengwiththefact that itis difficult todetermine
thecontributionof thenon-monetarysectorofconstruction. Thesedif-
ficulties arefurthercompoundedbythe generallackofstatisticsonde-
velopingcountriesand the problemofincomparabilityof datacollected
ondifferentcountries. Nonetheless,enoughstatisticsareavailable
to drawtentativeconclusions, particularlyabout thesignificanceof
the industryandits rolein theeconomyofbothdeveloped anddeveloping
countries.
Itshouldfirstbenotedthat theworldresources forconstruction
areveryunevenlydistributedamongcountriesatdifferenteconomic le-
8
vels (seeTable2.1). Countrieswithapercapitagrossnationalproduct
(GNP)of 700 dollarsormoreaccountedfornearly88 percentofconstruc-
tionintheworldin1965. Inthatyearnearly40percentof theworld's
grossdomesticcapitalformation (GDCF)in construction
of 230billion
dollarswas inNorthAmericaalone. The dataalso showastrongpositive
correlation
betweenthepercapitavalueaddedinconstruction
andper
capita grossdomesticproduct (GDP)(seeFigure2.1). Asimilarrela-
tionshipseems toholdforpercapitaGDCFinconstruction
andpercapita
GDP,althoughhereitis percapitatotalGDCFwhichincreaseswithin-
creasingpercapitaGDPandnot construction's
sharein totalGDCF (23,
26).
Figure 2.1alsosuggeststhat construction's
shareinGDP tends to
increasewithincreasing
percapitaGDP. AccordingtoaUnitedNations'
study(22), valueaddedinconstruction
representsbetween3and5per-
cent of theGDP inmostdeveloping
countriesandbetween5and9percent
inmostdevelopedones. Table 2.2substantiates
this andfurthersug-
gests that ontheaverageconstruction's
shareovertheyears indeve-
loped countrieshas beenfallingwhileit hasbeenrisingindeveloping
countries.
The indexesinFigures 2.2aand2.2b also indicatethat in
developing
market economies, since1960,construction
has tendedto grow
somewhatfaster thanGDPwithespecially
significant
growthsince themid-
sixties; essentially
theoppositetrend is exhibitedbydevelopedmarket
economies.
Anindexforallmarketeconomies follows thedeveloped coun-
tries' trendssince theydosuchalargeshare of theworld's construc-
tionandhavesuchalargeshareof theworld'sGDP (seeFigureA2.1*).
Moreover,sincethemid-sixties,
economicgrowthinthe developing
marketeconomieshasbeensignificantly
higherthanthatinde-
Figuresor tableswithprefix"A"areinAppendixA.
9
---
a
,byincomegroupsandbyregions,of (a)valueaddedinconstructionand (b)grossdomesticcapital
Table 2.1: Worldestmates
ref.23)
formationinconstruction,for 1965 (billionsofU.S. dollars) (source:
Incomegreups
byrangeof
percapita Western Eastern Latin Middle Totalall Percentageof
Africa regions worldtotal
GNPinU.S. North OceaniaE
Europe Europe America East
Asia
dollars America
(a) (b)
(a) (b) (a) (b) (a) (b)
(a) (b) (a) (b) (b) (a) (b) (a) (b) (a) (b)
36.5 96.0 33.4 41.8
.
1
b .
2
b
2.2 5.1 0 0
I.2,000+ 34.2 90.7
b 59.4 106.0 54.3 46.1
b
0.3 0.6 4.8 8.9
1.8 3.2 27.4 48.8 23.9 41.8 1.2 2.7
0-j II. 700-2,000
1.2 4.4 9.1 4.0 4.0
2.1 --- 0.1b
0
.1b
0
.2b 0.7
1.3 3.1
1
.3b
2
.4b 1.0
II1. 400-700
1.6 0.6 1.3 3.4 6.8 3.1 3.0
0.6 1.1 --- --- 1.2 2.5
0
.
2
b
0
.3b 0.8
IV. 120-400
5.7 11.9 5.2 5.2
5
.2b
10
.9b 0.5
1
.0b
V.under120
TOTAL ALL
1.8 3.5 109.4 229.8 100.0 100.0
1.2 10.9 21.6
3.2 31.5 58.1 25.2 44.2 3.4 7.3 0.6
GROUPS 34.2 90.7 1.8
Percentageof
1.6 1.5 100.0 100.0
0.5 10.0 9.4
3.1 3.2 0.6
1.6 1.4 28.8 25.3 23.0 19.2
worldtotal 31.3 39.5
aDatarelateto75countries.
bCrudeestimate.
Figure2.1: Percapitavalueaddedby
construction
a
and percapitaGDP,
1963 (U.S.dollars) (source:ref.23)
1000- - _ _ _ - --
700
0
400
Cj 100
0
*0 70
0O
CU S
10 - _ _ _
$4
10 40 70 100 400 700 1000 4000 7000 10000
PerCapitaGDP
aAveragepercentagecontributionof constructiontoGDP1960-1965
multipliedbypercapitaGDPin 1963.
11
Table2.2 : GDPandits distributionamongvarioussectors of theeconomy,byeconomicgrouping,for1953
to1968 (source: ref. 25, 29)
Economicgrouping GDPin Percapita AveragepercentagedistributionofGDPamongthe
andyear purchaser's GDPin sectorsoftheeconomyb
valuesa purchaser's
(billionsof valuesa Primary Secondary Tertiary
U.S.dollars) (U.S.dollars)
Construction Manufacturing
Developingmarket
economies
1953-1955 na na 42.1 3.6 14.2 40.1
1959-1961 184.1 140 39.8 3.7 15.7 40.8
1966-1968 295.1 180 36.1 4.0 17.4 42.5
Developedmarket
economies
1953-1955 na na 12.3 6.0 28.9 52.8
1959-1961 943.7 1500 11.6 5.9 29.1 53.4
1966-1968 1618.1 2370 10.2 5.6 31.1 53.1
aFormiddleyears-- that is1954,1960and1967.
bThepercentageshareiscalculatedonthebasisofathree-yearaverageofGDPatconstantfactorcost.
Theprimarysectorincludesagriculture,forestry,andfishing;miningandquarrying;andelectricity,
gas,andwater. Thesecondarysectorincludesmanufacturingandconstruction. Thetertiarysector
includescommerce; transport,storage,andcommunication; services; andallothernotincludedelsewhere
Figure 2.2a: IndexnumbersofGDPa, for theeconomyasawholeand
certainsectors,indevelopingmarketeconomies (source: ref. 30)
180 uiNDEK: e9 , 10/
CONSJZOCTOQN
-,-- iL)LC
/1
.
16o .. ,..Tal, 6,ONOM ' ctP)/
/
/ ,. 6
//
/ '
80
/
/ *
L//
6& 67- 6 69 '70 "71
1 (fto 61 62. -63
YEAk
GDP 5.0 5.7
6.7
Construction
5.7
Manufacturing 7.0 7.4
Agriculture 2.4 3.8
alndexnumberswerecompiledasweightedaveragesof countryindexesof
gross productat 1963prices. Thecountryindexesweregenerallyderived
fromofficialestimatesof GDPat constantpricesbykindof economicac-
tivity in terms of the formerSNA.
Averageannualgrowthratesat constant prices (percent).
13
,
Figure 2.2b: Indexnumbersof GDP
a
for theeconomyasawholeandcer-
tainsectors,indevelopedmarket economies (source:ref.30)
1 coXJs65,c 0
10o "- 4ANUFA T #TL44
TQT-On. ecotamo4y (qjpp)
do
iqo
uJJ
Uj"
00
Sol
6? 6a 69 70 -1
1960 61 62 63 6, &5" 6
GDP 5.3 4.7
Construction 5.1 3.5
Manufacturing 6.6 5.5
Agriculture 1.9 3.0
aSeefootnoteainFigure2.2a.
*
Averageannualgrowth ratesat constantprices (percent).
14
velopedones. ManufacturingandFgricultureareincluded forpurposes
ofcomparisonintheabovetablesandfigures. Further,data forindi-
vidual countriesare giveninTablesA2.landA2.2,andalthoughthey
maynotalwaysagreewiththesegeneralizations, thisdoesnot invali-
datethembutratherdemonstratesthe caution thatmustbeexercisedin
applyinggeneralizations tospecificcountriesandvice-versa.
Insummary,it seemsobvious that construction's roleineconomic
growthis asignificant oneinbothdevelopinganddevelopedcountries.
Duringthe developmentprocesseconomicgrowthishigh,andconstruction,
alongwithmanufacturing,playsanincreasinglyimportantrolewhile
agriculture'simportancedeclines. Oncearelativelyhigh levelofde-
velopment is achieved,however,economicgrowthappears to slowalittle,
andconstruction's rolestabilizesorevendeclineswhilethe othersec-
tors continueas before.
Construction's manpowerrequirementsrange fromhighlyskilledpro-
fessionalsto completelyunskilledlaborers. In developingcountries
physicalconstructionactivitiesaloneemploy some 2to 6percentofthe
totallaborforce,whiletheancillaryoperationsprovideanadditional
2to 4percent. The correspondingfigures for developedcountries are
6to 10percent and4to 6percent (5,23). Thedatain Table2.3afor
twenty-sevencountries at threedifferent levels ofdevelopmentarein
accordwith this information,as arethedatainTable2.3bforthree
developingcountriesand the U.S. These figures also indicatethat con-
struction'sshareinemploymenthas tendedtoincrease overtheyears in
the developingcountries whileremainingfairlystable inthe U.S. It
thus appears that construction'sshare inemployment tends to followthe
behaviorof its shareintheGDP. AnInternationalLabourOfficereport
1.5
Table2.3a: Employmentandits growth rateinconstructionandmanufac-
turing,interms ofarithmeticmeansfor twenty-sevencountries and
threesubsets, 1955 to 1964 (source: ref. 18)
Economic
Employmentas shareof Growthrateof
groupinc economicallyactive
grouping
population (percent)
employment (percent)
ConstructionManufacturingConstructionManufacturing
Underdeveloped
(12countries)
3.9(10) 11.1(10) 1.3(9) 4.4(9)
Middle group
(7countries)
6.7 18.6 5.1(6) 2.9(6)
Developed
(14 countries)
7.2 27.5 1.8(13) 1.6(13)
All
(27 countries)
5.8(25) 20.4(25) 1.6(22) 2.7(23)
Note: Figures inparenthesesindicatenumberofcountriesifless than
totalshownatbeginningofrow. Developedcountries included
in the sample, in descending order of incom. perhead,are: the
United States, Canada, Australia, Norway, the Federal Republic
ofGermany, the UnitedKingdom,France,Denmark,Belgium,the
Italyj and Japan* Classified as
Netherlands, Austria,Finland,
underdevelopedare: Spai!,Jamaica*,Mexico,Turkey,Peru,
Honduras,ElSalvador,Egypt, thePhilippines, SouthKorea,
Nigeria, and Kenya. The middle income countries are those marked
with an asterisk above plus Puerto Rico.
16
Table 2.3b: The economically active population and its distribution among various branches of economic
activity,forthreedevelopingcountriesand theU.S. (source: ref.7, 12, 28)
Economically construction Manufacturing Agriculture
Country
and yearen
year
activepopulation
Number Percent of Number ercent of Number Percent of Number
Pecnto
Percent of
total
(thousands)opulationd
(a e.a.N
thouaaon population
e.a.
(thousands)
e.a.
population
Korea
1972
a
10,500 32.3 371 3.5 1,372 13.1 5,078 48.4
1966
a
8,654 29.7 191 2.2 958 11.1 4,553 52.6
1960
b
7,543 30.2 127 1.7 487 6.5 4,670 61.9
Iran
1966
c
7,584 30.2 510 6.7 1,268 16.7 3,169 41.8
1956 6,067 32.0 336 5.5 816 13.5 3,326 54.8
Colombia
1970 5,938 28.1 316 5.3 808 13.6 2,670 45.0
1964 5,134 29.4 221 4.3 656 12.8 2,427 47.2
1951
d
3,756 33.4 133 3.5 461 12.3 2,023 53.9
U.S.
1972 88,991 42.6 5,728 6.4 21,022 23.6 3,701 4.2
1966 80,164 40.7 4,924 6.2 21,017 26.2 4,439 5.5
1960 69,877 39.0 4,302 6.2 18,536 26.5 4,519 6.5
aEconomicallyactivepopulationfiguresexcludepersons seekingworkforthefirsttimeandarmedforces.
bEconomicallyactivepopulationfiguresexcludemilitarypersonnelinbarracksand24,945personsof
status unknown.
cExcludes unsettledpopulationof244,141persons.
dExcludes 127,980Indianjunglepopulationandpopulationofcertainlocalities (estimatedat191,683)
wherecensusnotcarriedout.
(11)shows that construction's
shareofthe industrial
workersindeve-
lopingcountries
is generally
greaterthanthatindeveloped
ones,with
arangeintheformerof 10to 77 percent
(medianof 25 percent)
andin
thelatterof13to 29percent (medianof 21percent).
This againap-
pearstobearout the conclusions
aboveaboutconstruction's
andmanu-
facturing's
roles inGDP duringdevelopment,
althoughproductivity
may
alsoplayapartinthisprocess.
The datainTable2.3a showthatthegrowthrateof employment
in
construction
indeveloping
countries
islowerthanthatindeveloped
countries;
what isreallystriking
inthesefigures,
however,
is the
high growthrateinthemiddlegroupcountries
(seeTableA2.3forin-
This
dexesof employment
for two developing
countries
and theU.S.).
seemsto accordwithconstruction's
changing-importance
duringdevelop-
mentandwiththe following
characterization
of athree-stage
develop-
mentprocess:
(1)duringthe earlystages,construction
islargelyby
expatriate
firms usingareasonably
highlevelof technology
and thus
as growthprogresses
and localindustry
rather capital-intensive;
(2)
dointermediate
technologies
ofamorelabor-intensive
na-
develops,
so
arelatively
highlevel ofdevelopment
is achieved
ture; and (3) as
andlaborbecomesmoreexpensive,
localtechnology
probably
becomes
morecapital-intensive.
Manufacturing's
trendof ahighinitialem-
ployment
growthratewhichdeclines
as development
progresses
seems
explicable
mainlyin terms oflaborproductivity.
Construction's
shareintheeconomically
activepopulation
is ge-
nerallylargerthanitsshareintheGDPinbothdeveloping
and deve-
lopedcountries,
suggesting
that itslaborproductivity
is lessthan
Moreover,
comparing
theratioofcon-
thatof theeconomy
asawhole.
18
struction'sshareinGDP toits shareinemploymentwiththe sameratios
formanufacturingandagricultureindicates that laborproductivityin
constructionismuchless thanthat inmanufacturingbutsomewhatmore
thanthat inagriculture. Thus, constructioninbothdevelopingandde-
velopedcountries isgenerallyaquitehighlylabor-intensive industry;
the datainTable2.4 supportthis conclusionandsuggest that construc-
tionis relativelymorelabor-intensiveindevelopingthan in developed
countries. In lightof thisinformation,itseems reasonabletoexpect
laborproductivitytogrowfasterinmanufacturingthaninconstruction
thoughoutthe developmentprocess; Figure2.3 shows that thishasgene-
rallybeenthecaseintheU.S. Afrequentexplanationfor thissitua-
tionis the generalunsuitability ofmanyconstructionprocesses toau-
tomationand mechanizationand theever-changingnature ofthe product.
Itthusseems clearthatconstruction,aratherlabor-intensivein-
dustry,playsasignificantroleinemployment. Italsoplays asigni-
ficantroleinunemployment,however,withits sharebeingtwo to three
times thenationalaverageinbothdevelopingand developedcountries
(5,23). Anumberof factorsaccount forthis, includingthe seasonal
natureofthework,the industry'srelianceonafloatinglaborforce,
anddemandmarketfluctuations. Thegovernmentinsomedevelopedcoun-
trieshas takensteps to alleviatethis job insecurity,but,moreim-
portantly,laborunionshavedevelopedandtake anactivepartinin-
fluencingtrainingand hiringproceduresin theindustry. Partlyas
compensationforpoorworkconditionsandpartlydue to the bargaining
powerofthe laborunions,amongotherreasons,wages inconstruction
indevelopedcountries are generallyhigherthan thoseinmanufacturing
(seeTable2.5). This isnottrueindevelopingcountries,however,
wherelaborunions arejustbeginningtodevelop (23). Yet,as deve-
19
Table 2.4: Indicators oflaborintensityinvariousbranchesof
economicactivity,for certaindevelopinganddevelopedcountries
(personsengagedperunitofvalueadded,manufacturing=100)
(source: ref.11)
Miningand
Country
Construction quarrying
Developingcountries:
Algeria(1954)
148 65
170
-
Malawi (1961)
Morocco (1961)
209 90
Tunisia (1962)
307 77
UnitedArabRepublic t1961/62) 191 50
Zambia(1963)
227 36
Honduras (1960)
179 57
Jamaica(1960)
102 7
Mexico (1960)
85 69
Trinidadand Tobago (1957) 244 29
Brazil (1949)
121 154
Venezuela(1953)
26 57
China (Taiwan)(1962)
645 334
Israel (1963)
151
69
Malta(1961)
89 135
NorthAmericaandEurope:
100
Canada (1961)
UnitedStates (1958)
161
Germany (Fed.Rep.)(1962)
11 ill
Ireland (1963)
145 102
Italy(1962)
141 94
Netherlands (1962)
143
88
UnitedKingdom(1958)
126 115
Yugoslavia (1964)
139 130
20
Figure2.3: Indexesof laborproductivity (outputperman-hour), for the
totalprivateeconomyandvariouseconomicactivities,intheU.S. (source:
ref.4)
ISO
rI10
lo0
160
ItuADX:1957-59-1,Ioo
-CON STACTIOIN
*--TO'rRLPRWURTe. -o/Oot
--- M & L .rTP. rqG%
Arr%
ICI&LTU.
I b
Ito
130
900
/" %
90
off
70
fe
aI 4qrj Ail .6 53 55 57
YC_
59 41 4,3 (5 (7
aBasedonCassimatis'deriveddeflator (heusedaweightedaverageof three
indexes toarriveat hisderiveddeflatorwhichhethenused todetermine
realoutput,andfromthatlaborproductivity).
bBasedonU.S.BureauofLaborStatisticsdata.
21
Table 2.5: Averagehourlyearningsandtheirgrowthrateinconstructionandmanufacturing,intermsof
arithmeticmeansfortwenty-sevencountriesandthreesubsets,1955 to 1964 (source: ref. 18)
Economic
grouping
Underdeveloped
(12countries)
MiddleGroup
(7countries)
Developed
(14countrieS)
All
(27countries)
Averagehourlyearnings
(1963U.S.dollars)
Construction Manufacturing
0.23 0.23
0.42(6) 0.39(6)
1.10 0.90
0.71 0.61
Growthrateofaverage
hourlyearnings (percent)
Construction Manufacturing
2.8(7) 3.9(7)
5.8(5) 4.8(5)
3.9(12) 3.7(13)
3.8(19) 3.8(20)
Note: SeenoteinTable 2.3a.
lopmentdoesprogressandconstruction'sneedfor laborincreases along
withthatofothersectors of the economy,wagesinconstructiontend
to risefasterthanthose inmanufacturing andsoonexceedthem.
Inexaminingotherinputs to theconstructionprocess,it seemsuse-
fultobeginbyconsideringthevalueaddedinconstructionas ashareof
constructionoutput fordifferent levelsofdevelopment. ReferringtoTa-
ble2.1, theratio ofvalueaddedinconstructiontoGDCFinconstruction
is 38percentforthe top income group,56percentforthe secondone,and
48to50percentforthebottomthreegroups. This canpossiblybeex-
plainedbyconsideringthethree stagesofdevelopmentmentionedabove.
In the bottomincome groups, constructionis probablylargelybyex-
patriatefirms, usingareasonablyhighlevelof technologyresultingin
fairlymechanizedproductionand lowlaborrequirementsand usingexpen-
siveimportedmaterials. Theoutcomeis arelativelylowvalueadded.
Inthemiddleincome group,developmenthasprogressedtothepointwhere
constructionis probablybylocalfirmsusingintermediatetechnologies
of amore labor-intensivenaturewithlocalmaterialsproducedbythe
locallydevelopingbuildingmaterials industries. Theresultis avery
highvalueadded. Finally,inthetop income group, laborhas probably
becomeincreasinglycostlyas competitionhaG increasedwithindustria-
lizationand technologyhas advancedtoahighlymechanizedstagewith
lowlaborrequirementsandmostlyprefabricatedbuildingmaterials. The
Theprofilesof constructioninputs
outcomeisaverylowvalueadded.
inatypicaldevelopingand developedcountrygiveninTable 2.6seem
to support thishypothesis.
Table2.6 shows that 60percentof thematerialinput inconstruc-
tionindevelopingcountriesis imported,and30 percentof the total
Inmany
valueof constructionis theseimports and theirtransport.
23
Typicalprofilesofconstructioninputs,inadevelopinganddevelopedcountry,intheearly
Table 2.6:
sixties (grossvalueofproductionis 100units) (source: ref. 23)
Developed
countryb
Developing
countrya
Inputs
Total Domestic Imports Total
Domestic Imports
Inputs fromagriculture,
33
forestry,mining,quarrying,
40 25 8
16 24
manufacturing
Fuel,power,electricity,gas
1
1 -
1 1 2
water
Otherserviceinputs,including
8 5 13 7 1 8
transport
TOTALVALUEOFINTERMEDIATE
33 9 42
25 30 55
INPUTS
Wages,salaries,associates
28 3
43
31 43 -
expenditure
Amortizationofplantandequip-
2 1 3
- 2 2
ment,rentalspaid
2
2 2 -
Indirecttaxesless subsidies
2 -
2 10 10
Othergrossbusinessincome 8
10
TOTALGROSSVALUEOF
90 10 100
63 37 100
PRODUCTION
aTypicalofalessdevelopedcountry ixAfricaorAsiawithapercapitaGNPofabout$100.
bTypicalofaWesternEuropeancountrywithapercapitaGNPofabout$1200. Percapitavalueof
constructionofmodernbuildingsinthis countryis abouttwentytimes thatintherepresentative
developingcountry.
developingcountriesthe valueof importedbuildingmaterials isbetween
5and 8percentof thetotalvalueofimports,whileexpenditureonbuild-
ingmaterials isonlybetween3and5percentofthe GDP (22). Building
materials thus seemtouseupadisproportionateshareofforeign exchange.
Thesefactshavegeneratedsubstantialinterestinthedevelopment of lo-
calbuildingmaterialsindustries and the developmentofconstruction
technologies that could utilize existing local materials. In light of
this, it is of interest tonote thatvalueaddedas ashareof output
varieswidelyforbuildingmaterials,suggestingsomeare likelymore
suitablethanothersfor developingcountries toconsiderestablishing
(see Table 2.7).
Onefinal point toconsiderwhenexaminingconstruction's rolein
the economyis the natureoftheproductitself. Thetypes of construc-
ted facilitiesproducedbyadevelopingcountry arenaturallysomewhat
different thanthose producedby adevelopedone. Table2.8indicates
thatacountry intheearlystagesofdevelopmenttends todevotea
greatershareof Jsresources tonewwork,partlybecausefacilities
inexistencearefewerinnumberand generallynewer,andpartlybecause
theretends tobelittleemphasis on the importanceofmaintenance. A
developingcountry,moreover,tends to concentrateon the construction
ofbasicinfrastructure inagriculture,mining,transportation,commu-
nication,andutilities, generallywiththe government as the client.
Oncethebasicinfrastructureis developed,more effortcanbedevoted
toconstructionfor manufacturing,commerce,and servicesandto the
buildingof dwellings andinstitutionalfacilities,muchofwhichis
privatework(seeTableA2.4forsimilardataonindividualdeveloping
countries andtheU.S.).
25
Table 2.7: Valueaddedasapercentageofoutputforselectedgroups
ofbuildingmaterials (source: ref. 22)
Averagepercentage
valueadded
BuildingMaterial
59
ClayProducts
49
SteelManufacture
45
ConcreteProducts
45
MetalFrames
43
Cement
38
Sawnwood
38
Asbestos-Cement
36
Wood-Based
Sheet
30
Wire,WireProducts
30
Bolts,Nuts, Screws,etc.
29
PaintandVarnish
28
TubesandPipes (Steel)
26
Table 2.8: Typicalprofilesofconstructionoutput,inadevelopinganddevelopedcountry,intheearly
sixties (totaloutputis 100units) (source: ref. 23)
Totalofnew
Sectoracquiringoutput work,repair
andmaintenance
Newwork
Public Private Total
Repairandmaintenance
Public Private Total
Developingcountrya:
Agriculture,fishing,forestry,
mining,quarrying
Manufacturing,includingconstruction
Trade,commerce,otherprivate
services
11
12
5
2.2
2.4
0.5
8.0
9.0
4.0
10.2
11.4
4.5
0.1
0.1
-
0.7
0.5
0.5
0.8
0.6
0.5
Transport, communications,roads,
otherpublicservices
Utilities- gas,electricity,water
Dwellings
Education
Healthandwelfare
24
7
35
3
3
16.0
6.6
0.3
2.1
2.3
-
-
31.5
0.7
0.5
16.0
6.6
31.8
2.8
2.8
8.0
0.4
-
0.2
0.2
-
-
3.2
-
-
8.0
0.4
3.2
0.2
0.2
TOTALS
b
Developedcountry :
100 32.4 53.7 86.1 9.0 4.9 13.9
Agriculture,fishing,forestry,
mining,quarrying
Manufacturing,including construction
Trade, commerce,otherprivate
services
3
14
12
0.6
-
-
1.7
8.0
9.7
2.3
8.0
9.7
0.1
-
-
0.6
6.0
2.3
0.7
6.0
2.3
Transport, communications,roads,
otherpublicservices
Utilities- gas, electricity,water
Dwellings
Education
17
6
40
5
9.5
3.6
13.0
3.7
0.5
0.4
13.0
0.3
10.0
4.0
26.0
4.0
6.7
1.9
3.0
0.9
0.3
0.1
11.0
0.1
7.0
2.0
14.0
1.0
Healthandwelfare 3 2.2 0.1 2.3 0.7 - 0.7
TOTALS 100 32.6 33.7 66.3 13.3 20.4 33.7
aSeefootnoteainTable 2.6.
bSeefootnotebinTable 2.6.
2.2
Onecanthenconclude
that construction
is animportant
sectorof
Itmakessignificant
directcontributions
totheGDPand
the economy.
employment
andless directcontributions
through
its requirements
ofan-
Perhaps
eveamoreimportantly,
however,
construction
cillaryindustries.
Theindustry
playsamajorrolein satisfying
isnotanend initself.
Inthe longrun, tiv,con3truc-
manyphysical
facility
needsof society.
tionindustry
alsohas asignificant
influence
onthe overall
ability
of
industries
to produce
and distribute
goods andservices
for con-
other
In thismannerconstruction
hasamostimportant
impactonso-
sumers.
cialandeconomic
growthanddevelopment.
TheNatureofConstruction
Thecharacteristics
of construction
products,
including
theircus-
tom-built
nature, immobility,
costliness,
complexity,
andcontinuously
changing
technology,
set construction
apart frommanyother industries
Most construction
activity
inbothdeveloping
anddeveloped
countries.
is initiated
bysources
outside
theindustry
itself,
whichenters the
picture
tobeginproduction
onlyafterthecustomer
hasdetermined
his
In this respect
con-
needfor afacility
andhasdecided
toprocure
it.
Onlyafewmanufactur-
struction
is verymuchlikeaservice
industry.
ingindustries,
thosewhichproduce
heavydurable
goods ofaspecialized
nature,
customarily
operate
inthis manner,
and theynormally
produce
otherlines forageneral
tradeto assuresomeconstancy
ofoperation.
Moreover,
the procedure
for thefinancing
ofproduction
inconstruc-
Inmost industries,
production
isfinanced
tionis somewhat
unique.
bytheproducer's
entrepreneurial
capital
orshort-term
bankloans and
Inconstruction,
however,
is independent
of thecustormer
andproduct.
28
theproductionofaspecificfacilityis financed largelybythecusto-
mer,ratherthanbythemanufacturer,byperiodicpayments tothepro-
ducerduringproduction. Furthermore,the sourceof thecustom'r'stem-
porary (shortterm--forproduction)andpermanent (longterm--forpur-
chase)financingis oftenloans securedby the constructedfacility it-
self,whichputs the lenderinapotentiallyinfluentialpositionre-
gardingdesignandconstructionoperations. This factoris particularly
significantinthe caseofdevelopingcountries,wherethe financingof
majorprojectsisoftenlargelybyinternationalagencieswhich can,and
do, putnumerousstipulationsontheir loans, suchas requiringcompeti-
tivebiddingor financingonlythe foreignexchangeportionof thepro-
ject. Finally,thetemporaryloans are oftendependentupon the client's
first obtainingapermanentfinancingcommitment.
Theimmobilityoftheconstructionproduct,whichrequiresfinal
assemblyat the placeofultimateuse,sets constructionfurtherapart
frommanyindustries, althoughas prefabricationincreases someofthese
featureswillchange. Sinceconstructedfacilities cannotbetranspor-
ted,thestability oflocal demandisofparticularimportance. More-
over,stockpilingof constructedfacilities ininventoriesis impossible,
and thus there isnobufferbetweenproductionanddemand.
Thespecializedcharacterof eachfacility, theproject-oriented
natureof production,seasonality,andthe industry'ssusceptibility
toeconomicfluctuationsanddemographicinfluencesallcombinetomake
constructiondemandinherentlyunstable. Publicpolicyoftentends to
augmentthisinstability,andin developingcountries unstableeconomic
andpoliticalenvironmentsand singleshort-termspectacularprojects
furtherexacerbate theproblem. In linewiththis instability,the
29
construction
laborforceis generallyafloatingratherthanapermanent
largely on a project-by-project
are
one, and construction
workers
hired
In
basis,resulting
inlittlejobsecurityandtheneedformobility.
employment
in construction
is often considered
a
developing
countries
transitional
stagebetweenworkinagricultureandinmanufacturing,
theworkermaydividehis time seasonally
between
construction
and
or
agriculture.
Tobetterunderstand
thenatureof construction
itis usefulto
lookat theconstruction
process
itself,
acomplex
procedure
involving
avariety
of stepsandparticipants.
Thiese participants
are traditio-
nallydivided
into threegroups,
theclient,
theprofessional,
and the
contractor
sectors,
anarrangement
whichisquitedifferent
fromthat in
manufacturing
wherethe designer
andproducer
areinasinglesectorand
Theparticipants,
eachgenerally
from
the cliententersonlyat
9
theend.
anindependent
organization
and selected
onthebasisofpriceand/or
qualifications,
aregathered
together
onaproject-by-project
basiswith
littleornoprovision
forinsuring
organizational
compatibility
and
withlittleroomforcontinuity
ofworkingrelationships.
Furthermore,
eachparticipant
is generally
brought
intothe project
onlywhenneeded,
servingtocurtailfeedback
and theconsideration
ofnewalternatives
in
to work
the later stages of the project,
and constraining
participants
they had no part.
of decisions
in which
within the bounds
The owner, who may be an individual,
a corporation,
a branch of the
someotherprivateorpublicorganization,
combines
with
government,
or
the client sector, which
planners,
investors,
and developers
to form
The client's
job is to establish
initiates
and finances
the project.
theneedforanewfacility,
define facilityrequirements
andbudgetary
30
constraints, evaluateand selectthesite,and soforth. Thisprocess
necessarilybecomesmore -- omplicatedwhentheownerisnotanintividual
(whichmeansheisprobablyspendingothers' money), whenheis notthe
user (whichmakes evaluationofuserneedsmoredifficult), orwhenhe
isnotthe operator(whichmayresultinthecostsof operationandmain-
tenancereceivinginsufficientconsideration). Ownerswhobuildalot
andmanypublicagencieshaveanin-housedesignteamoralong-termar-
rangementwithagroup ofdesigners,whilemostothersmust findade-
signer to developandthenacontractortoconstruct theirfacility.
The client'sactivities throughout the remainderof the construction
processprimarilyinvolvetheassessment andapprovalofthe activities
of the otherparticipants,althoughsomeoftheseresponsibilitiesare
oftendelegatedto theprofessionals ontheproject.
The roleof the government inconstructionindevelopingand deve-
lopedcountriesis important andvaried. Governmentaldepartmentscon-
cernedwithconstructionas aclient, suchas transport, communications,
andhealth,education,andwelfare, alongwiththemajorpublicutili-
ties indevelopingcountries, arefrequentlywellstaffedandtechnically
sophisticated,oftenhavingnot onlytheirown designteamsbutalso
theirown constructioncrew'. Thegovernmentofdevelopingcountries
can influence the price and availability of certain materials and thus
the typeandtechnical sophisticationofconstructionbyowningand
operatingmajorconstructionmaterialsmanufacturingplants (e.g., ce-
ment,steel,andglass). Byprovidingpreferentialtreatment toapar-
ticularsectorof the constructionindustry,thegovernment,inits roles
as financierandpolicy-maker,also can substantiallyaffectthe dis-
tribution ofavailablemanpowerintheindustryandincreasetheten-
31
dencyfortechnologicalinnovationsinthatarea. Finally,as aregula-
tor,the governmentcan establishbuildingcodes and relatedregulations
placingexternalconstraints on theindustry.
Thearchitects, engineers, andconsultantsformthe professional
sectorof theindustry. Thearchitect'smajorroleis in thedevelop-
ment of commercial,institutional,
apartment,andpublicbuildings,the
engineer'sinthat ofindustrialbuildings,the structural,electrical,
andmechanicalaspectsof allotherbuildings,andheavyandhighway
Themajoractivities oftheprofessionals
encompass the
construction.
following: (1)ascertaining
theneedsanddesires of theclient, (2)
(3)drawing up plans and specifica-
developing a satisfactory design,
tions, (4)aidingin the selectionof the contractor,and(5)overseeing
certain work is performed in accordance with the
the project by making
construction contract documents while serving as a liaison between the
ownerandcontractor. Theprofessional's
legaltie to theowneris ge-
nerallyanegotiated contractwherebythe professionalis selectedon
thebasisofhis qualifications and thepricenegotiated,althoughprice
sometimesplaysaroleinselection.
Theprofessionalgroup is generallythe leastadvancedsectorof
Muchconstruction
theconstructionindustryindevelopingcountries.
is carriedoutwithoutaprofessionaldesignerperse, andthepublic
sectoris oftentheprincipalorevensoleemployerofsuchprofessio-
nals. Developingnations thus tend torelyratherheavilyonaidfrom
Designsbyexpatriateprofessionals,
developedcountriesinthis area.
however,areoftenpoorlysuitedto locallyavailablelabor,materials,
equipment,and constructionmethods. Unfortunately, this isnot apro-
blemuniquetodevelopingcountries;asimilarsituationexists in the
32
developedcountriesdueto the separationofdesignandproductionin
construction. This lackof collaborationbetweenthedesignerandcon-
tractorfurtherslowsthe introductionofnewmaterials,process&s,and
equipmentanddoes littletominimizethe costof thefacility. Itis
becomingmorecommon,however,forthecontractorto beconsultedbefore
thedesignis completedasdesigners and ownersbeginto realizewhat
hecan contribute. Furthermore,design-constructfirms, design-construct
or turnkeycontracts, and constructionteams formedduringtheinitial
stages ofaprojectand composedof theowner,designer,and construction
manager (someonewhohas bothmanagementexpertiseandconstructionknow-
how)arebeginningtobeusedandholdsomelimited promiseforhelping
to alleviatetheprobleminbothdevelopingand developedcountries.
Whatdevelopingcountriesneedinaddition,of course,isto cultivate
localprofessionalexpertise.
Thecontractor isprimarilyaresourcemanager,wheretheresources
includemen,materials,equipment,money,andtime. The contractorsec-
tor then,whoseprimeresponsibilityistheassemblyoperation,ismade
up of generalcontractors,specialitycontractors (subcontractors),con-
structionworkers, andmaterialandequipmentmanufacturersandsuppliers.
Thegeneralcontractormustbeskilledbothinthetechniques of construc-
tionandin themanagementof constructionoperations. Heis responsible
forthe planning,coordination,andsupervisionof the entireproduction
process and for thecompletedfacility's adherenceto theprojectedplans
andspecifications. Thegeneral contractor,whoisusuallytied tothe
ownerbymeans of acompetitivelybidcontract, generally delegatesthe
morespecializedactivitiestosubcontractors. Theamountofworksub-
contractedvariesamongcountries andprojectsalthoughit isgenerally
33
fairlyhighinthedevelopedcountries. Subcontractorsareusuallytied
tothegeneral contractorthroughacompetitivelybidcontract,although
systems ofseparateandseveralcontractsdoexistwhereallpartiescon-
tractdirectlywiththeownerandthereisnomaincontractor.
Thepracticeof competitivebiddingfor constructioncontracts is
widespread,particularlyin thepublic sector,inbothdevelopedandde-
velopingcountries (seeTableA2.5). Averynegativefeatureof this
procedure,especiallyindevelopingcountries, is thatitnotonlyforces
the separationofdesignandconstructionbutalsoessentiallyforces
the contractortochooseatechnologydictatedbydesignratherthanone
suitableto local conditions. Moreover,competitivebiddinghas really
onlyonecriterion,price,andqualityandtimeshouldalsobeimportant
to theowner. Competitivebiddingputs thecontractorinanadversary
relationshipwiththe owneranddesigner; itmakes continuousworkingre-
lationshipsamongparticipantsessentiallyimpossible; and itdoeslit-
tleto encourageacontractortobuildupafavorable reputation,foron
thendxtjobhewillbeselectedonlyifhehasthe lowestbid. Some
of theapproachesmentionedaboveforalleviatingtheproblemof sepa-
rationof designandconstructionmaybeexecutedwithcompetitively
bidconstructioncontracts,whileothersrelyonnegotiatedones.
Negotiated contractsare frequentinthe privatesectorand arege-
nerallyusedinallcountries formaintenanceandrepairworkwhichcan-
notbeprescribedandquantifiedwithsufficientprecisioninadvance,
andforhighlyspecializedoperationswherethereisnocompetition. The
difficultywithnegotiatedcontracts inthepublicsectorlies insafe-
guardingthepublic interestand preventingfavoritismandcorruption.
Withfewexceptions,thedevelopingcountrieshaveadoptedthemosttra-
34
ditionalandofteninhibitingcontractualprocedureswhichunfortunately
presupposealevelof administrativeand technicalcompetence generally
lackinginthesenations.
In all countries thebasicunit of the constructionindustryis the
individualfirm. Inmanydevelopedmarketeconomies the industrycon-
sistsofan agglomerationofgenerallysmalland specializedfirmswhich
servealocalmarket,lackverticalintegration,relyonlow capitaliza-
tion,dolittlemassproduction,exhibit littleinthewayof economies
otscale,andaretransient. Thereis, however,sometrendaway from
thesecharacteristicswiththe increasingroleofthe corporate formof
organizationand the formationof conglomeratesintheindustry. In
fact,thelargerand less specializedfirms do avery disproportionate
shareofthework,employaverydisproportionate shareofthe labor
force,andaremost commonlyinternationalin theiroperations. The
datagiveninTablesA2.6throughA2.9andFiguresA2.2andA2.3for
various developedcountriessubstantiate severalof these observations
abouttheconstructionindustry.
Whilefewstatisticsexistontheexactnatureof construction
firmsindevelopingmarketeconomies, the generaltrendseems to beto-
wardthe fragmentationapparentinthedevelopedmarketeconomies. In
most developingcountries afairlysizeableportionofconstruction,
the traditionalsectorconcernedwithsmallprojects inruralareas,
iscarriedoutinthenon-monetarycategoryofthe economy,andthus
littleisknownaboutit. Theremainingconstructionactivity,largely
infrastructuralprojectsand urbandevelopment,isexecutedbymeans
whichvarywiththelevel of development.
Fivestagescan usefullybeoutlinedinthe developmentofthis
35
partof theconstructionindustry: (1)foreignfirms domostof thework,
sincetheyarethe onlyoneswithenoughexpertisetohandlelargerpro-
jects; (2)localsubcontractors develop; (3)smalllocalcontractors
executethesmallerprojects; (4)localcontractorstakeovermostlocal
work,regardless ofmagnitude,jointventuringwithforeignfirms as ne-
cessary; and (5)local contractorsgo abroad. The five-stagedevelop-
mentprocesshas alreadyoccurredinmanyLatincountries, is nowhap-
peningin theFarEast, andwillsoon takeplaceinAfrica (2).
It isnaturalthat thedevelopingconstructionindustriesshould
followthetechniquesandorganizationalmethodsemployedinindustria-
lizedcountries,butthat this isbestforthedevelopingcountries is
opento serious question. Someof thesparsestatistics onthe construc-
tionindustryindevelopingcountries ofparticularinterestto thispa-
peraregiveninTablesA2.10 throughA2.14.
The assemblyp~iase of the constructionprocesscan itselfbebroken
downinto severalsteps, eachofwhichinvolvesaratheruniquemixof
labor,equipment,andmaterials,andhas acertainamountof technolo-
gicalflexibility. Forexample,inbuilding,the foundationandgrading
phasemaybeahighlymechanized,capital-intensiveprocessrequiringa
fewoperatingengineersand other fairlyeasily-trainedsemi-skilled
labor; or,atthe other extreme,itmaybeafullymanual,labor-inten-
sive activity requiring large amounts of minimally-trained unskilled
labor. The same is true with various aspects of heavy and highway con-
struction. Electricaland mechanicalwork,ontheotherhand,although
alwayshighlylabor-intensive, requireshighlyskilledlaborobtainable
onlythroughextensivetraining. Theplanninganddesignphasesplay
animportantpartindeterminingthetechnologicalnatureof the assem-
36
blyoperation. Forexample,adesignrequiringasinglelargedamcan
beconstructedonlyinahighlycapital-intensivemanner,whereasone
requiring a series of smaller dams might better employ more labor-inten-
siveprocedures.
The fractionof costallocated toeachspecializedprocess inthe
assemblyphasenaturallyvaries fromprojecttoproject,withatypical
breakdownfor buildingcost intheU.S.giveninTable2.9aandbreak-
downs forhousebuildinginvariousAfricancountries inTable2.9b.
The allocationofcosts inthese two regionsseemsreasonablyalike,ex-
ceptAfricancountries tend to investlessin electricalandsanitary
workthandoestheU.S. possiblybecauseofdifferencesindefinition,
facilitiesprovided,andunit costs. This assemblyprocesstypically
consumesup to 90percentoftotal initialinvestmentandconstitutes
the lengthiestphaseof the constructionprocess.
Themajorcomponents ofcostinthe assemblyoperationarelabor,
materials,equipment, andoverheadand profit,the mixofwhichvaries
notonlyamongthesteps of the assemblyprocessbutalsoamongtheva-
rious types ofconstruction. The allocationofthesecosts amongdif-
ferent types ofconstructionintheU.S. givenin Table2.10aindicates
that thedistributionof costs isquitesimilarforresidentialandnon-
residentialbuildingwithmaterialsalittlehigherinnonresidential,
overheadandprofit alittlehigherin residential,andequipmentvery
smallinboth. Tnpublicworksconstruction,labor'sshareiscloseto
thatinallbuildingconstructionandoverheadandprofit'sshareis
closeto thatinnonresidentialbuilding,but the contributionof ma-
terials ismuchless and of equipmentmuchmorethaninbuildingcon-
struction. Breakdownsofconstr-ictioncosts inKoreaandhousebuilding
37
Table 2.9a: Typicalbreakdownoftotalconstruction
costbyelements
ofthebuildingintheU.S.(source:ref.13).
Process
Percentage
ofCost
5-15
Foundationand grading
25-55
Erectionandframing
20-35
Electricalandmechanicalwork
15-35
Finishing
38
Table 2.9b:
ref.
BreakdownofcostbyelementsofbuildingforhousinginAfrica
a
(percentages)(source:
20)
Structural Finishesandequipment
Sanitaryand
Sub- Super-
Doorsand
Country structure structure Subtotal windows Finishes electrical Subtotal
installations
Singlestory
construction:
Ethiopia 5.0 42.8 47.8 14.5 27.7 10.0 52.2
Madagascar 10.0 56.4 66.4 6.8 16.4 10.4 33.6
Mauritania 6.5 43.0 49.5 8.3 28.0 14.2 50.5
Mauritius 11.8 68.0 79.8 12.5 7.7 - 20.2
Senegal 6.0 43.0 49.0 11.9 26.0 13.1 51.0
UpperVolta 7.8 45.1 52.9 11.8 19.0 16.3 47.1
Multi-story
construction:
Cana 14.0 39.5 53.5 11.2 25.8 9.5 46.5
Kenya 11.1 52.1 63.2 10.5 19.6 6.7 36.8
Libya 10.3 39.5 49.8 12.6 25.5 12.1 50.2
UAR 10.2 41.2 51.4 17.3 19.2 12.1 48.6
aSource(copyright1965) givesnodate.
bytypeof
Percentage
distribution
of construction
costs
Table
2.10a:
ref.
1,32)
construction,
intheU.S.
(source:
Overhead
a
On-site
Materials
Equipment
Typeofconstruction
andyear
andprofit
Tpwages
Federally
aidedhighways
1971
b
25.9 45.1
c29.0
29.4c
-c
45.0
25.6
1970
-27.4
24.8
47.8
1967
12.6
11.1
26.0
50.3
1964
11.0
24.7
52.6
11.7
1961
13.5
23.9
50.6
12.0
1958
Elementary
&secondary
schoola
1.0
19.0
25.8
54.2
1964-65
1.4
17.8
26.7
54.1
1959
Hospitals
1.3
18.7
29.6
50.4
1965-66
17.4
28.2
53.2
1.2
1959-60
Public
housing
43
.4d
d
24.2
32.4
1968
2.5
17.0
35.5
45.0
1959-60
housinge
Private
single-family
0.9
35.3
20.4
43.4
1969
29.7
1.0
22.1
47.2
1962
Sewerworks
20.0
11.2
24.3
44.5
1962-63
lines
16.0
8.2
26.6
49.2
1962-63
plants
Civil
works
(Corps.
ofEng.)
19.7
26.0
35.0
landoperations
1959-60
19.3
25.5
32.3
17.3
24.9
1959-60
dredging
Federal
office
buildings
1959
29.0
51.4
1.9
17.7
(continued)
40
(Table
2.10acontinued)
overhead
a
-and site
Materials
Equipment
and profit
Typeof construction
year wages
Nursing
homes
d
19.5
1965-66
25.6 54
.9d
Collegehousing
16.5
29.3
52.6
1.6
1960-61
alncludesoff-sitewages,fringes,construction
financingcosts,
inventory,
andotheroverhead
andadministrative
expenses
aswellas
profits.
bpreliminary,
fromref.
CEquipmentincludedinoverheadandprofit.
dEquipment
includedinmaterials.
eConstruction
costsincludesellingexpensesinadditionto construc-
tioncontract
costs (selling
expenses
were2.9percent
in1969).
41
costs in various African countries are given in Tables 2.10b and 2.10c,
respectively.
InKoreaheavyconcentration
onpublicworks construction
(nearlyhalf ofallconstruction)
partly accountsforthe lowshareof
materials
and
1
Lighshareofoverheadandprofit (assumingequipment
is
includedinthe lattercategory).
Further,thelocalindustryappears
tobequitewelldeveloped,
and thus ratherlabor-intensive
methodsand
As forAfrica,muchworkis stilldone
local materials arelikely used.
byexpatriates
whomayusetherelatively
cheap locallabor (accounting
for the low labor costs) or who may have to import labor (accounting
for
thehighlaborcosts). Materials
are largelyimportedand thusexpen-
Overheadandprofit,ontheotherhand,are relatively
lowin
sive.
somecasesbecausecertainAfricanprojectsmaybecarriedout bydirect
laborwithnorecordedprofit.
Whilethe contribution
of laborto construction
cost is simiarin
varioustypes ofconstruction,
the typesof laborneededarequitedif-
Table2.11whichgivesbreakdowns
bytrade ofconstruction
workers
ferent.
invarious developedcountriesshows thatskilledworkerscompose about
Table2.12 then givesbreakdowns
50percentof the totallaborforce.
of theman-hoursof differentworkersrequired forvarious types nfcon-
Thetotalman-hours
requiredforeachofthefour
struction
in theU.S.
types of construction
arenot too different,
norare theman-hours
for
otherindustries
and for the construction
industryas awhole (although
federal officebuildings
aresomewhathigher);butthere aresignificant
differences
inthebreakdowns
of man-hours requiredwithintheconstruc-
tion industry,
particularly
onthe site. Therequirement
for construc-
tiontrades inbuildingconstruction
isnearly twice thatinpublicworks
construction;
abouthalfof that inpublicworksis foroperatingengi-
42
Table 2.10b: CostcomponentsofconstructioncontractscompletedinKorea (source: ref. 9)
Costcomponent
1966 1967 1968 1969 1970
Completedcontracts (millionwon) 41,441 64,112 116,918 169,723 185,318
(percent) (100.0) (100.0) (100.0) (100.0) (100.0)
Materials(millionwon) 17,920 27,813 46,013 64,214 73,827
(percent) (43.2) (43.4) (39.4) (37.8) (39.8)
Wages(millionwon)
11,864 18,052 32,147 46,241 52,075
(percent) (28.6) (28.2) (27.5) (27.2) (28.1)
Subcontracts (million won) 1,739 2,559 6,166 10,045 12,238
(percent) (4.2) (4.0) (5.3) (5.9) (6.6)
Overhead(millionwon) 4,444 7,172 17,128 25,172 21,512
(percent) (10.7) (11.1) (14.6) (14.8) (11.6)
Grossprofits (millionwon) 5,474 8,515 15,464 24,050 25,666
(percent) (13.2) (13.3) (13.2) (14.2) (13.8)
Note: Detailsmaynotaddto totalsduetorounding.
Table 2.10c:
Breakdown
of cost of housebuilding
byelements
Of Cost.
20)
forAfricaa
(percentages)
(source:
ref.
on-site
labor
oveed
Conty
Materials
17
20
63
Ethiopia
5
70
25
Kenya
14
39
47
Ghana
20
32
48
Libya
9
25
66
Madagascar
12
36
52
Mauritania
18
24
58
Senegal
15
25
60
UAR
27
UpperVolta
42
31
aSource (copyright1965) listsnodate.
44
Table 2.11: Breakdownbytradeofconstructionworkersinvariousdevelopedcountries (aspercentage
oftotal) (source: ref. 27)
U.S. Germany Sweden Netherlands Czechoslovakia
(1960) (Fed.Rep.) (1960) (1962) (1962)
Occuatin (160)(1963)
Skilledworkers 57.5 44.1 53.4 - 47.7
Masons 5.1 20.7 - 16.8 18.1
Carpenters 19.5 7.8 20.7 6.0
Concretors 0.9 1.6 - 6.4 5.3
- -
Electricians 8.0 - 6.5
Operatorsofearth-
movingmachines 4.7 ....
Painters 8.8 6.7 9.1 5.5 7.2
Plumbers 7.3 - 8.5 - 4.4
-
Craneoperators 3.0 7.0 -
Unskilledlaborers 17.4 35.3 23.1 - 29.4
Others 25.1 20.6 23.5 20.0 22.9
con-
Table 2.12: Distributionofman-hoursperthousanddollarsof contractcostforvarious typesof
structionintheU.S., byindustryandoccupation(source: ref. 15, 31, 32, 33)
Industryandoccupation
Totalman-hours
Construction
industry
On-site
Supervisory,professional,
technicalandclerical
Construction
trades
Operatingengineers
Carpenters
Electricians
Plumbers
Bricklayers
Ironworkers
Painters
Plasterers
andlathers
Cementfinishers
Othertrades
Semi-skillede
Unskilled
Off-site
Privatesingle
familyhousinga
(1962)
202
84
72
2
53
1
25
2
4
4
-
7
1
3
6
17
12
Federaloffice
building
(1959-1960)
227
107
97
5.8
58.4
2.3
12.2
8.8
8.5
5.0
3.3
2.0
3.8
2.0
10.5
1.3
31.5
10
Sewerworksc Civilworks-
(1962-1963) ('959-1960)
(1959-1960)
208
221.9
89
91.7
85
84.5
9.3
9.5
33.7
30.5
14.7
20.4
5.4
6.5
0.1
1.3
0.1
-
2.1
1.4
2.6
.6
0.1
1.6
-
1.0
1.1
4.0
1.2
20.5
6.3
21.3
38.1
7.2
(continued)
(Table 2.12 continued)
Privatesingle Federaloffice c Civilworks-
Industryandoccupation familyhousinga buildingb Sewerworks landoperations
(1962) (1959-1960) (1962-1963) (1959-1960)
Otherindustries 118 120 130.2 119
Manufacturing 61 79 72.6 53
Wholesaletrade, transportation,
services 31 29 41.2 47
Mining,allothers 26 12 16.3 19
Note: Detailmaynotaddto totalsduetorounding.
a
Reference 32.
bReference15.
cIncludessewerlinesandplants,ref.33.
dIncludeslevees, dams,piledikes,bankstabilization,localfloodprotection,andmiscellaneousother
projects,ref. 31.
eIncludes truckdrivers,oilersandgreasers,powertooloperators,andpowdermenandblasters.
fIncludeslaborers,helpersandtenders,pipelayers,deckhands,watchmen,andflagmen.
neers,whoareeasiertotrainthanarethemorehighlyskilledtrades
requiredforbuildingconstruction. Moreover,theuseofsemi-skilled
andunskilledlaborinpublicworksconstructionismore thantwicethat
insingle-familyhousingandnearlyoneandahalftimes thatinfederal
officebuildings. Itshouldalsobenotedthat as thesemi-skilledand
unskilledman-hoursriseso do thesupervisory,professional, technical,
andclericalman-hours. Whileth-seproportionsmaynotbeexactlythe
samefordevelopingcountries, the trendsmaybeexpectedtobesimilar.
Formanydeveloping countries, therefore,amajordifficultyinbuilding
constructionappears tobeashortageofskilled labor; inpublicworks
construction,theproblemseemstobeashortageof supervisoryperson-
neland,to alesserdegree,ashortageofskilledlabor.
The time trends of the allocationsofcomponent costs forvarious
types ofconstructionin theU.S. in Table2.10ashowthat labor'sand
equipment'ssharesare generallysteady,whilethat ofmaterialsis de-
cliningand thatofoverheadandprofitrising. Thetime trendsofman-
hoursrequiredfor constructionofhighwaysandsingle-familyhousing
intheU.S. inTables 2.13aand 2.13b,respectively,showthatman-hours
are declining. Itthus seems that thedeclineinman-hourshasbeen
offsetbyincreasingwages.
In the developedcountries, increasesinthecost of laborrelative
tootherinputs (seeFigure 2.4)haveledcontractorstosearch for
laborsubstitutes,perhaps throughtheuseofmoreproductiveequipment
oramorecapital-intensivemethodof constructionwhichreduces on-
sitelaborrequirements. Forexample,trends towardindustrialized
housingandprefabricatedcomponents inbuilding,andthe substitution
ofveryhighlandfills forbridgesinroadconstructionservetore-
48
Table 2.13a: Distributionofman-hoursperthousanddollarsofcontract
costfornewfederallyaidedhighwayconstructionintheU.S., in1967
dollars,byindustryandoccupation,forselectedyears(source: ref.1)
Industryand occupation 1958 1961 1964 1967 1970
a
Totalman-hours 221.5 200.6 180.9 165.8 157.4
Constructionindust 100.5 89.4 80.4 78.8 74.6
On-site 91.1 81.0 72.4 70.1 66.2
Executive,administea-
tive,supervisory 9.5 8.3 7.0 na 4.1
Skilledc 34.8 31.7 31.8 na 31.1
Semi-skilledd 19.9 16.8 14.8 na
31.0
Unskillede 27.0 24.2 18.7 na
Off-site 9.5 8.4 8.1 8.7 8.4
Otherindustries 120.9 111.3 100.5 87.0 82.8
Manufacturing 61.9 58.6 48.9 48.4 46.1
Wholesale trade, trans-
portation,services 36.9 33.0 31.9 27.9 26.7
Mining,allothers 22.2 19.6 19.7 10.6 10.1
Note: Detailmaynotadd to totalsdueto rounding.
apreliminary.
blncludestechnicalandclericalpersonnel.
clncludesheavyequip-mentoperators,skilledcraftsmenofjourneyman
grade,andworkingforemen.
dlncludesapprentices,on-the-job trainees,andoperators oftrucks
larger than1.5 tonsand tractorswithmorethan20 horsepower.
eIncludeshelpers, tenders, laborers,andoperators oftrucksof 1.5
tonsorlessand tractorsof20 horsepoweror less.
49
Table 2.13b: Distributionofman-hours forconstructionofnewprivate
single-familyhousingintheU.S., byindustryandoccupation(source:
ref. 32)
Industry
and occupation
Totalman-hours
Constructionindustry
On-site
Supervisory,professional,
technical,clerical
Skilleda
Unskilledb
Off-site
Otherindustries
Manufacturing
Wholesaletrade,transporta-
tion,services
Mining,allothers
Man-hoursper Man-hoursper$1000
100 squarefeet of construction
cost
1962 1969 1962 1969
238 217 202 137
99 98 84 62
85 82 72 52
3 2 2 1
62 58 53 36
20 23 17 14
14 6 12 10
139 119 118 75
72 65 61 41
36 32 31 20
31 22 26 14
Note: Detailmaynotaddto totals dueto rounding.
aIncludesallcommonskilledtrades.
blncludeslaborers,helpers,andtenders.
50
Figure2.4: PriceindexesoffactorsofconstructionintheU.S. (source:
ref. 4)
10
P Zt4L :aj90-'I96 "00
i ,., (AHO j^l.. P/zj o) CoMIT.W-JC10J / Q~gPM T.
" WHO ?v.- OF c.OUTE.LXfI'O, M g'I'E'A.S i-~AL~ ice
.'
60
YEA5
51
ducelaborrequirements.
Referring
toTable2.13,however,
itisimpor-
tant tonotethatthe majority
ofthe savingsinman-hours
hasbeenin
Withinthe construction
indus-
the industries
otherthan construction.
try,forhighwayconstruction,
themajorsavinghasbeeninunskilled
mdsemi-skilled
man-hours,
although
theoppositehasbeentrueinsin-
is that reduc-
gle-family
housing construction.
The imiplication
of this
tionof construction
man-hours
isperhapsnot particularly
feasible.
In
any case,it seemslikelythat the techniques
currently
beingdeveloped
in the industrialized
countries
maynotbeespecially
suitableforuse
in developing
countries
due to theirincompatibility
withlocal condi-
Rather,someof theolder techniques
relyinglessoncapital-
tions.
intensive
methods andmoreonlabor,particularly
unskilled
andsemi-
skilledlabor,mightbemoreappropriate.
52
CHAPTER 3
ISSUES IN THE DEVELOPMENT OF THE
CONSTRUCTION INDUSTRY IN EMERGING NATIONS
Inconsideringthedevelopmentoftheconstructionindustryin
emergingnations, this chapterbeginsbydeterminingwhatconstruction
capabilitiesareavailableandwhatareneeded. Meansofalleviating
theseneedsare consideredandevaluated.
Constructionnormally fallsintooneof two generalcategories--
(1)repetitiousandroutineactivities for fulfillingvolumeneeds,
suchas highwaysandbridges,manufacturing,commercialand institu-
tionalbuildings,andsingleand multi-familyhousing;and (2)s ecia-
lizedandsophisticatedactivitiesfor fulfillingoneortwo-timeneeds,
such ashugedamsandpowerplants. This chapter focusesprimarily
uponthe firstgroupofactivities, for itis herethatanindigenous
constructionindustryshouldfirst develop. Thesecondgroupofacti-
vities,requiringhighlyspecializedskillsandsophisticatedtechno-
logy,willcontinue tobeperformedbymulti-nationalconstruction
firms, althoughbytheirworkwithlocalpeopleandfirms someofthis
expertisemaybepassedonto the developingindigenousindustry. Con-
siderationoftheroleofmulti-nationals inthis areais treatedin
Chapter 4.
Thedevelopmentof constructioncapabilitiesis discussedherein
termsofthe fourmajorstagesofthe constructionprocess-planning,
design, construction, andmaintenance. Finally,theenvironmentwith-
inwhich the industryis to developis considered.
53
3.1 Planning
There are two levels of planning associated with the construction
industry; oneis concernedwithnationaldevelopmentplans, theother
withplanningat the project level. Thissectionofthereportdeals
withplanningassociatedwithaparticularproject. Theclientsector
is the onlyparticipantinvolvedinthis phase,andiftheowneris,
forexample,acorporationorapublicL4gency, itprobablyhasits own
in-houseplanningstaff. Themanpowerand capitalrequirementsfor
this stagearethusrathersmall,buttherequiredmanpowermusthave
certainhighlytechnicalcapabilities.
Planningoffacilityconstructioninvolvesassessmentoftheneed
for anewfacility,studyofuserrequirements,determinationofbud-
getaryconstraints, feasibilityand economicanalyses,siteevaluation
andselection,and so forth. Thelevelofsophistication,difficulty,
andcompletenessofsuchanalysesvarieswithprojecttype, size,and
owners. Thisplanningshouldreviewthesuppiyofanddemandforcer-
tainconstructioncapabilitiesin theformofavailabledesigners,con-
tractors, capital,labor,materials,andequipemnt. Moreover,suchpro-
jectevaluationshouldconsidervariousalternativesolutions touser
needs,appropriatefactorprices,associatedindirectand secondary
effects,social and politicalaspecta,and compatibilitywithnational
priorities suchas employmentcreatiou, income re-distribution,and
output generation. Suchconsiderations arealsoimportantinthese-
lectionofthe design,technology,andcontractor. Althoughstandard
planninganalysesare generallyperformedindevelopedcountriesand
tosomeextent indevelopingcountries, inclusionof theaboveadditional
54
considerations is relativelyrareinbothdevelopedanddevelopingcoun-
tries,exceptinafewpublicworksprojects.
Suchplanninganalyses requirethe developmentofaratherexten-
siveinformationbaseontheconstructionindustry,onparticulartypes
ofprojects,and onvarious socio-economicaspects ofthecountry. More-
over,developmentof localcapabilitiesfordoingplanninganalyses is
ofimportance,sinceforeignconsultantshave thusfarlargelybeenre-
liedupon forsuchanalyses.
The use ofthecomputermayhelptosubstantiallyincreasethe ca-
pabilityandproductivityoflocalplanners. Newcomputerizedtechni-
ques ofinformationprocessinghave, forexample,allowedtheindustry
inbothdevelopedanddevelopingcountries to applytheprinciplesof
systems engineeringintheevaluationof alternativestrategies for
large-scaleprojectssuchas regionalwaterdistributionand transpor-
tationnetworksystems; andthe furtheruseof computersin this area
bylocalplannerscertainlywarrantsconsideration. Nevertheless, some
localskillsstillneedtobedeveloped,and itwillprobablybeneces-
sary for the developingcountriesto continuetorelyforawhileon
foreignconsultants,althoughtheymaybesomewhatinsensitiveto local
conditions. Inaddition,extensiveresearchintoappropriateanalysis
techniques and computerapplicationsis necessary.
Financing is animportantpartof theplanningphasebecauseof
thecostlynatureof constructedfacilities. Thereare twobasictypes
ofcapitalinvolvedinconstruction: (1)the owner's fundsusedtofi-
Itshouldbenotedthat the discussion and associated data on finan-
cingdo notreflect therecentdevelopments intheoil-producing coun-
tries.
55
nancetheprojectduringtheperiodbetweenitsinceptionandthetime
itbeginstoyieldits socialandeconomicbenefits,and (2)thecontrac-
tor's capitalwhichbridgesthe gapsbetweenpaymentsbytheownerand
purchasesofmaterialsandequipment. Thefirsttypeofcapitalis of
major concern here; the second is discussed in Section 3.32.
Theinterest paidoncapitalofthe firstsortmayaddfrom5to
10percent to the capitalcostofmanyprivatebuildingprojectsdepend-
inguponprevailinginterestrates, financialarrangements,andfiscal
conventions (48). Forexample,debt service,principaland intereston
the mortgage, andFHAinsurancepremiumsmadeup58.7percentofthe
ownership expenseofnewFHAhousesintheU.S. in1966 (62). Whenthe
government istheclient,however,thesemattersare oftenmaskedby
the publicbudgetary conventionsand the fact thatmarketinterestrates
areseldomchargedeuringthe periodbetweenaproject'sinceptionand
the time itbeginstoyieldeconomicreturns.
The details ofthe financingprocessvary,ofcourse,depending
uponthe type,size,and locationoftheconstructionproject,thepar-
ticipants,economic conditions,andso forth. Forexample,intheU.S.
inthe caseofprivatesingle-familyhomes, financingis generallyin
theformofconstructionloans andmortgages; inthecase ofprivate
nonresidentialbuilding,financingmaybebymeansofinternalorex-
ternal funds aswellasbyloans securedbytheproperty. In the case
ofpublicconstruction,financingis generallybymeansofmunicipalor
federalbonds, current revenues,orfederalaid. In theU.S. andother
industrializedcountriesfinancingis usuallythroughdomesticsources,
whileinthedeveloping countriesboth domesticandforeignfunds are
used. InAfrica,forexample,as inmanyotherdevelopingareas,a
56
largepartofprivateinvestmentis financedbyloansgrantedbyvarious
financialinstitutions,andonly asmallpartis financedbypersonal
savings and foreign funds; public sector projects, on the other hand,
are often heavily dependent or foreign funds for financing (41).
Construction products re- re high capital investment, something
whichis inscarcesupplyinmostdevelopingcountries. Infact, con-
structionmakesup roughly 50 to60 percentofgross capital formation
and55 to 65 percentofgross fixedcapitalformationinbothdeveloping
anddevelopedcountries; thefigures,however,tend to fluctuateconsi-
derablydependinguponthe country'sparticularareaof interest (see
TableA3.1a). Theshares ofgross capitalformationandofgrossfixed
capital formationinGDP,however,aregenerallyless inthedeveloping
countries thanin thedevelopedonesdue to theshortageofcapital,al-
thoughtheirgrowth ratesaregenerallyhigherin developingareas than
indevelopedonesdue to theirimportanceineconomicdevelopment (see
TableA3.1). Evcnso, gross domesticsavingsindevelopingcountries
arenot generallysufficienttofinancethe limited amountof gross do-
mesticcapitalformation, andthus someforeign funds arealsogenerally
necessary (seeTableA3.2). Foreignsourcesof finance,moreover,are
alsoimportant interms ofsupplementingthe availableforeignexchange
reserves and thus increasingthe import capacityofdevelopingcountries.
The domesticresourcesavailableforcapitalformation,inparti-
cularin the formofconstructedfacilities,caninthe finalanalysis
come onlyfromnationalsavings, comprisedofhousehold,corporate, and
governmentsavings (seeTableA3.3). Mobilizationofnational savings
inthe directionof capital formationdependsuponavarietyoffactors,
including: (1)attitudeofpeople towardimmediateversusfuturecon-
57
sumption; (2)availabilityofappropriateinstitutionalarrangements
andknowledgeaboutthem; (3)activitiesof centralbanks,inparticu-
larinformingthemonetarypolicy (TableA3.4suggests interestrates
in developingcountries fluctuatemuchmore thanindevelopedones); (4)
willingnessofcorporationsto plough-backprofitsorinvestotherwise
soas to increasecapitalformation; and (5)fiscalandtaxationpolicy
(42). Effortsto influencethese factorsso as to increaseandchannel
savings intheappropriatedirectionforcapitalformationmustbeun-
dertakenindevelopingareaswherethelevelofnationalincome is still
low.
Householdsmaydirectly contributetheirsavings tocapitalfor-
mation through investment in housing or other real estate. It has also
been a common practice In developing countries to save privately, often
byhoardingcash, ratherthan to save throughwellorganizedandmanaged
institutionswhich caneffectivelyutilize themoney. Someoftheapp-
ropriateinstitutionsintowhichhouseholdsavingsmightbechanneled
include: commercialbanks, savingsbanks,life insurancecompanies,pen-
sion funds, provident trusts, investment trusts, mutual funds, and the
stock exchange.
Corporatesavingsmightbedirectlyusedtofinance theexpansion
or improvement of existing industries or the establishment of new ones,
ormayalternativelybechanneledintosomeof theinstitutionsinthe
capitalmarketmentionedabove. Suchfunds may comefrominternalsour-
ces suchas retainedearningsorundistributedprofits, orfromexternal
sourcessuchas thesaleofcorporatebonds.
Publicsavingsare the third and final sourceofnationalsavings.
Indevelopingcountries, the government generallyhastheresponsibility
56
ofprovidingthe generalinfrastructureandinstitutionalfacilities,
thedomestic f
4
nancingofwhichwillbethroughpublicsavings. The
sourcesofthesesavingsinclude: (1)budgetsurpluseswhichmaybede-
rivedfromtaxrevenueand otherreceiptsless expenditures,withtax
revenuebeingthemainsourceof income; (2)governmentdowcesticbor--
rowingfromthecapitalmarket through treasurybills and government
bonds; and (3)profitsgeneratedbygoveramententerprises.
Twootherinstitutions,industrialdevelopmentbanksorindustrial
developmentfinancecompanies,and industrialdevelopment corporations,
warrantsomecommentwithregardto domesticfinancingof industrialde-
velopment. Thefirst are financialinstitutionswhichspeicalizei1i
industrialdevelopmentandmaybepubliclyorprivatelyowned. They
providefinancialassistanceto selectindustrialinvestmentprojects,
usuallyiccompaniedbytechnicalassistance,and oftenhelp to channel
capitaland experttechnologicalknowledgefromabroadto domesticpro-
jects. Industrialdevelopmentcorporations,on theotherhand,are
wholly-ownedgovernment 'orporationsestablishedto setup industries
entirelythrough theirownresources. Theygenerallyexecuteand ope-
ratethe industries forsome time, and oncean industryhas demonstrated
profitableoperations, theydisinvestinfavor ofprivateenterprise.
Theflow of foreignresources intodevelopingcountriesmaybein
the formofofficialaid eitherchanneleddirectlyfromthedeveloped
tothe developing country (i.e., bilateralaid)orchanneledthrougha
multilateralinstitution,orin theformofprivate aid (SeeTables3.1
andA3.5). It is ofinterest tonotethatalthough the overalltrend
ofaidto developingcountries is growing,the averageofficialshare
is decliningwhiletheprivateshareis climbing. Therelativedistri-
59
thedevelopingcountriesandmultilateralagenciesfromvariousdevel-
Flowofresourcesto
opedmarketeconomies, 1961-1969 (source: ref.39)
Table 3.1:
Average Percentagedistributionoftotalnettransfersofresources
annualtotal Official Private
rvt
Countryandperiod
transfers
Ofca
(millions
Bilateral Tomulti- Directand Export
lateral Total portfolio
credit
b
ofdollars Total
I Loans Grants agencies
Investmenta
Austria
1961-1963
1964-1966
1967-1969
7
36
56
-53
72
52
-3
34
15
12
8
6
-62
31
32
153
28
48
34
4
3
119
24
45
Denmark
1961-1963
1964-1966
1967-1969
11
19
82
-113
65
61
13
7
12
-21
21
14
-104
37
35
213
35
39
-27
-4
4
240
39
36
France
1961-1963
1964-1966
1967-1969
1,302
1,258
1,491
72
62
59
9
9
7
57
50
47
6
3
4
28
38
41
23
27
26
6
12
16
Japan
1961-1963
1964-1966
1967-1969
257
416
958
54
76
67
40
56
52
29
21
14
-15
-
1
46
24
33
31
17
11
15
7
23
Norway
1961-1963
1964-1966
1967-1969
12
22
56
56
53
48
-
-
1
63
19
16
-7
34
31
44
47
53
18
8
9
25
39
44
Portugal
1961-1963
1964-1966
45
37
100
71
83
67
11
23
6
-18
-
29
-
29
-
-
1967-1969 65 66 66 16 -17 34 34 -
(continued)
(Table 3.1 continued)
Average Percentagedistributionoftotalnet transfersofresources
annualtotal Official
Private
Countryandperiod
transfers
(millions
omillon)
ofdollars)
Total
Bilateral
Loans Grants
Tomulti-
lateral
agencies
Total
Directand
portfolio
investmenta
Export
creditb
UnitedKingdom 1961-1963 721 57 24 27 6 43 34 9
1964-1966 894 53 23 24 6 47 36 11
1967-1969 836 52 19 26 8 48 29 19
UnitedStates 1961-1963 4,066 80 17 58 4 22 22 1
1964-1966 4,781 70 18 49 3 30 29 1
1967-1969 5,060 68 27 35 6 32 31 1
a%
Averageor totalc 1961-1963 8,055 69 17 46 6 31 25 6
1964-1966 9,338 64 19 40 5 36 28 8
1967-1969 11,820 58 22 29 7 42 30 12
aIncludingfundsinvestedinloanobligationsoftheinternational
developmentaidinstitutions.
bIncludingthenon-guaranteedportionofinsuredcredit.
CThe sourcedoes notmakeitclearwhetherthis isfor theDevelopmentAssistanceCommittee(DAC)coun-
triesonly(i.e., Australia,Austria,Belgium,Canada,Denmark,France,FederalRepublicof Germany,
Italy,Japan,NetherLands,Norway,Portugal,Sweden,Switzerland,UnitedKingdom,andUnitedStates)
orforalldevelopedmarketeconomies (i.e., DACcountriesplusFinland,Iceland,Ireland,Luxembourg,
NewZealand,and SouthAfrica). Itappearstobeonlyfor theDACcountries,butinanycase thiscan
serveas anindicator foralldevelopedmarketeconomies sincethenonDACcountries' contribiltionto
thistransferofresourcesis smallandlikelywouldnotalterthedistributionmuchif atall(e.g.,
theiraverageannualtransfersfortheperiod1967-1969wereonlyabout31milliondollars [55]).
butionsbetweenofficialandprivate,andbetweenbilateralloansand
grants areverydifferentfor thevariousdevelopedcountries shown.
Table3.2 showsconsiderablevariationamongsomeof thecontributing
developedmarketeconomiesintheirratios ofthenet outflowofresour-
ces toGNP. Itisparticularlynoteworthythat theU.S. issuchalarge
contributor,givingabout 50percentof the total foreignaid,but its
shareinrecentyearshasbeendeclining (55), andits ratioofnetout-
flow of resources toGNP isbelowtheaverage. Withregardto financial
terms ofofficialcommitments, theU.S.terms ingeneralappeartobe
aboutaverageor somewhatmore favorablethanthe average (seeTable
A3.6).
The datain Tables3.3 andA3.7 giveanindicationof the distri-
butionofofficialandprivateaidresourcesamongthedevelopingre-
gionsoftheworld,particularlythe aid receivedby the fivedeveloping
countriesofinterestinthis report. It isnotsurprisingthat,due
to the relativelevels ofdevelopmentand correspondingwillingnessof
private investorsto enterthepicture,privateaid toLatinAmerica
on apercapitabasisismuchhigherthantoAfricaandAsia. Into-
tal amounts,howe,.ver, Asiaactuallyreceivesmoreofficialaidthando
AfricaandLatinAmericacombined,althoughit receives less thaneach
on apercapitabasis.
Therethus appears tobemuch dataavailableonthesources, des-
tinations, andfinancial terms oftheflowof foreignresourcesinto
developingcountries,butthereis alackofdataon thepurposeswhich
thesefunds serve. Table3.4gives someindicationbyputposeof the
distributionofofficialbilateralandmultilateralcommitments. Fixed
capital formation,ofwhichconstructionaccountsfor some55 to 65
62
Table 3.2: Netoutflowofresources comparedtogrossnationalproductforsomeofthedevelopedmarket
economies, 1961-1969 (source: ref. 31,39)
Ratioofnetoutflowofresources to GNP Average Percapita
Per capita
annualnet totalofficial
GNPain Average overallratio Averageratioofofficial outflowper andprivate
Country 1968 (percent)
transfers (percent) capitab, flowsin
(olr)1961-68
(dollars)1961-63 1964-66 1967-69 1961-63 1964-66 1967-69
1968
(dollars) (dollars)
Austria 1550 0.07 0.38 0.48 -0.03 0.27 0.25 4.0 10.0
Denmark 2540 0.16 0.19 0.60 0.07 0.13 0.32 5.5 15.1
France 2510 1.81 1.29 1.13 1.30 0.80 0.68 26.7 29.5
Japan 1410 0.43 0.46 0.67 0.24 0.36 0.44 4.7 10.4
Norway 2360 0.18 0.31 0.60 0.11 0.14 0.29 6.4 15.1
Portugal 540 1.56 1.01 1.28 1.56 0.80 0.85 4.8 5.1
UnitedKingdom 1850 0.90 0.89 0.78 0.51 0.48 0.40 14.6 13.8
UnitedStates 4380 0.72 0.68 0.59 0.56 0.48 0.39 24.1 28.9
TotaloraverageC 2770 0.77 0.70 0.70 0.54 0.A5 0.41 15.8 21.0
aAtmarketprices.
bRelativetomid-1965population.
cThisforpercapitalGNPin1968andpercapital totalofficialandprivateflowsin1968is forDACcoun-
triesonly (31). Thisfortheothercolumnsappearstobeforalldevelopedmarketeconomies,thoughthe
source (39) doesnotreallymakeitclearwhetheritisfor alldevelopedmarketeconomiesoronlyDAC
countries.
Totalofficialbilateral
andmultilateral
net flows tovarious regionsanddeveloping
coun-
Table 3.3a:
ref. 51,55)
tries, 1960-1971 (source:
Percapitaaverageannual
Averageannual
(dollars)
(milliondollars)
Population
andyear
Regionorcountry BltrlMliaea oa
Bilateral Multilateral Total (millions) Bilateral Multilateral Total
5.46
0.61
6.07
169 1669
275.0
1500
1960-66
Africa
1.30
5.50
1801 327.5
4.20
425
1376
1969-71
0.56
1.91
47.2 24.7
1.35
33.4
13.8
Ethiopia
1969-71
2.03
6.54
10.9
4.50
49.1
22.1
71.2
Kenya
1969-71
0.64
3.95
882 223.3
3.31
739
143
, LatinAmerica 1960-66
3.03
2.15
5.18
600
1444 278.8
844
1969-71
3.52
8.68
5.18
71.9
177.5
20.4
105.6
1969-71
Colombia
0.26
2.99
2701
903.3
2.73
232
2469
1960-66
Asia
2.74
0.44
3.18
470 3385 1064.5
2915
1969-71
0.90
1.26
28.5
0.36
10.3
25.6
35.9
1969-71
Iran
0.97
10.61
9.66
30.1 330.5
31.1
300.4
1969-71
Korea
599
b
6019 1493.5
3.63
0.40
4.03
5420
1960-66
Total
a
3.33
0.94
4.27
1767.9
5895
1654
7549
1969-71
Detailraynotaddtototalsdueto rounding.
Note:
alncludes SouthernEurope,Oceania,andunallocatedflowsaswell.
bExcludingfiguresforAfricanandAsiandevelopmentbanks.
Table 3.3b: Percapita netreceiptsof foreignprivatecapital
a
by
variousdevelopingcountriesandregions, 1965-1968 (dollars)(source:
ref. 51)
Region
b
orcountry Averagefor 1968
1965-1967
Africa 1.7 1.3
Kenya 1.2 3.4
Ethiopia 0.7 1.0
Asia 0.5 0.8
Korea 4.7 15.4
Iran 3.5 2.2
LatinAmerica 4.0 5.8
Colombia 3.7 3.3
World 1.3 1.9
aNetreceiptsofforeignprivatecapitalaredefinedas: foreigndirect
investmentand loansreceived (netofrepayments), includingloans to
localgovernmentsandprivatemonetaryinstitutions;andchanges in
otherlong-termliabilities (arising,forexample, fromtransactions
inexistingbond issuesof developingcountries). Thereturnflowof
interestandprofitsis notdeducted.
bThesourcedoesnotmakeit clearwhetherthe regionalaveragesare
justfor the countriesit listsineachregion (Africa- 13 countries,
Asia- 15 countries,andLatinAmer'ca- 22 countries)or forall
countriesintheregion. Theworldaveragein1968 isnotedasbeing
for only50 countries though.
65
Table 3.4: Officialbilateralandmultilateralcommitments,bypurpose,
1967-1968 (percentage)(source: ref. 51)
Official
Official
bilateral
multilateral
83.09
Capitalprojectassistance
30.04
2.38
16.82
Agriculture
Industry
11.04
13.39
4.23
19.34
Energy
22.57
Transport
6.35
Socialinfrastructure
3.47
9.82
2.57
1.14
Other
Technicalassistance
19.27
15.37
23.10
1.52
Non-projectassistance
-
16.50
Exportcredits
-
11.11
Othercontributions
100.00
100.00
Total
Note: Detailmaynot add to totalsdueto rounding.
66
percent,probablypredominantlyfalls undercapitalproject assistance,
and thus funds for the financingof construction mightbeexpectedto
represent afairlysizeableportionof capitalproject assistance. Con-
structionalsoreceives someaidinthe formof technicalassistance
andexportcredits.
Somebriefcommentsremaintobemadeabout thevarioussourcesof
foreignaidand theirrespectiveadvantages and disadvantages. Official
bilateralfinancialassistancemaybeallocatedby,forexample,the
Agencyfor InternationalDevelopment (AID)intheU.S., ExportCredits
GuaranteeDepartmentof the Boardof TradeorCommonwealthDevelopment
I,
Corporation (CDC)intheU.K., KreditanstaltfurWiederaufbau (KW)or
I,
DeutscheGesellschaftfur WirtschaftlicheZusammenarbeitin theFederal
Republicof Germany,orCaisseCentralede CooperationEconomique (CCCE)
inFrance. Themajoradvantageofbilateralassistanceis that the fi-
nancialprovisionsaregenerally morefavorable thanthoseof othersour-
ces interms oflonger repayment periods,lowerinterestrates, and,in
some cases, repaymentinlocal currency.
Aproblamwithbilateralaidis thatits allocationamongdevelop-
ingcountriestends tobedeterminedby specialpoliticalandeconomic
ties. Forexample,theU.K.concentratesits assistancealmostentirely
on the Commonwealthcountries,France largelyontheAfricancountries
formerlyadministeredbyit, and theU.S. onAsiaandthe FarEastand
morerecentlyLatinAmerica. Koreaparticularlyhasreceivedahigh
volnmeof percapitaofficialbilateralaid (seeTable 3.3a). Moreap-
propriateeconomiccriteria for allocationof foreignassistanceamong
developing countriesneedtobeevolved. Asecond difficultywithof-
ficialbilateralassistanceis thatit isoftentiedaidunderwhich
67
goods andserviceshavetobepurchasedinthedonorcountry. Someob-
viousdisadvantagesofthis include the facts thatit (1) mayreduce
competitionamongsuppliers, (2) maymakeimpossibletheprocurement
ofimportsfromthemost economicalsources, (3)mayresultinpurchasing
of goods andserviceswhichdonotmeetthe recipient'srequirements,
(4) mayencourageexecutionoflow-priorityprojectsforwhichsuitable
goodsand servicescanbeobtainedinthe aid-givingcountries, and (5)
may encourageimportinggoods andservicesinstead of producingthem
locally. Apartialsolutiontothis problemwassuggestedbyanUNCTAD
groupofexperts inMarch1966--whenaidtoadevelopingcountryis in-
tendedforthepurchaseofgoods and services inthedonorcountry,the
use suchaidtomakepurchases in
beneficiaryshouldbeauthorizedto
otherdevelopingcountries aswell (49).
Athirdprobleminthis areaisthe growingimportanceof official
loans relativeto officialgrants (seeTables3.1 andA3.6a), which
increases the debt-servicingburdenof theloan-receivingcountries
and furtheraggravatesthebalanceofpaymentproblemsof thesecount-
ries. In addition,officialaidisgenerallygivenfor specifiedpro-
jectsratherthanon aprogrambasis,whichmightbemorereadily co-
ordinatedwithnationaldevelopmentplans. Thefifthandfinaldiffi-
cultywithbilateralaid isthat thevariousbilateralfinancing agen-
cieshavediverseproceduresand thereisoftenalon.gwaitingperiod
beforeaid is grantedandmobilized. Theselastthreedifficulties
areequallytrueofofficialmultilateralassistance.
Someofthe multilateralfinancingagenciesinclude,forexample,
the InternationalBankforReconstruction
andDevelopment (IBRD),In-
ternationalFinancingCorporation(IFC), AfricanDevelopmentBank (ADB),
68
Themajor
AsianDevelopment
Bank,andEuropean
Development
Fund (FED).
advantage
ofmultilateral
overbilateral
aid, asidefromsomewhat
less
pressure
frompolitical
andeconomic
ties, is, of course,the freedom
Infact,multila-
topurchase
goodsand services
intheworldmarket.
teralagencies
oftenrequire
international
competitive
biddingfor con-
Nevertheless,
someof these agencies,
tractsfinanced
undertheseloans.
suchas the IBRDandIDA,generally
finance
onlythe foreign
exchange
costs ofprojects,
whichtends toencourage
importing
ofgoods andser-
vicesratherthan localproduction
andmaytendtoencourage
projects
withlarge foreignexchange
components
eventhoughtheymaynotbeof
toppriority
innational
development
plans.
Private
sources
offoreign
financial
aidinclude
private
export
Exportcredits
credits,
directinvestment,
andportfolio
investment.
are generally
easytoobtainbecause
the developed
countries
wishto ex-
tiedaidandaregenerally
exten-
portgoodsand services,
buttheyare
ded onashort- ormedium-term
basisat the commercial
rates ofinterest
in forceinthe lending
country
plusvarious
banking
and insurance
char-
ges. Annualrepayment
charges
thusmay betwo orthreetimeshigher
andprivateguaranteed
export cre-
thanthoseonbilateral
credits (49),
dits aregenerally
repayable
only inthe currency
of the lendingcountry.
Export credits
mayassumetwo forms--supplier
andpurchaser
credit.
Supplier
credit, givento the supplier
of goods andservices,
ismost
widespread
andgenerally
doesnot covertheentirecostof imported
goods andservices.
Purchaser
creditisgenerally
givenonly forlarge
alongerrepayment
periodandmaybesomewhat
projects
but usuallyhas
cheapersincethepurchaser
candealdirectly
withthefinancing
agency.
Allindustrialized
countries
operateexport creditsystems,
but
69
thenumerousproceduresvary. Thecentrallyplannedeconomiesgrantex-
portcredits thatarelikeloanassistance,severaldevelopedmarket
economiescombineor modifyexport creditssothat thesewillbecomea
formof loanassistance,and in certaincasesexport credits fromdeve-
lopedmarketeconomiesmaybegranted1;y publicbodies. Someofthema-
jorgovernment-supported
exportassociationsinthe developedcountries
are the Export-Import
Bank (Eximbank)andits subsectortheForeignCre-
dit InsuranceAssociation(FCIA)in theU.S., CieFrancaised'Assurances
PourleCommerceExterieur (COFACE)inFrance,HermesKreditituersiche-
rungsA.G.(HERMES)in Germany,andExportCreditGuaranteeDepartment
(ECGD)in theU.K. Theseexportassociationsnotonlyextendshort-,
medium-,andevenlong-termcredit,butmayalsogiveguaranteesof re-
paymentfor loansmadebycommercialbanks. Moreover,regionalization
of exportcredits (i.e.,bringingseveralexportingcountries together
to'provideexportcredits foralargeproject) ispossible,and even
somedevelopingcountries (e.g., indiaandMexico)haveadoptedexport
credit systems.
As forforeignprivate investment,commercialbanks,private cor-
porations, andspecialprivateorganizationsmayparticipate. Forex-
ample,thereis the PrivateExportFundingCompany (PEFCO)whichis
helpedbyagroupoffiftyU.S.banks andcorporations andtheOverseas
PrivateInvestment Corporation (OPIC)in theU.S., theLatinAmerican
EconomicDevelopmentAssociation,andthe PrivateInvestmentCompany
forAsia (PICA). Thethreelarge regionaldevelopmentbanksalsocan
takeactionto stimulateforeigninvestmentsbyassociatingsuchinvest-
mentswithprojectstheywish topromote. Oneof thecommonestforms
ofprivateforeigninvestment indevelopingcountriesis thejointen-
70
terpriseinwhichforeignandnationalcapitalarecombined; technical,
marketing,and personneltrainingagreementsaswellas financialagree-
mentsareusuallyincluded. Thereareavarietyof factorswhichstrongly
influenceprivateforeign investment,including availabilityofinvest-
mentopportunitiesinthe developingcountries; economicandpolitical
stabilityof the developingcountries; couditionsrelatingtorepatria-
tionofcapitalandprofits; arrangementsforguarantees givento for-
eigncapitalathomeor abroad; natureoflegislationonmonetary,fis-
cal,and taxpoliciesat homeandabroad; stabilityof theexchangerate;
andavailabilityofneededresources in thedevelopingcountries. Re-
gionalcooperation,internationalorganizations, anddevelopedcountries,
aswellas individualdevelopingcountries,mightassist in furthering
privateforeigninvestment througheducationalandpromotionalactivi-
ties,whilestillattemptingtoconsiderthebestinterestsofeachpar-
ticipant.
3.2Design
The designphaseof theconstructionprocess,like theplanning
phase,requires fairlysmallmanpowerandcapitalresources, butagain
the neededmanpowercomes fromawell-educatedand experiencedcadreof
professionals (i.e., architects and engineers). Asfaras industriali-
zedcountries are concerned,averageddatafor1962to 1966showprofes-
sionaland technicalpersonnelas 4.7percent of construction--ployment
in theU.S., whichprobably includesplannersand consultantsas well
as architects and engineers (seeTable 3.5aforU.S. figuresandTable
3.5b for figuresfor EnglandandWales). FiguresforLatinAmerica
for1965, on theotherhand, showprofessionalsasonly0.9percentof
71
a
Table 3.5a: Percentagedistributionof employmentinconstruction , in
theU.S., averagedfor 1962-1966 (source: ref.5)
Occupationinthe
Percentageof
constructionindustry
constructionemployment
4.7
Professionaland technical personnel
Managers,officials,andproprietors
12.2
5.2
Clericalworkers
Craftsmen,foremen,andkindredworkers
50.7
14.5
Carpenters
Brickmasons,stonemasons,
andtilesetters
3.7
Cementand concretefinishers
1.2
4.0
Electricians
Excavating,grading,androad-building
4.7
machineoperators
6.7
Painters
4.3
Plumbersandpipefitters
0.8
Plasterers
1.1
Roofersand slaters
0.9
Structuralmetalworkers
Tinsmiths,coppersmiths,
and sheet
1.0
metalworkers
7.8
Other
Operativesandkindredworkersb
9.8
0.5
Serviceworkersc
17.0
Laborers (includinghelpers)d
aIncludingemployeesofcontractors,government forceaccount,theself-
employed,andunpaidfamilyworkers.
boperativesaretraditionallyconsideredsemi-skilledworkers,including
apprentices,
asbestosworkers,oilersand greasers,truckdrivers,etc.
cServiceworkersincludeguardsandwatchmen,cleaningpersonnel,and
others.
dLaborersincludecarpenters'helpersandotherlatlrers.
72
Table 3.5b Occupationalclassdistributioninbuildingandcontracting
andallindustry,forEnglandandWales,1951 (percent)(source: ref.52)
OccupationalClass Buildingand a
contracting
All industry
Higherprofessional 1.22 1.96
Lowerprofessional 0.40 4.67
Employers,administrators,
managers 3.88 9.95
Clericalworkers 3.91 10.85
Foremen,inspectors,
supervisors 3.78 2.69
Skilledworkers 57.64 25.37
Semi-skilledworkers 4.36 32.84
Unskilledworkers 24.80 11.67
alncludesagricultureandfishing,mining,manufacturing,construction,
utilities,distributivetrades, transportandcommunications, finance,
andgovernment, professional,andotherservices.
employmentin constructionandtechnicians as 2.1percent,althoughar-
chitects
appeartobeincluded
intheotherservices
category
(seeTable
3.5c). Asforcapitalrequirements,
theAmerican
Institute
ofArchitects
suggests
that architectural
fees foraconventionally
constructed
apart-
7percentoftotal construc-
mentbuilding,
forexample,
shouldbe6to
tioncost (11).
Themagnitude
of theshortage
ofprofessionals
inconstruction
in
developing
countries
can onlybehintedatbylookingat figuresonall
professional,
technical,
andrelatedworkers'
shares oft1he economically
activepopulation
and ofunemployment
invarious developing
countries
AsTableA3.8shows, the shares of this class
as compared
withtheU.S.
about four times thoseinthedeveloping
c:oun-
ofworkers
intheU.S. are
tries,withfiguresfor Ethiopia
andKenyaprobably
evensmaller
than
(afew figures forprofessionals
inconstruction
in Korea
thoseshown
giveninTablesA2.10candA2.12b respectively).
Of
and Ethiopia
are
course,the specific
needsofanindividual
nation cannotbedetermined
Onere-
without
moredataonthe construction
industry
inthatcountry.
port (12),forexample,
suggests
that there areactually
toomanycon-
sultingengineering
firms inKoreainrelation
to thevolumeofbusiness,
andthat designsare oftenofpoorquality,whilein Ethiopia
although
arelatively
largenumberofarchitects
andengineers,
many
thereis
weretrainedabroad, lackpractical
experience,
andtendto go intogo-
Inmostdeveloping
vernment
jobs ratherthan intothe industry
itself.
countries
there thusappears tobeaneedforupgrading
the existing
professionals
and theireducational
programs,
andinmanyofthedeve-
aneedto educate
agreaternumberof
lopingcountries
thereis.also
localarchitects
andengineers.
74
Table 3.5c: Occupationalstructureof thelaborforceforvariousindustrysectors inLatinAmerica,esti-
matedfor 1965andprojectedfor1980 (percentagecompositionbyvocationalcategories)(source: ref.52)
1965
1980
VocationalCategory Construc- Manufac- Agriculture a Construc- Manufac- AgricultureTotal
a
tion turing andfishing Total tion turing andfishing
Professionalandtechnical
personnel 3.0 1.9 0.1 3.7 2.8 3.0 0.4 5.3
Professional 0.9 0.05 0.7 0.5 0.8 0.7 0. 1.0
Technical 2.1 1.4 0.07 2.9 2.1 2.3 0.3 4.3
Administrativeandmana-
gerialstaff 1.9 2.9 0.2 3.0 1.5 2.5 0.3 3.1
Employeesandsalesmen 1.9 0.4 7.8 12.2 1.9 10.0 0.4 12.4
Operativesandartisan
workers 92.1 86.3 98.2 67.4 92.6 83.0 97.9 67.1
Skilled 9.2 17.3 4.9 5.7 11.9 29.5 9.9 10.7
Semi-skilled 46.0 1 43.1 17.0 50.0 45.0 30.0 26.4
Unskilled 36.9 25.9 78.6 44.7 30.7 8.5 57.9 30.0
Servicespersonnel 1.1 1.1 1.1 13.7 1.1 1.5 1.0 12.2
Totalb 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
an additionto the threeindustrysectorsinthetable,thisincludesminingandquarryingandbasicand
otherservices.
percenzagesarebasedonthe followingfiguresfortotalemployment: 1965- total76,416,000, construc-
tion2,969,000,manufacturing10,546,000,andagricultureandfishing35,221,000; 1980- total120,000,000,
construction7,200,000,manufacturing20,000,000,andagricultureandfishing49,300,000.
Manyoftheexisting
educational
prcgrams
needsomereorientation,
particularly
inthedirection
ofteaching
morepractical
concepts,
in-
creasing
fieldexperience
and contact
withindustry,
andlessening
the
distinct
separation
between
the designer
andcontractor.
TheColombian
Fundfor Scientific
Research
(COLCIENCIAS)
inColombia,
for example,
has
developed
a,Government-University-Industry"
program
directed
toward
the
seems
ofexpatriates,
as
Thecontinued
use
first two of theseends (32'-
tohavebeendone inthepastin Iran (12), is apossibility
forhelp
inincreasing
training
capabilities,
butthis maynotbetoopromising
apro-
because
of theirinsensitivity
to localconditions
andbecause
of
Suchan
aswellas on-the-job
training.
fessionals'
needforin-class
approach
mightbemoresuitable
for draftsmen
and othertechnicians.
The accepted
traditional
training
oflocalprofessionals
inuniversities
inthe industrialized
countries
is alsonotcompletely
desirable
since
they maybecome
oriented
toward
techniques
and technologies
suited
to
Higher
education
inthe
these
environments
rather
than to theirown.
developing
countries
themselves
thus seems themost desii.'ble
method
of
Aserious
remaining
producing
capable,
locally-oriented
professionals.
problem,
however,
is thelength
oftimerequired
forthedevelopment
ofsuchprograms
and fortheactual
education
of themanpower.
Another
approach
tosolving
this problem
is to reduce
therequire-
Highly
industrialized
construction
ment forarchitectural
services.
techniques,
suchas modular
boxsystems,
mightlessen
thisneedon in-
Such techniques,
how-
muchas 50percent
(11).
dividual
projects
byas
ever,tendtobesomewhat
morecapital-intensive
thanconventional
met-
adefinite
drawback
fordeveloping
countries,
although
the re-
hods,
quired
labormaybeabletobesomewhat
less skilled.
Theuse ofty-
76
pifiedormodeldesignsisanotherpossibilityalongsimilarlines.
Novelapplicationof computers isstillanotherpossibility,as
mentionedinregardtotheplanningstage. Inthe developedcountries
the introductionof thecomputerhassignificantlyincreasedthecapa-
bilityfordesigninglarge-scalefacilities,andmoreexactmethodsof
analysisanddesignhaveresultedin the constructionof moreefficient,
complex,andelaborate structures. Moreover,thereisawidevariety
of standardprogramscoveringmanyaspectsoftheanalysis and design
process,and theuseofcomputers inhighly repetitiveand routinized
activities isparticularlypromising. Whilemostofthese advanceshave
beenput intopracticein thedevelopingcountries throughthe interna-
tionalfirms, littleefforthasbeenmadeto rtudytheeffectof compu-
ters on increasingtheefficiencyandeffectivenessofthelimitedlo-
callyavailabledesigncapabilities. Ofcourse, developingcountries
presentlyhavelittlein thewayof computerfacilities,but this could
becorrectedrelativelyquickly. The maintenanceandoperationofcom-
puters requiresonlyayearorso of trainingforsomeonewithatech-
nicalschooleducation in electronics, althoughthe trainingofprogram-
mers in formulatingcomputerproblemsinvariousbuildingactivitiesis
moredifficult andexacting. In this latterareathe developingcoun-
trieswillprobablyhaveto relyuponinternationalagenciesandthe
industrialized countriesforfurtherresearchincomputerapplications
ofvarious aspects ofdesign andinthe development of standardprograms.
Novelapplicationof computers thus seemspromisingandmightnotonly
substantiallyincrease theproductivityand capabilityofscarcelocal
talent,butmightadditionallyprovideincentives for innovationand
adaptationindesignconsistentwithlocal conditions.
77
Anaspect
ofdesign
which
receives
relatively
little
attention
is
its influence
onthetechnological
nature
of theassembly
operation;
that is, design
essentially
dictates
thechoice
of technology,
largely
Consider,
for example,
a
determining
theresource
mixandtechniques.
roadproject
inmountainous
terrain--if
extensive
cutting-and-filling
is
called
for,itwillbearather
capital-intensive
project
duetothe
needforheavy
equipment;
butifrelatively
little
cutting-and-filling
called
for andretaining
walls
areusedinstead,
itwillbearather
is
aremade inthe design,
not
These
decisions
labor-intensive
project.
Amorequantitative
example
ofthis factis
the construction
stage.
given
inTables
3.6 andA3.9where
the labor
andmaterial
requirements
formulti-family
housing
arecompared
forconventional
andindustriali-
Thetype,
quantity,
cost,andso forth
of thela-
zedbuilding
methods.
bor,materials,
andequipment,
and theconstruction
techniques,
are
quite
different
inthe two approaches,
buttheapproach
is again
selec-
nothing
inherently
wrong
with
ted during
the design
process.
There
is
It is thus
this except
that theinfluence
ofdesign
mustberecognized.
of utmost
importance
that the designer
be completely
aware
of local
con-
Theuseofplaus,
ditions
andprepare
adesign
inaccordance
withthem.
specifications,
andbuilding
codeswhich
establish
performance
charac-
to be employed
and methods
than the materials
to be met rather
teristics
is one approach
which
mightbeused to reduce
theinfluence
ofthede-
signstageif thatweredeemed
desirable,
although
thiswould
require
contractor
tohavegreater
engineering
andconstruction
skills
than
the
otherwise.
Inlight
ofthese considerations,
it is important
tonote thatstu-
the feasibility
oflabor-
versus
capital-intensive
construction
dieson
78
Table 3.6: Costcomparisonof conventionallyandindustriallybuilt
high- and low-riseapartmentsintheU.S.a(source: ref. 62)
Costpersquarefootofbuilding (dollars)
Typeofconstruction LaborcostMaterialTotalcostTotaldi-
cost rectcost
(shell) (shell) (shell) (building)
b
Low-rise
Rochester
apartments
c
Conventionallybuilt 2.55 2.35
d
4
.
90
e 14.00
Industriallybuilt
2
.
29
df 1.71 4.00 13.10
High-riseNewHavenapartmen
Conventionallybuilth 3.67k
2
.
40
d 6.07 14.07
Industriallybuilt
2
.
02
dj 1.76 3.78 11.78
aSource (dated1970)givesnoyear.
bComparisonofconventionallyprecastandprestressedconcreteconstruc-
tionwithdrywallpartitionsandindustrialized constructionwithpre-
castwallsandpartitionsandsite-castslabs. Laborcost,average:
factory,$3.80perhour; site, $7.80perhour. Buildingis two stories,
840squarefeetperdwellingunit.
CMan-hourspersquarefootof shellare0.33.
dIncludeslaborcost formixingconcrete.
eAtthe average laborrates,the numberofman-hours (factoryand site)
persquare footof shellis0.37man-hours.
fCostbreakdownpersquarefootas follows: engineering,$0.05 (2%);
factorywork,$1.00 (44%);sitework,$1.24 (54%).
gComparisonof conventionalconcreteframeconstructionusingmaso.:'y
anddrywallpartitionsandindustrialized constructionusing .:ccast
wallsandpartitionsandsite-castslabs. Laborcost,average: fac-
tory $3.75perhour; site $7.15perhour. Buildingis 16stories, 915
squarefeetperdwellingunit.
hAs thecostbreakdownfor conventionallybuiltNewHavensh.'1wasnot
available,averageof figures for 2projectsof similarNewYorkcon-
structionwasused.
'Man-hourspersquarefootofshellare0.51.
JUsingtheratio of factory-to-sitelaborand theaboveaveragelabor
rates,man-hourspersquarefootofshellare0.34.
79
techniquesin developingcountrieshavedonelittlemorethansimply
mentionthatdesignmightbeimportant. Thegeneraloutcomeofthese
studies isthat capital-intensivemethodsaremoreeconomicallyfeasible
than labor-intensiveones,butthisis as expectedsinceonlyasingle
design,onebasedoncapital-intensivemethods, isusedintheanalysis.
Whatremainstobeestablishedis whichismoreeconomicallyfeasible--
aprojectdesignedfor andbuiltbylabor-intensivemethodsoracom-
parableproject designedforandbuiltbycapital-intensivemethods.
Case studiesinthis areaaredefinitelyneeded.
3.3 Construction
Theissues indevelopmentofthe constructionphaseofthebuild-
ingprocess are dividedinto fourrequiredresourcecategories--manage-
ment,capital, labor,andmaterials.
3.31 Management: Themanagerialaspectsofthe construction
phasehaveonlyrecentlybeguntoreceive theamountofattentionthey
deserve,eveninthe developedcountries. The functionsofthe con-
tractorandhis staffrangefromgeneralofficeadministration to es-
timating,bidding,planning,scheduling,monitoringandcontrolling
jobprogress,and fieldsupervisionofconstruction. Themanagermust
handlemen,materials,equipment,money,andtime,andthe successful
completionofthe projectis'argelyinhishands.
Figuresonmanagersandadministrators asashareofemployment
inconstructionrangewidelyamongdifferentcountries (seeTables 3.5
and A3.10). Inboththe U.S.andEngland themanagers'andadministra-
tors' shareofconstructionemploymentissignificantlylarger than
thatofthe professionalsorofthe professionals andtechnicianscombined.
80
Only thefirst ofthesecomparisons is trueofLatinAmerica,however.
Apossibleexplanationofthis, supportedbythefindings of anILO
study (17), is thatindeveloped countries thebuildingtechnicianis
generallyresponsibleforfield testingandinspection,whileindeve-
lopingcountrieshisroleis oftenthat of siteforemanormanagerand
askilledworkertakes overhis traditionalrole. Thepracticeofma-
nagersrisingfromtheworkerranks orotherpositionsinthe industry,
as isstillrelativelycommoninconstructionindevelopedcountries,
seemsalso tobesomewhatthe caseindevelopingcountries. Forthis
reason,managersare seldomactuallytrainedinmanagementtechniques.
Thelargelynegativeimpactofthis onmanagerialefficiency,effective-
ness, capability,and so forthis obvious andhasbeenobservedinin-
dustrializedcountries. Relianceonforeignmanagersisprobablyano-
therpartialexplanationof thesmallnumberof constructionmanagers
in developingcountries.
This shortageofmanagersin Iran,Korea,andotherdeveloping
countriesis probablyevenmoreserious thaninLatinAmerica,ifCo-
lombiacanbeconsideredrepresentative of the region,andthe figures
onmanagers andadministrators ingeneralrepresentativeof thosein
construction (seeTableA3.8a). Althoughexactfigures cannotbe de-
terminedwithoutmorespecificdataforconstructiononanindividual
countrybasis, itappears that inmostdevelopingcountriesthereis
ashortage ofmanagersforconstructionorat theveryleast ashortage
ofadequatelyqualifiedones.
As forthe clericalworkerswhoservetosupportthe managers,
thereis muchless ofadiscrepancyherebetweendevelopinganddeve-
loped countries (seeTables 3.5andA3.8). This is as expectedsince
81
the levelofeducationandskillrequiredforclericalworkismuch
less thanthat formanagers. Foreigncontractorsaremore likelyto
useand,ifnecessary,trainlocalpeople forclericalwork,although
theymightalsohavetheworkdonein theirhomeoffices. Nevertheless,
thereareprobablysomeshortages innumberandskillsinthe clerical
fieldin constructioninmany developingcountries. Theseshortages
seemrelativelyeasilycorrectablethroughtheassistanceofexpatriate
contractors andthrough increasingandimprovingtrainingprogramsin
the developingcountries themselves,althoughit maybemoredifficult
totraintheteachers fortheseprograms.
Developingandupgradingmanagers is aconsiderablymore difficult
andtime-consumingprocessprimarilybecauseexperienceissoimportant.
Effortstotrainmanagers fordevelopingnations in industrialized
countrieshavenotbeentoo successfulsincetheyarenot gearedto lo-
cal conditionssuchashandlinglarge groups of relativelyunskilled
workers, and also because they tend to look upon themselves as superior,
anattitudewhichruins theworkatmosphere. Thetrainingineducational
andspecializedinstitutionsinthedevelopingcountriesneedsconsi-
derableupgradingandlackspractical,on-the-jobaspectsdue to lack
ofcontactwiththe industryitself. Moreworkalsoneedstobedonein
the areaofupgradingexistingmanagers,interms ofimprovingtheir
management skills, teachingthemnewones, andpersuadingthemtoadapt
to technologicalchange. InEthiopia,forexample,theEthiopianHigh-
wayAuthorityhasaTrainingandTestingBranchwhichgives courses to
upgradeworkersand supervisors (12). Anotherapproachtoassisting
existingmanagersmightbetoplacetheservices ofsuitablyqualified
advisorsorconsultantsat the disposalofindividualfirms forlimited
82
periods. Aratherinterestingprogramsomewhatalongthese lines in
Kenyaisthat oftheNationalConstructionCompany,establishedbythe
governmentin1967 toassistAfricancontractorsbyobtainingworkfor
them, giving them advice and training, and providing them with finance
(12).
The industryitselfshouldtakeamoreactiveroleintraining,
bothinthe areaofupgradingexistingmanagersand also interms of
helpingto developmorepractical,industry-orientededucationalpro-
grams andprovidingsomeon-the-jobtraining. Asemployerassociations
increaseinnumberandstrength,theymightprovidesomeof thisassis-
tance,and individualfirms mightalsohelpinthe fundingof training
programs. Internationalagenciesand developedcountriesmighttake
part,especiallyinthetrainingandupgradingofinstructorsandin
settingupshort coursesfor keepingmanagersup to date. Co-operative
activitiesamongdevelopingcountries alsohavesomepromise.
Anothermeansfor assistancein the developmentofcontractors and
managersare theexpatriate contractors. Expatriatefirmsmaybring
in foreignersfor alljobs includingandabovesupervisorypersonnel,
someofwhommayhavelocal assistants. Alternatively,theymayjoint
venturewithorsubcontract apart ofthejob to local contractors de-
pendingupon theiravailabilityand capability. Onlyrarelydothein-
ternationalcontractorsprovideexplicit trainingandmanagementassis-
tancetosuch locals,butsimplyworkingw.ththe expatriatefirms on
largeprojects generallyresultsinlocal firms acquiringgoodexperience
and perhaps some contact with new management techniques.
The use of computers, as in planning and design, is another possi-
bility which might help to increase the capability and productivity
83
of presentmanagers. Indevelopedcountries,computers arewidelyused
for manystandardfirmoperationssuchas accounting,payroll,andpur-
chasing,and theyarebeingusedincreasinglyinconstruction-related
ac-
tivitiessuch asproject estimating,scheduling,monitoring,andcontrol
(basedonnetworktechniques likeCPMandPERT). Standardprogramsare
available in theseareas, andsomecomputer-basedsystemsare currently
beingdevelopedwhichintegratemanyoftheseoperationswithinthe
frameworkof anetworkapproach. Ofcourse, computers canbeoflittle
assistanceinthe actualfieldsupervisionofmanpower,buttheydo
haveconsiderablepotentialelsewhereinmanagementinthe developing
countries.
As mentionedin Section2.2, manyof the organizationalandstruc-
turalfeatures ofthe constructionindustry indevelopedcountriesseem
tobecarryingovertothe industryin developingcountries. In Korea,
forexample,mostconstructionfirmshavebeenbegunbybusinessmenin
otherindustries,especiallybuildingmaterials, butmorerecentlyare
alsobeingbegunbyengineersand architects. Thesameis trueinIran,
wheretheprofessionalsare generallyeducatedabroad (12). Thereare
alargenumberof rathersmallfirms inKorea,but 4.7percentofthem,
licensedinbothbuildingandcivilworksconstruction,hadanaggre-
gatecontract limitationof49.6percent ofthetoca contractlimita-
tionsof all contractorsinthis fieldin 1972. Moreover,manyofthe
firmsare relativelydiversifiedintheiroperationsin that84percent
ofthe licensedfirmsin 1972coulddobothbuildingand civilworks
construction (12). This isexpectedinKorea,however, forits construc-
tionindustryis relativelyadvancedandforeignfirms arenowgenerally
employedonly forspecializedwork,particularlyinthefieldofheavy
84
In Ethiopia,
industrial
construction
(seeTablesA2.10aandA2.10b).
ontheotherhand, localresident contractors
offoreignnationality
haveplayedaprominant
part in construction,
.andcontractors
ofEthio-
pian nationality
areofrelatively
recentoriginandhavehadto con-
tendwith considerable
competition
fromresident Italiancontractors
(seeTablesA2.12aandA2.12b).
Alllocalcontractors
tendtoconcen-
trateonbuildingconstruction
andtoleavecivilworkstolocalbran-
ches of foreigncontractors
andtonon-resident
foreignfirms, at least
partlybecausemost civil workshavebeenfinancedbyexternal agencies
under conditions
requiring
at least someinternational
competitive
bid-
ding(12). The easyentry/easy
exitnatureofthe industryis exempli-
fiedbythehighrate ofattrition
of firmsin Irandueto ratherin-
Moreover,
it isalso reflected
tensecompetition
(seeTableA2.11c).
in the operaticns
ofmajorinternational
construction
firmsworkingin
Inconstruction,
thetruemulti-national
organi-
developing
countries.
zations,withwell-established,
permanent,
operating
subsidiaries
in
several countries,
havenot developed
althoughinternational
construc-
tionfirmshavebeenoperating
inthedeveloping
countriesformany
years. Theinstability
ofconstruction
demandis at leastpartlyres-
Whetherit issuitable for thedeveloping
indigenous
ponsibleforthis.
industryto followthe industryindevelopedcountries
in terms ofstruc-
anissueof considerable
significance.
tureand organization
is
Anothermatterofsome importance
is thenatureofparticipant
re-
Onceagain,thepractices
in de-
lationsand contractual
arrangements.
velopedcountries,
including
independence
ofparticipants
andlackof
continuous
workingrelationships,
let aloneverticalintegration,
and
the extensiveuseofcompetitive
biddingfor construction
contracts,
85
arebyand large carryingovertodeveloping
countries.
Themajorne-
gativeandpositiveaspects ofthesepracticesin developedcountries
werediscussedin Section2.2,andalternatives
wereconsidered.
Inde-
velopingcountriestheuse of thesepractices isevenmorequestionable.
Amajorshortcomingof contractorsindevelopingcouritries istheir
lackofmanagerialskills, suchasworkschedulingandfieldsupervision,
but evenmoreseriouswithregardto competitivebiddingis theirina-
bilityto performaccuratecostestimatingandatendencytounderbid.
The useofaquantitysurveyer,as is doneinEngland,toprovideasin-
gle listof quantitiesofmaterialsuponwhichallbidsarebased,might
beof somehelpwiththis particularproblem. Inroadconstruction
in
Iran, forexample, taskschedulesaswellas quantitysurveysare given
to the contractor,
andbiddingis thussimplyamatterofsubmittinga
lowestcost estimatefor thecompletionofagivenset of operationsover
agivenperiodof time (19). Furthermore,
selectionofthecontractor
extentof
shouldbebasedon conditionsotherthanminimumcost suchas
employment and trainingof localpersonnelandthe use oflocalequip-
Ameansto do thiswithinthebounds of competitive
ment and materials.
biddingmightinclude (1)requiringthesubmission,
alongwiththebid
price,of guarantees ofminimumlocalemployment,
maximumvalueof im-
portedmaterials andequipment,andmaximumvalueofexpatriatesala-
ries; (2)usingthese guaranteestovaluethebidwithshadowprices
forlabor,foreignexchange,andcapital; and (3)choos~igthebidwith
the lowest cost on a national economic profitability
basis rather than
the onewiththelowestmonetarycost.
In Korea,anincreasingpercentageof contractsare beingletby
negotiation,althoughthemajorityarestillletbycompetitivebidding
86
(seeTableA2.5b). AratherinterestingsystemusedinKoreaprimarily
forlargeprojectsis theoptionalcontract system. Underthis,the
contractorwhois awardedthefirstjob, bynegotiationorcompetitive
bidding,hastheoptiontonegotiatefor carryingoutthe remainingjobs
providedhis unitprices arewithinthegovernment's costestimateand
at least as lowasthoseinthefirstjob (12). Thisis onemeanswhere-
bythe demandmarket forparticularcontractorsmightusefullybestab-
lized. In Iran,9"percentofpubliccontracts are letbycompetitive
bidding,asare70 to80 percentofthe privateones, althoughthis does
notmeancontracts arenecessarilyawardedto thelowestbidder (12, 19).
Apotentiallysuitablealternativeto competitivebiddingmightbene-
gotiationof acost pluscontractwithaguaranteedmaximum,withashare
ofanysavings going to the contractor. Theuse of desi:.n-constructcr
turnkey contractsandconstructionmanagersareotherpossibilities
warrantingconsideration.
3.32 Capital: The contractorneedsbothworkingandinvestment
capital. Working capitalcoverspayments for labor,subcontractors,
materials,supplies, equipmentrentals,overhead,andsimilarexpenses.
Contractorsarealmost universallypaidbyinstallmentsovertheperiod
ofconstructionon thebasisofworkdone. Further,aportionof the
payments dueto the contractorisalmost alwayswithheldas aguarantee
againstpoorworkmanship,hiddendefects, andsimilar faultswhichmight
beobservedonlyafter project completion. Similararrangementsare
usuallyset upbetweenthe contractorandsubcontractor,withthe sub-
contractor generallyreceivinghispaymentshortlyafterthe contractor
has receivedhis fromthe client. Labor,ontheotherhand,isoften
87
paid on a weekly or even daily basis. 6WID0has estimated that this
creates a need for working capital of from 2 to 10 percent of annual
turnover (48).
Payment for building materials and other supplies may often be made
in arrearsindevelopedcountrieswherethematerialssuppliermayex-
tendshort-termcredit to thecontractor. As suggestedbythefigures
inTables2.6 and 2.10a,equipmentrentals (or depreciation)donot.make
up averylargeshare of constructioncost, particularlyinbuilding
construction; aUNIDOestimateplacesoperatingcosts and rentalsat
between2and5percentoftotalcost (48). Finally,it is customary
forthe contractor toprovidethegeneralplant,including, for example,
scaffoldingandtemporarystructuresand services,requiredbytheva-
rious subcontractors.
Itshouldbenotedthat thesearethe conditions thatexistinthe
developedandthemoreadvanceddevelopingcountries, butinmanyless-
industrializednations thesmallcontractormayhavetoworkundermore
difficult conditions, suchas (1) paymentfromthe clientmaybesub-
ject to unreasonabledelays, (2)labormaybeunreliable, (3) materials
andsuppliesmayhavetobepaidforon delivery, (4) equipment rentals
maybenonexistent, (5) equipmentmaybeexpensiveandbreakdowns fre-
quent, (6)cashflowmaybeunpredictablemakingforwardplanningdif-
ficult, and (7) short-termcreditmaynotbeavailable.
ItLsbeenrepeatedlyemphasizedthat constructionis arather
labor-intensiveindustry. Investmentinplantandequipmentin construc-
tionistherefore comparatively lowinbothdevelopedand developing
cc-.4,ries althoughitmightbeexpectedtobe "3omewhatlessinthelat-
ter (seeTableA3.11). Accordingto aUNIDOreport (48), capitalfor-
88
mationbythe constructionindustryaccountedforless than4percent
oftheGDCFin 33outof39 countries studiedovertheperiod1960 to
1965.
In developedcountries, contractors inneedofworkingorinvestment
capitalmightuseinternalfunds ormight turnto commercialbanks for
short-termloans on thebasis oftheircollateral. Alternatively,if
theyareincorporated,theymight trysellingcorporatebondsormore
stock. Indevelopingcountries,contractors try similardomesticsour-
ces butoftenencounter difficultiesdue to avarietyof factors,in-
cluding (1)manycontractors haveinsufficientfinancialresourcesof
theirown; (2)normalfinancialinstitutions areoftenunwillingtoex-
tendcredit tocontractors, especiallysmall ornewoneswhohavelittle
in thewayoffixedassets; (3)contractorsmayhavedifficultymeeting
theterms of normalloans; (4)managementoffinancialresourcesbycon-
tractorsindevelopingcountries isoftenratherpoor; and (5)capital
andforeignexchangereservesnecessaryforthepurchaseofimported
goods andservicesare generallyin scarcesupply.
The firststepinbeginningto alleviatethis situationinthe de-
velopingcountriesis to lessenthe contractor'sneedtoborrowworking
andinvestmentcapital. As forworkingcapital,thereareanumberof
possibleways for the governmentas clientto assist, including (1)
makingprogresspayments ontime; (2)providinginterest-freeorlow-
interest advancesforworkingcapital,as is alreadydonequiteoften;
(3)providingthematerialsthatarerequiredin largequantities,as
is sometimes donein Koreaforexample (seeTableA3.12); and (4)making
arrangementstopayformaterials that havebeen deliveredtothe site
butarenotyet incorporatedinthe facility. Aprivateclientmight
89
beencouraged
toperformsomesimilarservices.
to lesseninvestmentinequipmentincludeencouraging
firms
Means
to buyonly equipmentwhichcanbefullyutilizedandtoengageinequip-
Thispoolingmightoccurinavarietyof forms: (1)go-
mentpooling.
vernmentequipmentpools setupindependently
or inconjunction
witha
agency which already owns equipment for its own operations (see
public
Table A3.13 for data on government-owned
and contractor-owned
equipment
leasing companies (for
in Korea); (2) development
of private equipment
are quitecommoninIran,where
example,ratherspecialized
rentalfirms
includeoperator,
operationsare generallyona"wetlease"basis [i.e.,
pooling of equipment owned by
maintenance,
and fuel] [ 19] ); and (3)
lessenthis invest-
contractors
andsubcontractors.
Anothermeansto
mentmightbeto purchaseusedandreconditioned
equipmentfrom foreign
fromabroadthrough agovern-
contractors
whoare leavingthe countryor
mentorprivate agent.
alleviating
the financial difficulties
ofcon-
Anotherapproach to
tomakeitmorefeasible for them
tractorsindeveloping
countriesis
to improve
toborrowworkingandinvestment
capital. The firststepis
their abilitytomanage financialresources throughadditional
education
orshorttrainingprograms formanagers,
and the secondis todevelop
Thegovernments
incentives
for contractors
to saveandreinvestprofits.
ofsomedeveloping
countries ownandoperatematerials andequipment
plants and might set an example for the private sector
manufacturing
byprovidingthe contractor
with short-term
credit forpurchasesofsuch
are already fi-
goods. In Iran, for example, most equipment purchases
In somedeve-
nancedbythe dealers,andlosseshavebeensmall(12).
lopingcountrieswherenormalfinancialinstitutions
arereluctant
or
90
unwillingto finance contractors, anumberofconstructionenterprises
havejoinedforces and establishedaspecialinstitutiontoprovide fi-
nancingforcontractors (e.g., BankKarin IranandContractor'sFinan-
cialCooperativeofKorea [CFCK] [12] ). Thesehavebyand largebeen
quitesuccessfulinthemselves,butevenmoreimportantlytheyhaveof-
tenresultedinthemorenormalfinancialinstitutions' takingonthe
financingofcontractors. Anotherapproachtoencouragenormalfinan-
cialinstitutionsto finance contractorsmightbeforthe governmentto
provideincentivesortoprovidefacilities toinsuresuchcreditrisks.
Finally,too,publicfundsmightbeprovidedfor contractorfinancing,
perhaps throughindustrialdevelopmentbanks. TheNationalConstruction
Companyis doingthis inKenya,butsofarhasnotbeen toosuccessful
(12).
An additionalcomment shouldbe madeon theimpactsof the resource
mixand timingofinvestmentonboth the contractor'sand client'sneeds
for capital. Theresourcemixaffects the contractor'sneeds forwork-
ing as opposedtoinvestment capital andlocal currencyas opposedto
foreignexchange. Itmightsimilarly,althoughless directly,affect
the typeoffunds the clientneeds. The governmentmaythus devise fi-
nancialpoliciesto influence theuseofvarioustechnologies; for ex-
ample, thepurchaseofequipmentmightbediscouragedbyregulationof
exchangerates,byincreasinginterestrates, byimplementation ofdu-
ties onimportedequipment,orbyeliminationofdepreciationallowan-
ces onequipment (21).
Thetimingofinvestment alsoinfluences the contractor'sandcli-
ent'sneeds for funds. Since thereisafair amountofuncertainty
associatedwith the futurefundingofprojects, the generaltendency
91
is to request the maximum amount available for present funding and spend
it immediately, resulting in overdesign and neglect of maintenace.
Stagingofconstructionis anexcellentwayto alleviatethis problem
and to defer costs both for the client and the contractor. This is a
procedure whereby a facility is built initially to meet the imnedlate
demandsof theuserand is thenupgraded throughreconstruction tomeet
increaseddemand. Bytakingalazgeproject andthusbreakingit up in-
toaseries ofsmallerprojectsoveralongerperiodoftime, thecon-
tractor'sneeds forworkingandinvestmentcapitaland the client's
needs forfundingare decreasedintheshortrun,and inthe longrun
mayevenbedecreaseddue tomoreefficientutilizationof resources
or tounforeseenchanges in demand.
Two final topics relatedto contractorfinancingarebondingand
insurance. The suretybond is auniversalelementin -,onstruction
throughout the industrializedworldandis becomingsointhe develop-
ingworld. A surety bond is an agreement by the bonding company to in-
demnify theownerto theextent ofthebond's facevalue fornonparfor-
mance by the contractor. It is in no way insurance for the contractor
since he is required to indemnify the surety against any claim that may
be brought against it because of his failure to performin theprescri-
bedmanner. Someofthemostfrequently usedbonds include (1)bid--
guaranteesthat thebidder,ifawardedthe contract,willexecute the
contractwiththeowner; (2) perfurmance--guarantees performance in ac-
cordancewiththe termsofthe constructioncontract; (3)payment--
guarantees that the contractor's bills for labor and materials incurred
under the contract will be paid; and (4) maintenance--guarantees to
rectifydefects inworkmanshipormaterialsforaspecificperiodof
92
timefollowingcompletion. Contractorswithlimitedexperienceoras-
sets oftenhaveahardtime gettingsuchbondingexceptat the costof
veryhighpremimums,andmeansto alleviatethissituationneedtobe
workedout. Forexample,the governmentmightprcvide facilitiesfor
provisionofbondsor forinsuringbondingcompanies againstsuchrisks.
Alternatively,someotherforms ofguaranteesmightbe used; forexample,
the performanceandmaintenancebondsmightbereplacedbyretentionof
apartof the contractor'sprogress payments,andthepaymentbondby
withholding the contractor'sprogresspaymentuntilheshows evidence
that alllabor, suppliers,and subcontractorshavebeenpaidfor the
period.
Responsibility,liability,and insuranceis an importantbut com-
plextopicinconstruction. Constructionprojectsgenerallyhavese-
veral contractualarrangements ineffect at any point intimewhichto-
getherestablishacomplicatedstructureofresponsibilities fordama-
ges arisingout of constructionoperations;for thisreason,allparti-
cipantsneedinsurance. Indevelopingcountries,however,insurance
is stillasomewhatnewideaand, like financingandbonding,is diffi-
cult for the contractorwhois newor inexperiencedorwho lacks as-
sets. The governmentmighthelpbydevelopingsome facilities forpro-
vidinginsuranceorbyacceptingsomeof the contractor'sresponsibi-
litiesitselfwhenit is the clientandencouragingotherclients to
do the same. Developmentand implementationofnewinsurance arrange-
ments, suchas thewrap-up insuranceprogramswhichcoverallpartici-
pants (owner,architect,engineer,general contractor,and subcontrac-
tors), isanotherpossibility.
93
3.33Labor: Acommonconditionofunderdevelopment isan abun-
dance oflabor. Dataonunemployment,whichgenerallyrelates toper-
sons out ofworkand seekingworkforpayorprofitduringaparticular
referenceperiodare showninTable3.7. Differencesin the levelof
developmentandinaccountingproceduresat leastpartlyexplainthedis-
crepanciesnotedin this table. In the developingcountries thereis
alsousuallyaconsiderableamountof underemployment,whichisnearly
impossible to quantify. AnILO employmentstudyinColombiasuggested
thatperhaps 30 percentof the availablelaborwas unutilized. Similar
figurescouldbecitedforKenya,Ceylon,andseveralothercountries,
butdefinitions andconcepts differanddatais sketchy (7). Some
formsunderemployment takes include (1) personswhocannot findwage
employment,cannotaffordprotractedunemployment,andthus takeup
some formofnon-wageemploymentas ameansofsubsistence; (2) persons
in thewageandnon-wageworkforcewhoseproductivityisso lowthat
theycouldbewithdrawnfromemploymentin theiractivitywithvcr;, lit-
tle, ifany, resultingloss in outputunderexistingconditionsoftech-
nology andworkorganization; and (3)personsworkingshorterhours
duringtheworkweekthantheydesirewho areseekingadditionalem-
ployment, andpersonswho are seasonallyunemployed.
Theextentof thisover-abundanceof labornaturallyvaries from
one country to thenext,andfromone regionto another,andtheifmo-
bilityoflaborforcesmay causeascarcityoflaborin one areawhile
severeunemploymentexistselsewherein thecountry. InBrazil,for
example, large labor forces in the northeastern part of the country
cannotbeinducedto move tothe centralregionwherehighly capital-
94
Table 3.7: Unemploymentrates inKorea,Kenya,Colombia,Iran,and the
U.S. (percentagesa)(source: ref.18,22,36,55)
Year Koreab Kenyac Colombiabd Irane U.S.b
(Bogota)
1953 na na na na 2.9
f
1956 na na na 2.6 na
1963 8.1 8.3 8.7 na 5.7
1964 7.7 na 7.2 na 5.2
1965 7.4
11
.
4
g 8.8 na 4.5
1966 7.1 10.8 11.5 4.6 3.8
1967 6.2 8.1 12.7 na 3.8
1968 5.1 na 11.6 na 3.6
1969 4.8 na na na 3.5
1970 4.5 na na na 4.9
1971 4.5 na na na 5.9
1972 4.5 na na na 5.6
apercentagesarecalculatedbyrelatingtheunemployedto the total of
employedandunemployed.
bBasedonlabor forcesamplesurveys. Unemployedincludepersons seek-
ingworkwhetherornot theywerepreviouslyemployedandpersons
available forworkwhowerepreviouslyemployed,includingthosetem-
porarilylaidoff (U.S.andKorea- ref.22; Colombia- ref. 36).
CBasedonappliantsregisteredforwork- maleonly (ref.55).
dAge 14andoveruntil1965, thereafterage 10andover.
eBasedoncensusdata. Unemployedircludeonly thosepersonsactively
seekingworkandexcludeseasonallyunemployedagriculturalworkers
(ref. 18).
fExcludes
Alaska
andHawaii
(ref.
55).
gAverageofless than twelvemonths.
95
intensive techniquesare consequentlybeingutilizedonthe cross-Ama-
zonhighwayproject. Theextentofover-abundance oflaboralsovaries
overtime, and largelaborsuppliesmaynotbe continuouslyavailable.
At thepeakofthe plantingandharvestingseasons, forexample,all
available labormaybeneededonthe farms,whileduring theslacksea-
sons thereis asurplusoflabor.
Asidefromthesequestions on theavailabilityoflaboron alocal,
national,and continuousbasis,there arequestionswithregardto the
appropriateness
of thisabundantlaborforce forindustrialactivities.
By and large, it isseriouslylackingin skillsand experience (seeTa-
blesA3.8b andA3.14). Theliteracyrate of the adultpopulationin
manydevelopingcountries is verylow (seeTableA3.15). Anotherindi-
catorof thequalityofthe availablelaboris its healthandlevel of
nutrition. The populationsofdevelopingcountries tendgenerallyto
be undernourished
interms ofthe energy (calorie)andprotein content
of theirfood intake (seeTableA3.16), andthis notonly createspoor
livingconditionsbutalsomayaccountfor lowproductivityand thein-
abilityto do strenuouswork. Finally,mostdevelopingcountries lack
any industrial traditions; mostare agrarian,and the growingurban
areas are thus populatedmainlybyformerfarmers acquaintedonlywith
primitiveagriculturalmethods. Notonlyhavethe availableworkers
hadlittleexperiencewithmachineryand thushavescantperceptionof
thedisciplines requiredorofthe risks incurredwhendealingwith
heavy equipment, but theyalsooftenhaveaconceptoftimedifferent
thanthe tempoofmodernindustry.
Thedemands that theproductionphaseofthe constructionprocess
Places on labor are considerable.
On-site labor is, on the average,
96
nearly30percentof totalconstruction
cost (seeTable2.10). The
deviations
fromthis maybedue to differences
indefinition
andtype
ofconstruction,
butthey areprobably
also due to differences
inthe
levelof development.
Inthe U.S., forexample,production
tends to
behighlymechanized
andmaterials
tobelargelyprefabricated
sothat
relatively
littleon-sitelaboris used. In the least-developed
Ethio-
piaandevenKenya,laboris cheap in relationto theexpensive
imported
materials,
andonworkdonebyexpatriate
firms production
maybefairly
mechanized.
In the more-developed
Korea,however,
competition
forla-
borhas increased
andwithit itswages,materials
havebecomeless ex-
pensiveas less reliance
isplacedonimports,
andnearlyallworkis
donebylocalfirms probably
usingfairlylabor-intensive
technologies.
The laborrequired
for theproduction
phase, including
foremen
and skilled,
semi-skilled,
andunskilled
workers,
makesup from80to
90 percentofemployment
inconstruction
(seeTable 3.5). This figure,
compared
withthe sharesofthese categories
ofworkersin thetotal labor
force as giveninTables 3.5b, 3.5c,andA3.8a,shows that construction
employs aratherdisproportionate
shareofsuchlabor,suggesting
that
construction
is alabor-intensive
activity.
The composition
ofthepro-
ductionlaborforce forconstruction
appears to beverydifferent
in
developed
anddeveloping
countries
(seeTables 2.11, 3.5a,and3.5b for
developed
coutries
andTables3.5cand 3.8 for developing
countries).
Forthe developed
countries,
the proportion
ofskilledlaboris somewhat
greater thanthat of unskilled
laborand is manytimes that ofsemi-
skilledlabor,whilefor the developing
countries
unskilled
and semi-
skilledlaborlargely comprise
the laborforce. Whilesomeofthis
difference
betweenthe developed
anddeveloping
countries
canbeattri-
97
Table 3.8: Employment
inthe construction
industry
inKorea(source:
ref. 12)
Ordinarylabor
Year
(thousands)
(percent)
96.2
1963
199
192
95.8
1964
96.5
1965
245
95.8
1966
213
96.4
1967
264
96.8
1968
317
333
96.7
1969
96.1
1970
279
96.5
1971
327
Skilled labor
(thousands)
(percent)
7.9
3.8
8.5
4.2
9.0
3.5
9.4
4.2
10.0
3.6
10.5
3.2
11.2
3.3
11.3
3.9
12.0
3.5
98
butedto differencesindefinition,themixofconstructedfacilities
beingproducedis also important. In developingcountries, a;wasnoted
inSection2.1,constructiontends tobe largelyfocusedoninfrastruc-
ture creation,whiledatainTables2.12 and 2.13 for the U.S. show
thatpublicworksconstructionrequiressmallerproportionsofskilled
labor and largerproportionsofsemi-skilledand unskilledlaborthan
does buildingconstruction. One last andveryimportant factorwhich
helpsto account forthis differencebetweendevelopedanddeveloping
countries is that there is generallyashortageofskilledlaborin
developingcountries. Constructionmethodswhichcanuse arelatively
highproportionofunskilledandsemi-skilledlaborthus are used,and
whenskilled laboris neededbutnot available,menare trainedon-the-
jobbut onlyin alimitedwayandonly for thepurposesofthe particular
project.
Thus theabundantnaturalresource,labor,is suitablefor constru-
ctiononlyundercertainconditions. Laborersmustbe induced to come
toworkonconstructionprojects,whichmayinvolvecosts to the project
in the formofsuitablerelocatingand livingarrangements. Much ofthe
available laborwillneedtraining,althoughit is alsoperhaps useful
to try to use constructiontechniques requiring relativelyunskilledlabor.
Illiteracyis also aproblemin constructionin thatthisnecessitates
specialtrainingprogramsand meansthat fewoftheworkerscan read
blueprints. Finally,malnutritionand poorhealthand alackofindus-
trialtraditionsposeproblems for constructionandmustbetakeninto
considerationin assessing the appropriatness ofthe abundantlabor
force.
Training: It appearsthat inmostdevelopingcountries there is
99
aneedbothfor additionalandbetterqualifiedworkers inconstruction.
Thecommonreasonscitedforthese shortagesare alackof training
facilities,shortageofinstructors,andlow job statusandpay. These
conditionsandthe fact thatworkersare lessable, due to theirlack
of training,tomoveup to the positionofsitesupervisor/foreman
also
havecreatedageneralshortageofqualifiedforemen.
Asis the casein industrialized
countries, trainingforworkin
constructionindevelopingcountries ranges fromformal institutional
trainingto informalon-the--job training. Astudyoftheeducationand
trainingrequirementsofvarious industries,basedon the 1950popula-
tion censusin the U.S., shows construction's
requirements
tobeamong
the highest,10.6yearsof generaleducationaldevelopmentand2.3.years
of specificvocationalpreparation
(53). In recentyears,manydevelo-
ping countrieshaveestablished apprenticeship
schemes for the construc-
the drawing up of standards for training
tion industry which include
in particular trades, the making of arrangements
to provide basic
trainingandrelatedinstructionandthe trainingofinstructionalstaff.
andthe adoptionofmeasuresforsupervisionandcontrolofapprentice-
shipand for trade testing. Nevertheless,
suchsystematicapprentice-
shiphascontributedlittle to themanpowerneedsofthe industry. A
varietyofreasonsappear toaccount for this, including (1) building
contractors are reluctantto takeonapprenticesunderofficiallycon-
trolledschemes; (2)difficulties areencounteredin arousinginterest
in apprenticeship
amongpotentialentrants; (3)admissionconditions
areoftensohighthat thereis alackofqualifiedcandidates; and
This includesvocationaleducationinschools,apprenticeships,
on-
the-jobtraining,andacquisitionofessentialexperience.
100
(4) responsible
trainingbodiesare notyetequippedtoprovidethe ne-
cessary guidance. Tu someextent, developingcountries havesetcom-
pulsoryratios for employmentofapprentices,butthesehavebeenge-
nerally unsuccessful.
Dataon apprenticeship
intheU.S. andGreat
Britainsuggestthatit ismoreimportant inGreatBritain thaninthe
U.S., butin the lattercountry theseprograms donotsupplyenough
newworkers tomaintainthe sizeofthe current laborforce (seeTable
A3.17), andthe roleof apprenticeship
programshas largelybecomeone
ofproducingthekeyworkerswho risetosupervisoryandtrainingpo-
sitions.
Secondaryvocationalortradeschools,whichincludebuilding
trades sections,exist inmostdevelopingcountries,buttheirenroll-
Theirlack
mentis generally quitesmall (secTables 3.9a andA3.18).
ofcandidates, highdrop-outrate, and lackof contactwiththe industry
itselfhaveresultedinvocationaltrainingprograms contributingfew
skilledworkers to the construction
industryinbothdevelopedandde-
FiguresinTable3.9b forLatinAmerica,forex-
velopingcountries.
ample,show thatonlyfive percent ofall operativesandartisanwor-
kershavemore thanaprimaryeducation,withtwo percentintechnical
schools and threepercent ingeneralsecondaryeducation. Themilitary
is yet another source for training of construction workers, although
In Korea,afaizly
the levelof trainingcoverage isoftennot great.
significantnumberof construction
workershavebeentrainedbythis
means (12).
Some other formaltrainingschemesinclude (1)specialtraining
centersorganizedforthe solepurposeof trainingconstructionworkers,
suchas the ConstructionWorkersTrainingCenterestablishedbythe
101
inColombia,Ethiopia,Iran,Kenya,Korea,andthe
Table 3.9a: Enrollmentineducationalinstitutions
a
UnitedStates (source: ref.55)
Secondlevel
Countryandyear Pre-
primary
First
level
General
______
Vocational Teacher
non
Total
ota
Thir
level
Special
Spca
Colombia (1968) 110,494 2,733,432 407,966 191,573 54,527 654,066 85,339 6,797
Ethiopia(1969) na 590,445 105,652 6,168 2,623 114,443 4,636 3,270
Iran (1969) 20,214 2,916,266 897,443 23,335 9,275 930,053 67,268 2,086
Kenya(1970) na 1,427,589 126,855 2,136 8,017 137,008 4,967
b
1,849
Korea (1969) 21,658 5,622,816 1,441,700 259,601 ua 1,701,301 186,675 3,947
UnitedStates (1969) c
3 1
,
9 5 5
,
0 00
c na na na 19,674,0007,916,991 2,439,000
Figuresincludebothpublicandprivateschools,excludingadulteducationandcorrespondenceschools.
Part-timestudentsaregenerallyincludedonlyatthethirdlevelandinvocationaleducationat thesec-
ondlevel. Pre-primaryisdefinedaseducationprecedingthefirstlevelprovidedforchildrenwhoare
atnurseryschool,kindergarten,infantschool).
notoldenoughto enterschoolatthe firstlevel (e.g.,
Firstleveleducationisthatwithamainfunctionofprovidingbasicinstructioninthetools oflearn-
Its lengthmayrangefromfourtonineyearsdependingon
ing (e.g., atelementaryorprimaryschool).
Secondlevel educationisbaseduponatleas
theorganizationof theschoolsystemineachcountry.
the firstlevelandprovides general orspecializedinstructionof
fouryearsofpreviousinstructionat
both (e.g., atmiddleschool, secondaryschool,highschool,vocationalschool, teachertrainingschool
Thirdleveleducationrequires, asaminimumconditionofadmission,thesuccessfulcom-
atthislevel).
pletionofeducationatthesecondlevelorevidenceoftheattainmentof anequivalentlevelofknowledge
(e.g., atuniversity,teacher'scollege,higherprofessionalschool). Specialeducationcoversall gen-
eralorvocationaleducationgivento childrenwhoarephysicallyormentallyhandicapped,sociallymal-
adjusted,orinotharspecialcategories.
bDatarelates to 1968.
CPre-primaryenrollmentisincludedinfigureforfirstlevel.
Table 3.9b: Hypothes.sontheeducationalprofileofthelaborforceinLatinAmericain 1965anda
hypotheticalprojectionfor 1980 (source: ref. 52)
Percentagecompositionbyeducationallevel
Yearandeducationallevel Professional Administrative Employees Operatives Services
Total andtechnical andmanagerial and andartisan personnel
personnel staff salesmen workers
1965
Totala 100.0 100.0 100.0 100.0 100.0 100.0
Universitytraining
(completeandincomplete) 1.4 23.7 10.0 2.0 - -
Secondaryeducation 11.4 53.8 45.4 35.2 5.0 5.1
Generalsecondary 8.2 23.0 40.2 30.2 3.0 5.1
Complete
2.0 10.1 15.1 10.1 - -
Incomplete 6.2 12.9 25.1 20.1 3.0 5.1
5.0 2.0 -
Technical
2.3 5.0 5.2
- - - -
Teacher training 0.9 25.8
Primaryeducation 87.2 22.5 44.6 62.8 95.0 94.9
Morethanthreeyears 38.6 13.2 24.9 34.9 40.0 45.0
Lessthanthreeyears
ornone 48.6 9.3 19.7 27.9 55.0 49.9
1980
Totala 100.0 100.0 100.0 100.0 100.0 100.0
(continued)
(Table3.9b continued)
Percentagecompositionbyeducational le-el
Yearandeducationallevel
Total
Professional
andtechnical
personnel
Administrative
andmanagerial
staff
Employees
and
salesmen
Operatives
andartisan
workers
Services
personnel
0
Universitytraining
(completeandincomplete)
Secondaryeducation
Generalsecondary
Complete
Incomplete
Technical
2.0
21.2
12.8
3.7
9.1
6.9
24.6
65.7
20.8
10.0
10.8
16.0
13.1
60.7
46.3
30.6
15.7
14.4
2.7
44.8
36.5
23.0
13.5
8.3
-
14.0
7.2
1.8
5.4
6.8
-
8.1
8.1
1.9
6.2
-
Teachertraining
Primaryeducation
Morethanthreeyears
1.5
76.7
47.9
28.9
9.,
7.2
-
26.2
18.8
-
52.5
38.2
86.0
52.0
91.9
60.4
Less thanthreeyears
ornone
28.8 2.5 7.4 14.3 34.0 31.5
aPercentagesarebasedonthefollowingfiguresforthetotallaborforce: 1965- total76,416,000,
professionalandtechnical 2,787,000,administrativeandmanagerial2,312,000,employees andsalesmen
8,543,000,operativesandartisans53,484,000, andservicespersonnel9,290,000; 1980- total
120,000,000,professionalandtechnical6,310,000,administrativeandmanagerial2,705,000,employees
andsalesmen14,820,000,operativesandartisans 80,485,000,andservicespersonnel 14,680,000.
KoreanContractorsAssociationin1967 (12); (2)acceleratedtraining
centersoftenset upwithdirect referencetorequirementsundereco-
nomicplanning; (3)mobileunitsusedtocomplementtraining givenin
afixedcenterortoprovideshortintensivecourses inlimitedskills
topeoplewhowouldnototherwisehavereadyaccess to trainingfor
construction; (4)trainingfor constructionworkasacomponentof
youthemploymentand trainingschemes,prevocationaltraining, andcom-
munitydevelopmentprograms; and (5)upgradingand retrainingprograms
forworkers in theindustry, such as the training centerset upby the
TrainingandTestingBranchoftheEthiopianHighwayAuthorityfor the
purposeofupgradingits ownforceofskilledworkers andsupervisor,
(12).
Byand large, themajormeansofskillacquisitionindeveloping
countries is throughinformaltrainingon thejoborthroughamore
traditional formofapprenticeship. Toasomewhat lesserextent, this
is alsothe case inindustrializedcountries. For example,astudy
(8)of 784workers (includingbricklayersandtilesetters, carpen-
ters, electricians,and operatingengineers) in upstateNewYorkin the
U.S. found that21.6 percentof theworkersindicatedinfor-alon-the-
job trainingas theironlysourceof skillacquisition , 90.3percent
ofnon-apprenticeworkersindicateditas one of theirsources,andas
manyof thenon-apprenticeworkers receivedsomeof theirtraining
fromfriends and relativesas didfromvocationaleducationandmili-
tarytrainingcombined. Theextentoftrainingnecessaryvariesamong
Of these, 280eitherdidnot answerin anywayorhadtakenappren-
ticeshipandwerenotincludedinthe numberswho receivedtraining
fromothersources. Thisleaves 504non-apprenticeworkers.
Thisis33.5percentof thenon-apprenticeworkers.
105
crafts,of course,andas showninTable3.10some tradesin theU.S.,
forexample,relyquiteheavilyonformaltrainingofsomesort. On-
the-jobtrainingin developingcountries generallyproducesworkers
withsimpleskills, atbest at thesemi-skilledleiel,and trainsthem
only for the immediateneedsof the job athand. International contrac-
tors also trainworkersonthe sitetoperformworknormallycarried
outbyskilledcraftsmen,butin this casecomplexjobs are generally
brokendownintohighlyspecializedcomponents, and thus theworkers
learnonly narrowlyspecializedskills. Themajorskillsproducedin
thismannerinclude equipmentoperators,maintenancemechanics,welders,
carpenters, shutterers, and,to alesserextent,plumbers aLdelectricians
(17). Amoretraditional
formofapprenticeship,
wherebyamastercrafts-
mantakes onyoungpeopleand providesthemwithinstructionand work
experience,is also commonlypracticedindevelopingcountries, although
suchasystemfails toproducethekind,level,and qualityofskill
that the developingcountriesneedandthatmoreformalizedmethodspro-
duce.
Thereis littlequestionthattrainingindeveloping countries
needsimprovement,bothinterms ofupgradingandexpandingexisting
programsandofdevelopingnewones. Adequatetrainingofskilledworkers
mustnecessarily consistof threeelements--provision
ofan adequate
educationalbasis,systematicinstruction inefficient techniquesof
work,andsupervisedapplicationof these techniquesinrealworksi-
tuations. Onemeans toaccomplishthis mightbethroughan apprentice-
shipsystemwhichcombines traininginemployment andintensiveshort-
termcoursesonagroupbasisduringslackperiods. Developmentof
NationalIndustrialVocationalTrainingSchemesas inEthiopiaandKenya
106
Table 3.10: Percentageofeachcraftthatlearnedthe tradethrough
formal traininga,determinedbyasurveyconductedinApril1963 inthe
U.S. (source: ref. 5,28)
Constructioncraftsmen Percentthatlearned trade
throughformaltraining
Brickmasons,stonemasons,and tilesetters 44.7
Carpenters
31.1
Electricians
72.9
Excavating,grading,androad-building
machineoperators
11.2
Painters
27.8
Plumbersandpipefitters
55.0
Tinsmiths,coppersmiths,andsheet
metalworkers
70.9
Cranemen,derrickmen,andhoistmen 17.5
Allconstructioncraftsmen
39.4
alncludingapprenticeship,technicalschool training,andtrainingin
thearmedservices.
107
is another possible approach (24,25). Trairi , programs, 7 %lever,must be
tailoredtotheconditionsof theparticularcountry,andthusnogene-
rallyapplicablepatternscanbeestablished.
Responsibility
forworker
trainingmustbesharedbypropergovernmentagencies,employers'and
&idworkers. Greatlyin-
workers' organizations,
and individualfirms
creasedprovisionforupgradingandretrainingofworkersalreadyin
constructionis alsoofutmostimportance.
Trainingandretrainingofinstructors for theseprogramsis also
necessary,andhereitseemsinternational
agencies anddevelopedcoun-
triesmightbeof someassistanceas mightco-operativeactivities
amongdevelopingcountries. In the long runit isprobablybestthat
these instructors risefromtheranks of thebetterqualified crafts-
men who have had considerable field experience. In Iran, for example,
for twenty-six industries, including con-
the Industrial Training Board
struction, has an interesting program somewhat along these lines. The
Board,whinhwasestablishedbythe goverrmentin 1971andis financed
a
byan industrialtrainirglevyof2percentonturnover,hasset up
rangeofpublicandprivatevocationaltrainingcenterswhichprovide
for the purpose of
numerousindustry-I sedin-service trainingcourses
training officers within firms. A Staff College for the pur-
developing
poseofdevelopingacorps ofpeoplewhowanttotake up industrial
trainingas acareer isalsoplanned (12).
Aswasmentionedearlierinthis section,thereisalsoashortage
Theircurrentresponsibilityfor on-
ofadequatelyqualifiedforemen.
site trainingre-emphasizes theimportanceof theirowneducation. The
principalsourcesofrecruitmentfor foremenarebuildingtechnicians
from the former
and skilled workers, with the largest number coming
108
group. Themajordifficultywiththe techniciansis theirscarcityand
lackofpracticalexperience. Ifimprovedandselectivetrainingis or-
ganizedforcraftsmen,however,thesedifficultiesmaybeovercomeby
recruitingforemen fromthe ranksofskilledworkers,as ismoreoften
donein industrializedcountries. Nevertheless,additionaltrainingin
avarietyofsupervisoryandotherforemen-related functionswillbe
needed for the craftsman if he is to become a foreman, and programs for
upgrading and updating foremen need improvement, expansion, and develop-
ment.
Productivity: Productivityinconstructionaswellasinotherin-
dustriesis atopicwhichreceives considerableattentionindeveloped
aswellas developingcountries. Only laborproductivityis generally
considered,however,and amajorshortcomingoflaborproductivityis
that it failsto considertheotherinput factors ofcapitaland mate-
rials. Technologicalchange,whichis thoughttobelargelyresponsible
forproductivityincreases, frequently changesthemixofinputs as
wellas theirquality. Itwould thereforebeusefulto lookattheva-
rious input productivitiesor atatotalfactorproductivitywhichis
aweightedcombinationofallinputs, thus cancellingthe effectsof
factorsubstitutions. Thedata todo thisevenindevelopedcountries,
however,is very-parse, and for thispaperonlylaborproductivity
will be considered while bearing these other factors in mind.
Themeasurementoflaborproductivityis aprbblemevenindeveloped
countries due to theheterogeneousnatureofconstructioninputsand
outputs. Froductivitydiffersamongtypes of construction,crafts,
geographiclocations, sizes ofproject,andso forthandchanges over
time (see, forexample,Tables2.12 and2.13 where man-hours per 1000
109
dollarsof constructioncostor100 square feetis essentiallyanin-
versemeasureofproductivity). Indevelopingcountriesonlyroughin-
dicatorsofproductivity,suchas GDPorvalueaddedinaparticularsec-
torperperson in the economicallyactivepopulationoremployedin the
samesectorare available. Such figures forColombia,Iran,Korea,Ken-
ya,Ethiopia,andtheU.S. are giveninTableA3.19, andwhilethese
are far fromexactmeasuresofproductivity,theydoseemtoexhibit
the generaltrends inlaborproductivitythat onemightexpect.
Some generalobservationsonemightdrawfromthisdataare that (1)
productivityin thedevelopingcountries is less than that in theU.S.
inallsectors considered; (2)productivityin constructionisgenerally
less than that in manufacturing and greater than that in agriculture in
boththe developingcoutnriesand theU.S., withtheexceptionofKen-
ya; (3) productivity in construction in Colombia and especially Korea
seems to grow faster than that in manufacturing,while in the U.S.it
growsslower ifat all; (4)productivityinmanufacturinginColombia
andKorea,in turn, seems togrowslightlyfasterthan thatinagricul-
ture, although the oppositeis trueinthe U.S.whereagriculturehas
beenundergoingrapidmechanization; (5)productivitygrowthinthede-
velopingcountries as comparedwith thatintheU.S.is generally grea-
terin constructionand less inagriculture,withnoconsistent pattern
formanufacturing; and (6)change inproductivityinKorea,Colombia,
and theU.S.hasbeengenerally upward,withthe exceptionof construc-
tionin theU.S., andhasbeenfairlyconsiderable,especiallyinKo-
rea,whereasproductivityinKenyahas fluctuatedgreatlyand theover-
allchangehasbeenless. Furtherexplanationsoftheseobservations
maylie i the particularconditionsof theindividualcountries con-
110
cerned aswellasofthe developingversus developedcountries.
Efforts to improvelaborproductivityinconstructionindeveloping
countriesmustbeginwithanidentificationofthe factors affecting
productivity,their relativeimportance,andtheirpotentialfor altera-
tion. Fivegeneralcategoriesoffactors canbe identified--(l)natu-
ral conditions, (2)thenatureand qualityofmanagementand organiza-
tion, (3)thenature andqualityoflabor, (4)the availabilityofcapi-
tal, and (5)the levelof technology. Undernaturalconditions parame-
ters suchas climate,topography, geology,soilconditions,and vegeta-
tionare included (e.g.,see TableA3.20)aswellas the typeofcon-
structionand ofworkinvolved. Relativelylittle canbedoneto alter
theseconditions,but theymustbekeptinmindwhenselectingproduc-
tiontechniquesifproductivityistobemaximized.
Someofthe moreimportantmanagerialfactors include (1) the or-
ganization,management,andsupervisionofthesite fromthe initial
planningandschedulingtothe completionofthe project (e.g., see
TableA3.21); (2)the conditionsofemploymentoflabor (e.g., seeTa-
bleA3.22)andthestateof labor-management relations;and (3)the
natureof the industryand ofindividualfirms interms of competitive
pressures,degreeofspecialization,sizeofoperations,andpotential
foreconomiesofscale. Thesemanagerialfactors,byandlarge,have
considerablepotentialfor change or developmentinthe directionof
significantly improvinglaborproductivity.
Thenext groupof factors relatetothenatureandqualityof the
laborforce. The first ofthese is the attitudesand traditionsof the
workers themselves which are largely intangible and therefore difficult
toalter. Thesecondfactoris thehealth,nutrition, andphysical
ill
well-being
of theworker,oftenaveryseriousproblemindeveloping
countries.
An ILOstudy (4 ) onconstruction
oftheSharavathi
Valley
ProjectinIndia, for example,found that Ma'abarworkershadan average
dailyoutput 80percentgreaterthan that ofnon-Malabar
workers,which
1620more
the ILOattributed
tothe fact thataMalabarworkerconsumes
caloriesperday. Anotherstudy(13), donebytheIBRD,ofirondefi-
ciencyanemiainIndonesia,
whichis largelycausedbyhookworminfes-
tationandpoor dietaryintakeof iron,found theproductivity
ofnon-
anemiclaborers tobeabout 20percent greaterthan thatofanemicla-
Onemeanswhichmaybegintoalleviate
suchsituations
ispay-
borers.
ment in foodratherthan money; anotheris furtherprovision
ofmedical
andsanitation
facilities.
Thelevelofskillsoftheworkforceis the
finalfactor,and this dependsuponthe existenceof traditionalskills,
the levelofeducation,the literacy rate, and the quality,breadth,
andavailability
of trainingand retraining
programs.
The fourthsetoffactorsinfluencing
laborproductivity
involves
the availability
and useof capitalin the formofinvestment
inplant
and equipment.
In themajorityofdeveloping
countries
there isa
shortageof capital,particularly
ofthe foreignexchangeneededfor the
initialpurchaseofequipment (whichtends tobehighdue totransport
charges,import duties, and the like) andits upkeep in the formof
fuel and spare parts. The low utilization,
poor maintenance,
frequent
breakdowns,
and costly repairs of such equipment tend to result in
in the developing
countries,
and the use of equip-
higher overhead costs
ment tends toreducethe amount of unskilledlaboronthe site. Thus,
whileinvestment
inequipmentin theindustrialized
countrieshashelped
that this is the route to
to raise labor productivity,
it is not clear
112
followin developingcounries, althoughinvestmentinsome,especially
locallyproducedequipmentmightbeadvantageous.
Closelyrelatedtothis is the fifthand finalgroupoffactors
whichinfluencelaborproductivity,theleveloftechnologyor,more
specifically, themixofinputsoflabor, capital,andmaterials,and
themethodofconstruction. Ashasoftenbeennoted,constructiontends
tobealabor-intens!veactivityeveninindustrializedcountries,yet
as laborhasbecomeincreasinglycostlyrelative tootherinputs, there
hasbeenatendencytotry to raiseproductivitybyreplacinglaborwith
equipment (seeTableA3.23) andbyusinglabor-savingmaterialsand pre-
fabricatedcomponents andsystems, although thesuccess ofthese effortg
isnotyet clear (seeTable2.13). Whetherornot this isappropriate
fordeveloping countries is additionallyhighlyquestionablebecauseof
theircapitalshortages, laborabundances,and lackofinfrastructure.
Itdoesseem,however,that thedevelopmentanduseofnewand improved
techniques,suchas processeswhichcanbebrokendown intosimpleope-
rations,standardization ofcomponents,processes, anddesigns,some
on-siteprefabrication, and generalrationalizationofworkon the site,
whichrequire lessskilledlabor and resultinmoreefficientuseof
availableequipment wouldbeworthwhileat least untilworkers canbe
trainedandthe furtherindustrializationofconstructionis appropriate.
ConditionsofWork: Conditionsofworkinthe constructionindustry
are notoriouslybadinbothdevelopedanddevelopingcountries. Whe-
theronelooks at construction'ssharesof totalemploymentandunem-
ployment (seeTables2.3b, A2.3,andA3.24)or the rateof unemployment
inconstruction (seeTable3.11)relative tootherindustrysectors,it
is evidentthat constructionhas adisproportionally largeshareofun-
113
Table 3.11: Unemploymentratesaforspecificindustrialgroups,intheU.S.andKorea (percentage)
(source: calculatedfromTables A2.3andA3.24)
Countryandindustry 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972
United
Statesb
Construction 13.8 11.7 10.6 8.3 7.8 7.3 6.4 10.4 11.6 11.7
Manufacturing
5.9 5.2 4.1 3.3 3.9 3.4 3.4 5.3 7.0 5.7
Agriculture, forestry,
andfishing 3.5 3.7 2.7 2.4 2.6 2.4 2.1 2.8 3.1 3.0
Total
5.8 5.3 4.6 3.9 3.8 3.6 3.5 4.9 5.9 5.6
Koreac
Construction
6.5 7.7 7.5 6.2 7.4 6.8 6.5 4.5 4.9 10.0
Manufacturing 9.3 8.6 6.5 4.6 5.1 4.1 4.3
3
.7 3.8
d
5.4
d
Agriculture,forestry,
andfishing 1.4 1.3 1.1 1.2 0.8 0.8 0.6 0.6 0.6 0.4
Total 8.1 7.7 7.4 7.1 6.2 5.1 4.8 45 4.5 4.5
aSeefootnotea,TableA3.24. Unemploymentrateisunemployment,dividedbythequantity employment
plusunemployment, andmultipliedbyonehundredpercent.
bpersonsaged16 orover,except 1963--1966aged 14oroverforunemploymentfigures. Employmentfigures
forconstructionandmanufacturingarefromstatistics ofestablishmentsintheprivatesectorrather
thanlaborforcesamplesurveys.
CNewindustrialclassificationcameintoeffectin 1971.
dExcludes allrepairservices.
employment. Althoughthe problemappearsmore seriousintheU.S.,
whereconstruction'sunemployment rateis twice theall-industryfigure,
it seemstobean increasingprobleminKorea,where the unemployment
rate inconstructionhasnotbeen decliningasithasinotherindustries
and inrecentyearshas beenlarger thanthe all-industryfigure. The
unemploymentproblemindevelopingcountries isprobablyless apparent
becauseof theuseof daylaborers (seeTableA3.25) andthewayin
whichworkersin ruralareasdivide theirtimeseasonallybatween con-
structionandagriculture.
The labor force in constructionis generallyafloatingone,hired
on aproject-by-projectbasis, and the demandfor laboris thus closely
linkedtothe fluctuatingdemand for construction. Theoutcomeinboth
developedanddevelopingcountries is employmentinstability (seeTable
A3.26). Periodicinstability,arisinglargelyfromeconomicandpoli-
ticalconditions,seems especiallyseriousinconstruction indeveloping
countries. AnILOreport (23)suggeststhreereasonswhy thismaybe
true--(1) failureto forecastonalong-termbasisthe majorinvestment
requirementsof theindustrializationprocess; (2)constructionprojects
innationaldevelopmentplans maynotbeexecuteddue topoliticalin-
stabilityorexchangecrises; and (3)arathersmallnumberofrelatively
largeinfraitructureprojects tend tocharacterizetheearlystagesof
the industrializationprocess. Seasonalfluctuations, on the other
hand,mayactuallybealess seriousproblemin the developingthanin
developedcountries, althoughin some thereareproblemswiththemon-
soonseason. Thetemporarynatureofconstructionworkdue to its pro-
ject-orientationand theperiods ofunemploymentwhichmostworkers en-
counterbetweenprojectsareprobablyequallyserious inbothdeveloped
115
Theimpactofthison theindividual,
how-
and developing
countries.
ever,maybeless indeveloping
countries
in thatconstruction
isoftedL
considered
temporary
seasonalworkorastepping-stone
to employmenL
in
Thisishardlyasatisfactory
solution
to theproblem,
manufacturing;
however,
sincethe successful
growth of the construction
industry
re-
Fi-
quires thedevelopment
ofapermanent
andcommitted
laborforce.
nally,technological
unemployment
andintermittent
occurrences
onthe
job, suchasaccidents,
workstoppages,
andmanagement
andlaborinef-
ficiencies,
also contribute
to employment
instability.
Suchemployment
instability
ishighlyundesirable
bothfromthe
standpoint
ofencouraging
workersto entertheindustry
andofusirg
to the fullestextent the labor forcethatisavailable.
Greateref-
forts to reducethis instability
mustbemade;someofthesemightin-
(1) explicitly
including
construction
innationaldevelopment
clude
plans; (2) easingrelianceonconstruction
as ashort-term
economicre-
and tax policies;
(3)
gulator through appropriate
monetary,
f~scal,
developing
aconstruction
labormarket information
system; (4) planning
tostabilize
construction
demand; (5) es-
publicworksprojects so as
tablishing
fiscalorrelatedmeasures
toencourage
off-season
construc-
(6) promoting
thedevelopment
anduseof
tionor tooffsetits costs;
all-weather
construction
techniques;
(7) increasing
foreign aidtied
tospecificprojects;
and (8) improvingcontinuity
intheoperations
At the sametime, however,it isimportant
of localand foreign firms.
to realize thatalloftheinstability
canneverbealleviated,
and thus
Thesemightinclude
effortsmust alsobemadetoreduceits impact.
providingcompensation
funds,makingguarantees
of acertainnumberof
hoursofworkperweek,increasing
workermobility,
andproviding
aid
116
toworkers inpursuitofworkthroughspecialinformationandemployment
services. InColombia,forexample,workersintheconstructionindustry
receive threedays ofwagesfor everymonthworkedas unemploymentcom-
pensation(23).
Hoursofworkisatopiccloselyrelatedtothe question ofemploy-
mentstability. Averagehoursofworkperweekin constructionare ge-
nerallylowerthanthose inmanufacturingandinthe non-agricultural
sectorofthe economyinbothdevelopinganddevelopedcountries (see
TableA3.27), and hoursworkedinconstructionare alsogenerallysub-
jecttogreaterfluctuations. Legislationestablishingmaximumhours
ofworkperday andweekwithandwithoutextracompensationis quite
commonandmayhelpto alleviateapart oftheproblemifit is enforced.
Anotherpossiblesolution,parzicularlyincountrieswherethe industry
is lessdeveloped,islegislationestablishingminimumhoursorsome
sortof unemploymentcompensation. Whereemployers' andem:ployees' as-
sociationsexist, amorevoluntaryarrangementbetweenthemmaybepos-
sible.
Wagesare of course anotherissueofimportancein constructionin
bothdevelopinganddevelopedcountries,but for ratherdifferentrea-
sons. Wagesin construction indevelopedcountries ingeneral tendto
behigherand to growsomewhatfasterthan thoseinmanufacturing(see
Table2.5); dataonthe U.S. inTables 3.12a,3.12c,andA3.28demon-
stratethis factand also showwagesinconstructionto behigherthan
thosein agricultureand thenon-agriculturalandtotaleconomiesas
wholes andto growsomewhat fasterthanin these othersectors,with
theexceptionofagriculture. Thereare avarietyoffactorswhichare
consideredat leastpartlyresponsibleforthesehigherand faster
117
3.12a:Averageearningsperworkerinconstruction,manufacturing,agriculture,aad thetotal non-agriculturalveuctor in
Table
KoreaandtheUnitedStates (source: ref. 22)
1971 1972
1968 1969 1970
Countryandindustry 1963 1964 1965 1966 1967
Korea (won) 2,7 2,28 3,0
a,bna
na na na 23,174 26,298 31,250
na na
Construction
(permonth) na na
' 6,640 8,400 11,270 14,150 17,349 20,104
Manufacturingac (permonth) 3,180 3,880 4,600 5,420
d'e
143 199 221 256 307 381 463 579 695 803
Agriculture (males)(perday)
207 260 316 392 472 552
(females)(perday) 91 124 141 165
Non-agricul
ural
na na na 11,610 17,363 20,988 23,146
na
sectoral (permonth) na na
UnitedStates (dollars)
5.49 5.84
f 3.55 3.76 3.99 4.26 4.64 5.08
Construction
(perhour) 3.26 3.43
197.64 209.07
153.79 169.82 184.40
(perweek) 111.36 122.79 128.16 136.49 145.64
3.36 3.56 3.81
2.83 3.01 3.19
Manufacturing
(perhour) 2.46 2.53 2.61 2.72
(perweek) 9963 102.97 107.53 112.34 114.90 122.51 129.51 133.73 142.04 154.69
d'g 1.12 1.12 1.33 1.42 1.48 1.58
Agriculture (perhour) 0.88 0.90 0.95 1.03
3.22 3.43 3.65
2.68 2.85 3.04
2.28 2.36 2.45 2.56
Non-agriculturalsector(perhour)
98.82 101.84 107.73 114.61 119.46 126.91 135.78
(perweek) 88.46 91.33 95.06
alncludes familyallowancesand thevalueofpayment inkind.
blncludessalariedemployees.
CScope ofseriesenlargedstartingin 1969.
dwageratesratherthanaverageearningsperworker.
eCashpartof remuneration(wherereceivedpartlyincashandpartlyinkind)andestimatedvalueof paymentsinkind forboard
andlodging.
fForbuilding
only.
remunera-
Wageratemaybecompletewagewhereworkers
glncludesallworkers (daylaborers andpermanentseasonalworkers).
ExcludesAlaskaandHawaii.
tedwhollyincashorcashpartwhereremuneratedpartlyincashandpartlyinkind.
Table 3.12b: WagesinmanufacturingandconstructioninsomeAfricancountries (nationalcurrencyunits)
(source: ref. 40)
Industry
Countryandyear Typeofwage Currencyunit
Construction Manufacturing
Algeria (1961) hourly,skilled franc 1.93 2.07
hourly,laborer franc 1.51 1.41
Ghana (1961) monthlya shilling 296 371
Kenya (1959) monthlya'b',males shilling 143 141
Malawi (1962) monthlya
'
b pound 5.7 5.7
Nigeria (1960) monthly,skilled pound 12.3 15.4
monthly,unskilled pound 6.4 7.4
'
Rhodesia (1962) monthlyab pound 10.2 11.7
Senegal (1961) hourly franc 74.70 79.50
Tanganyika (1962) monthly shilling 127 136
e
U.A.R. (1962) weekly piastre 226
d
219
'
Zambia (1962) monthlyab pound 10.6 11.8
alncludingemployees.
bIncludingvalueofpaymentsinkind.
cAdultsonly.
dBuildingonly.
eMales only.
inconstruction
andmanufac-
Table 3.12c: Averagewageper employee
a
turing(source:
calculated
fromTable A2.14)
Average
wageperemployee
i
I(thousands ofnationalcurrencyunitsperperson)
Country andyear 1
Manufacturing
o Construction
na
0.628
Ethiopia 1958
(dollar) 1961 0.573
na
0.653
na
1962
0.664
na
1963
107.1
Koreac
1968
na
133.4
(won) 1969
120.2
164.1
170.2
1970
4.886
5.020
UnitedStatesd 1958
(dollar) 1963 6.018 5.755
6.330
1965
6.595
6.688
7.417
1967
7.104
7.953
1968
7.451
8.615
1969
7.729
9.293
na
1970
9.909
1971
awagesandsalaries
dividedbyemployees;
for thesefiguresseeTable
A2.14.
bconstructiondataarefor licensedenterprisesengagedincontract
Manufacturing
datainclude
establishments
withfiveor
construction.
moreemployees
exceptthoseengaged inflourmillingforclient's
account,coffeeand graincleaning,
shoemaking,andrepairing
and
tailoring.
Manufacturingdata
CConstructiondata areforallregisteredunits.
areforestablishments
with fiveormorepersonsengagedexcluding
government
establishments
other thanrailroad
workshops
andtobacco
factories.
dConstruction
dataincludeallenterprisesengagedincontractcon-
struction
asof January
1. Manufacturing
dataareforestablishments
withatleastoneemployee
excluding
centraladministrative
offices
andauxiliaries
servingmanufacturing
establishments
(in1963and
1967-70)
andexcluding
thoseestablishments
engaged
inmanufacturing
or repairing
for theretailtrade (in1958and 1965).
120
Table3.12d: AveragewageperemployeeinKenya,byindustry,1968 (source: ref. 34)
Employmentc
Averagewage
Industy
Annualwagebill
b
(millionsofpounds) (thousands) peremployee
perperson) ______________________(pounds
Buildingandconstruction 4.6 18.1 254
Manufacturingandrepair 18.9 58.2 325
Agricultureandforestry 12.3 173.0 71
Total 147.0 608.7 241
aPrivateemployersengagedinindustrial,commercial,agricultural,andotheractivitieswereaskedto
statetheirmainactivity,andthiswasthebasisofindustrialclassification.
bEatimatedfrommonthlydata; reported earningsforthemontharemultipliedbytwelve. Wagescoverall
cashpayments,includingbasicsalary,costoflivingallowances, andprofitbonuses, togetherwiththe
valueofrationsandfreeboardandanestimateof theemployer's contributiontowardhousing. Non-cash
benefits,suchasretirementbenefitsandpassageassistance,areexcluded.
CFiguresareasof theendofJuneand includeallapprentices,part-timeworkers,anddirectorsand
partnersnotservingonabasicsalarycontract.
growing construction wages in the U.S., including (1) factors which in-
fluence changes in wage levels in nearly any industry, such as levels
of or changes in the unemployment rate, cost of living, productivity,
profit rate, and other industries' wage levels; (2) factors for whichi
higher construction wages are supposed to compensate, such as employment
instability, lowleveloffringebenefits,highproportionofskilled
labor, and hazardous and often unpleasant working conditions; (3)union
influenceinthe formofworkstoppages andunioncontroloverthe labor
supply throughhiringhallsand trainingprograms; and (4)localmarket
conditionsand the decentralizedstructureofcollectivebargaining.
Inmostdevelopingcountries, onthe otherhand,withtheexception
ofKorea,wages inconstructionare somewhatlower than those inmanu-
facturingbutstillhigher than thoseinagricultureand the economyas
awhole (seeTables2.5,3.12, and A3.28). In theearlystagesofde-
velopment,moreover,wagesinconstructiontend togrowmoreslowlythan
thoseinmanufacturing,althoughas developmentprogressetandconstruc-
tion'sneedfor labor increases,wages tendtorise fasterthan inma-
nufacturingand soonexceedthem. Thisappears tohavebegun tooccur
inKoreabutnot in theAfrican countriesingeneral. Thiswagediscre-
pancybetweendevelopedand developingcountries is atleastpartlydue
to the generallylowproportionofskilledlaborusedinconstruction
and thegenerallynew,ifevenexistent,laborunionsinthe developing
countries. Inaneffort tomake constructionamoreattractiveand
permanentoccupationin developingcountries,it isprobablynecessary
toraisethewagesinorderto successfullycompetefor thelabor,al-
thoughat thesametime caremustbetakentoassurethattheydonot
getout ofhandas theyhaveinsome industrializedcountries. Some
122
possiblemeasuresinthis directionincludestabilizingconstruction
demand,improvingmanpowerplanningandwithit training,allocation,
andutilizationoflabor,andthe carefulstructuringof collective
bargaining.
Wagedifferentials betweenthelowandhighskilledoccupations in
the developingcountriesare generallyrelativelylargerthanin the
developedcountries (seeTableA3.29). At the same time,wages for the
less skilledoccupationstendtorisefaster (seeTableA3.30), andin
many countriesminimumwageshavebeensetandtosome extentenforced
for unskilled,women,andyoungworkers,whileoccupationsrequiring
more skillhavenotalwaysbeengivensimilarattention. Broaderuse
ofminimumwagelawsmightbeconsideredaswellas systeisofsectoral
as opposed tonationalminimumwages.
Anotherissue relatedtowagesinconstructionisthe industry's
generalshortcomingsinsociallegislation,suchas provisions for so-
cial securityandvarious fringebenefits. Inmanydevelopingcountries
sociallegislationin theoryisrelativelyprogressive,butin practice
is appliedonlyinafewindustries,usuallynotincludingconstruction.
This problemarises largelybecauseof the temporarynatureofworkin
construction,andit appearsthatsome specialarrangementsprobably
need tobemadeinthis area. Thesemightincludemakingbenefitsa-
risingfromhealth,welfare, andpensionfundsmoretransferable,for
example,anddevelopingspecialunemploymentcompensationprograms.
Workingandlivingconditionson thesite itselfare anothertopic
of significance in construction. The nature and extent of facilities
andamenitiesprovidedbytheemployers for thewelfareoftheirworkers
varywidelywitheconomicfactors anddifferentsite conditions. Urban
123
andruralprojects
withworkers
livingathomemightprovide
onlythe
barestnecessities,
whilelargeprojects
of longduration
in remotelo-
mightbuildwhole townsand laborcamps,wherelivingconditions
cations
mayactually
beabovethe country's
standard.
Smallprojects
ofshort
duration
inremote locations,
however,
oftenfaceserious
welfare
prob-
tothe employer's
unwillingness
toprovide
thenecessary
faci-
lems due
greatly,
noexactlegislation
canreally
lities.
Sincesitesvaryso
belaiddown, although
welfare
facilities
tobeprovided
couldbespe-
cifiedinthecontract
documents
andperhaps someminimum
legalrequire-
ments couldbeset.
Workin construction
inbothdeveloping
anddeveloped
countries
is
oftenconsidered
unpleasant
because
itis strenuous,
dirty,andexposed
to theweather,
butofevenmoreconsequence
is thehazardous
natureof
arehighdue tothe dange.s
suchwork. Construction's
accident
ratios
inherent
in theerection
oflargestructures,
the temporary
natureof
thework,and the largenumberofsmallfirms involved.
Inaddition,
in the developing
countries,
the industry's
rapidrateofexpansion
is
not conducive
tosafetyconsciousness,
thereis little safetylegisla-
tionandeven less enforcement,
managers
andsupervisors
are oftenun-
familiar
withthe tew standards
thatdo exist, communication
isacom-
monproblemwithforeign contractors,
andthereareoftenanumberof
It isimportant
toeducate
thewor-
firmsinvolved
on asinglesite.
kerswith regardtosafety,tomakeand keepmanagers
andsupervisors
knowledgeable
aboutminimumprotective
standards,
andtoestablish,
up-
date,andenforceadequatesafetyregulations.
similar lines is the frequent
employment
of women
Along somewhat
lack of regulative
pro-
and children
in construction,
and the general
124
tective legislation or its enforcement.
The age at which children can
berecruitedand thekindoftasks andhoursofworkwomenandchildren
carefully regu-
can beexpected todo, as well as their wages,mustbe
latedthroughenforcedlegislation.
Moreover,particularly
in the case
ofchildren,itis importanttoconsiderwhattheworkerislearningon
hisjob.
Employees'
organizations
havebeenmentionedseveraltimes inregard
In industrialized
countries unions
toprotectingtheworkers' rights.
playanimportant role in this respect, andinconstruction
theyaddi-
activepartintrainingandhiringprocedures;
unions
tionallytakean
arealsoinvolvedinpoliticalactivitiesinseveralEuropeancountries.
Inmanydevelopingcountries,however,only relativelyfewconstruction
workersare formallyorganized,andoftenthe unions that doexistare
ineffective.
Whilelegislation
canbedevelopedtoprotect theworker,
itis oftenhard toenforce,particularly
in construction
dueto the
These
temporarynature ofthework,and the largenumberofsites.
featuresalongwithother conditionspeculiartodeveloping
countries
suchas thepovertyand ignoranceof manyworkers,theirnon-commitment
toindustrialization,
andashiftingworkforcealsocomplicateunion
organization.
Nevertheless,
collectivebargainingagreementsbetween
employers' andworkers'organizations,
basedon aminimumsetofstan-
dards concerningtheworkers'welfare,seempotentially
more feasible
andsuccessfulthansimplyrelyingonlegislationand itsenforcement.
Thedevelopment ofworkers'organizations
in developingcountries
requiresmuchthought,forwhilethedevelopingcountries can learn
fromthe industrialized
countries in theareaoflabor-management
re-
lations, it is importantthat theydonot simplymimicthe currentsys-
125
temsbecausetheyhavemanyshortcomingsandfeatureswhichareincom-
patiblewithconditionsindevelopingcountries. Animportant areaof
consideration, forexample, iswhetherit is desirableforunionsto de-
velopalongcraft or craft-industriallines, andwhethercollectivebar-
gainingshoulddevelopalongcraft, geographicarea, andindLtrysec-
torlines ashashappenedinconstructioninindustrializedcou,.ries,
oralongsomewhatbroaderlines as ishappeningnowin developedcoun-
tries. Itis alsoimportant thatequally strongemployers' associations
developconcurrentlyand,sinceconstructionisanespeciallystrike-
proneindustryinmanydevelopedcountries (seeTableA3.31), thatef-
fectivedispute-settlementmachinerybeestablished.
3.34Materials: Inbothdevelopingand developedcountries the
constructionindustry ishighlydependentuponotherindustries for in-
puts to thebuildingprocess. Materials' shareoftotal construction
costs in the U.S. and variousdevelopingcountries, asshownin Table
2.10,ranges fromalowof17percent for dredgingoperationsinthe
U.S. toahighof 70 percent forhousebuildinginKenya,withanave-
rage ofabout 50percent. Anumberoffactorsmayaccount for these
variations. DataforEthiopiaandKenyaare limitedtohousebuilding,
and thus one would expect the materials' component to be higher than
that for Koreawhichincludesalltypesof construction,abouthalfof
whichiscivilengineeringwork. The datainTables 3.13andA3.32
show thetypes andamountsofmaterialsusedinconstructionoverthe
yearsinthe U.S. Whilethese samebasicmaterialsareprobablyused
indevelopingcountries, their costs are different (see Table A3.33and
Figure A3.1), and theymaybeusedin differentproportions,or local
materials may be substituted as the indigenous industry develops. In
126
Table 3.13: "Distributionofmaterialandequipmentcostsperthousanddollarsofcontractcostfor
varioustypesofconstructionintheU.S. (dollarsper$1000orcontractcost) (source: ref. 30, 57,
59, 60).
Material
Privatesingle-
familyhousing
a
(1962)
Federaloffice
buildingb
(1959-1960)
c
Sewerworks
(1962-1963)
Civilworks-
landoperationsd
(1959-1960)
Allmaterials 482.40 532.50 564.70 542.50
Lumberandwoodproducts 193.20 17.60 6.70 22.50
Roughanddressedlumber
1 1
0.
1 0
e na na 10.90
Allotherlumberproducts 83.10 na na 11.60
Stone,clay,andglassproducts 116.60 117.20 234.60 144.00
Cement,concrete,andgypsumproducts 76.70 60.80 130.20 48.60
Clayproducts 19.70 18.50 77.40 195.40
i
Otherstone,clayandglassproducts 20.20 37.90 27.00
Metalproducts (exceptplumbingand
heating) 55.00 133.30 105.70 78.80
Fabricatedstructuralmetalproducts 36.40 102.50 49.70 7620
Otherfabricatedmetalproducts 6.90
Othermetalproducts 18.60 24.00 56.00 2.60
Plumbingproducts 26.80 27.40 1.10
Heating,ventilating,and aircondition-
ingequipment 18.50 65.50 5.20 -
Electricalproducts (exceptheating) 17.60 96.90 23.30 1.30
Fixedbuildingequipment
1 3
.
7 0
g 42.50
6 9
.
9 0
h 3.20
(continued
(Table 3.13 continued)
Privatesingle- Federaloffice c Civilworks-
Material familyhousinga building Sewerwarks9 landoperationsd
(1962) (1959-1960) (1959-1960)
Petroleumproducts 11.10 4.70 14.00 68.60
Chemicals,includingpaint 10.30 5.50 3.60 21.00
Explosives - - 1.80 19.50
Otherchemicalproducts 10.30 5.50 1.80 1.50
Constructionequipment (rentalcharges
ordepreciation) 9.80 19.10 98.60 192.00
Allother 9.80 2.80 2.10 11.10
Note: Detailmaynotaddtototals duetorounding.
aRef. 59.
bRef. 30.
Cincludessewerlinesandplants,ref.60.
dlncludeslevees,dams,bankstabilization,piledikes,localfloodprotection,andmiscellaneousother
projects,ref.57.
eIncludesdataforprefabricatedorpackagedhousesnotbrokendownintoseparatewoodcomponents.
fIncludes sand,gravel,anddirtfill.
g~ncludesbuilt-inmajorappliances (refrigerators,dishwashers,ranges,etc.).
hincludes
sewageplantequipment.
includesbrokenandcrushedstone,sand,andgravel.
EthiopiaandKenyaexpensiveimportedmaterialsand relativelycheapla-
borareused,whilein theU.S., locally availablebutlargelyprefabri-
catedmaterialsare employedandproductionis largelymechanized. In
Korea,whichis considerablymoredevelopedthanare EthiopiaandKen-
ya,materialshavebecomerelativelyless expensiveas less relianceis
placedonimports,whilelaborhasbecomerelativelymoreexpensiveas
Whilethedevelopment ofimport-substituting
competitionhasincreased.
capacitydoesnot generally appeartoresultin actualmaterials'costs
(41), these costs inbothdeveloping anddevelopedcountries
reductions
growmoreslowlythan do thoseoflabor (seeTablesA3.30andA3.34and
Figure2.4).
Yet anotherindicatorofthe importanceofbuildingmaterialsin
constructionare theman-hoursspent inotherindustriesinvolvedin
the production and distributionofmaterials andequipment forconstruc-
tion. In all cases, as showninTables 2.12 and2.13, the otherindus-
tries' componentis even largerthan that of the constructionindustry,
and thus thepotentialforemploymentin theseancillaryindustries is
greaterthan inconstructionitself. Thesedata,however, are for the
U.S. only, and it appearsprobable thatin the developingcountries
the ratio ofancillaryman-hours tothoseinconstructionis somewhat
lessbecausemanyofthematerials,equipment, andsuppliesareimpor-
ted and thelocalgoodswhichare usedare generallyin asimplerform
(e.g.,materials lessprefabricatedandequipmentless sophisticated).
Theproduction,consumption,and trade ofmaterialsand thewis-
domofdevelopinglocalbuildingmaterialsindustries deserve somedis-
cussion. Buildingmaterialsmaybedividedintotwo generalclasses:
(1)basicmaterials, suchas cement,iron and steelproducts,andwood
129
electrical,
products,
and (2)building
fittings
and fixtures,
suchas
Awidevariety
ofindustries
there-
mechanical,
andplumbing
equipment.
fore are involved
intheproduction
of thesematerials,
including
wood-
working,
chemical,
metal,
andengineering
industries.
Per capita
consumption
ofbuilding
materials
in developing
coun-
tries
is generally
farbelow
thatin developed
countries.
InAfrica,
forexample,
percapita
consumption
ofcement
inthe late sixties
was
onlyone-tenth
of that indeveloped
countries,
thatofmetal
products
sawn wood was one-twelfth
(38).
Table
and that of
was one-sixtieth,
data for Africa
and its subregions
relative
more detailed
A3.35
gives
to theworldand further
demonstrates
the considerable
disparity
among
Atrend,
similar
to the
subregions
inpercapita
consumption
levels.
strong
positive
correlation
between
percapita
value
addedinconstrulc-
(seeFigure
2.1), isapparent
for manybuilding
tion andpercapita
GDP
materials
in thatpercapita
consumption
seems tobe directly
related
Fi-
topercapita
GDP or,alternatively,
toper capita
national
income.
This corres-
gures 3.1 andA3.2showtheserelationships
for cement.
income
and consumption
suggests
thatdevelop-
or
pondence
between
GDP
ing countries
haverather
lowcapacities
forimmediate
consumption
of
manybuilding
materials.
Inlinewiththese
trends
inconsumption
aretrends
inproduction.
Table
3.14shows that Europe,
North
America,
andtheUSSR,for example,
wereresponsible
for 72 percent
of theworld
production
ofcement
and
Figures
for
60 to92 percent
of that ofwoodproducts
in196'-1967.
steel
and ironproducts
production
mightbeexpected
tobeequally
60percent--
highorhigher.
Consequently,
alargepart (as muchas
seeTable2.6)of therelatively
meager
materials
consumption
indeve-
13C
.
,-
0
-
00o
40
020,
0 0
30o.
2.Airia
3. ,-',wm
4. Canada
5. Chad
6. Greece
7. Congo(Leo)
8. Denmark
9. Costa Rica
10. France
I. Turkey
i2. Germany
(W)
13. Ghana .#
14. Guatemala
15. Honduras
I !reland
IT.Italy
18. Kenya
19. Sudan
Morocco
21. Nothtrland
22. Nigeria
23. Norway
24. Prtugal
25. Rhod.B Nyas.
26. Ponrniu
27 Sweden
26. P-ar.'mra
Figure 3.1: Relationshipbetweenpercapita consumptionof
cementandper capitaGDP (source:ref. 40)
.00
'a,
7
/-Z
7'
,7'
1-0' ,
"...
S"
7
.'"
N
Curve A
._._
i
0.
28. Switzerland
29. Tangnnyika
;30. Tunisia
31. S t -
32. U.K.
W/
/.
Z ..-
I
0 b
h4 N -------
aa
too7
a0
660 Soo lbO 126- 1400 1600
PerCapitaGDP (U.S.Dollars)
(Figure3.1continued)
aDatarelates
to the period1950-1960.
Thesource,
whichdealsmainly
broad
withAfrica,
describes
the figureinthefollowing
way: "Four
AreaIcorresponds
to countries
areasofcorrelation
can beidentified.
withacomparatively
highratioofpercapitaconsumption
ofcement;
areaII,ontheother side,concerns
countries
mostlyabove $600ofper
capitaGDPandis dominated
bythe growthpattern
of theUnitedKingdom
andCanadawherespecific
consumption
of cementis comparatively
lowin
Neither
ofthese
relation
to otherstructural
building
materials.
If
areasis therefore
relevant
to the situation
prevailing
inAfrica.
areas III andIVaretakenjointly,
it ispossible
to discern
ageneral
pattern
which,for thesakeofsimplification,
hasbeenrepresented
by
curveA."
132
Table 3.14: Percentageofworldproductionofcertainbuildingmater-
ialsbyEurope,NorthAmerica,andUSSRin1966/1967 (source:ref.47)
Percentage
Material
ofworldproductionby
Europe,NorthAmerica,
andUSSR,1966/1967
Cement
72
Sawnsoftwood
83
Sawnhardwood
60
Plywood
79
Fibreboard
85
Particleboard
92
133
lopingcountries is ofimportedgoods. Materials likesand,aggregates,
andnaturalstone,cement andcementproducts,andwoodproductsare
largely produced locally, while materials like glass, iron and steel
products,othermetalproducts,andelectricalandsanitaryequipment
largely imported (see Tables 3.15 and A3.36). Materials which thus
are
have lowvaluetoweightratios,haveavailablethenecessaryrawmate-
rials, have relativelylow capitalrequirements,requirerelativelyun-
sophisticatedproductionprocedures, and arewidelyusedarenaturally
more likelytobeproducedlocally.
It is also important to consider the magnitude of exports of raw
materialGandprimaryproductsenteringinthemanufactureofbuilding
DatainTable 3.16ashowthe valueofexports
materialsand components.
tobenearlytwice that ofimportsofbasicbuildingproducts indicated
inTable3.16b and about the sameas thatofimportsofallbuilding
materials andcomponents indicatedinTable3.15. This makesthe im-
portproblemseemless seriousuntilone looks atthe distributionof
imports andexportsand notes that thesubregionswhichimport themost
tendto exportthe least. Further,thesefigures aredollarvalues,
and relative quantities arealsoofimportance. Inmanydeveloping
countries,moreover,thevalueofimportedbuildingmaterialsis between
5and8percentofthe totalvalueofimports,whileexpenditureon
buildingmaterialsis onlybetween3and5percentofGDP(47). This
situationsuggests thatbuildingmaterials,relativetoinputsforot-
herindustries,useadisproportionate shareofforeignexchange.
Cement is an indispensable ingredient in concrete, a major build-
ing materialthroughout theworld. Manyofthespecialproblemsofce-
mentmanufactureindevelopingregionsresultfromthe generallyre-
134
Table 3.15: BuildingmaterialsproducedorimportedforlocalconsumptioninAfrica
a
,around1960
(source: ref. 40)
Material
Cement
Cementproducts
Bricks,tiles, andother
ceramicproducts
Ironandsteelproducts
0-e'rmetalproducts
Woodproducts
Glass
Paintsandvarnishes
Electricalandsanitary
equipment
Sand,aggregates,natural
stone,andotherbulk
materials
Total
aExciudingSouthernAfrica.
bEstimated.
Domesticproduction
consumedlocally Imports
Totaldomestic
onti
Importsas apercentage
oftotal domestic
consumption
(billionsofdollars) (percentage)
0.12 0.06 0.18 33.3
0
.
0 6
b 0.01 0.07 14.3
0
.
01
b 0.01 0.02 50.0
0.04 0.30 0.34 88.2
0.02
b
0
.
0 8
b 0.10 80.0
0
.
1 2
b 0.06 0.18 33.3
- 0.01 0.01 100.0
0
.
02
b 0.03 0.05 60.0
0
.
0 4
b
0
.
16
b 0.20 80.0
b
0.10 - 0.10 0.0
0.53 0.72 1.25 57.6
Table 3.16a: Exportsofrawmaterialsand primaryproductsenteringinthemanufactureofbuilding
materials,forAfricabysubregions, 1960 (millionsofdollars)(source: ref. 40)
Material
Cement
Metallicmineralcres
Primarymetalproducts
Roundwood
Sawnwood,veneers,
andplywood
Total
Percentagedistribution
bysubregion
North West Central East Percentage
Africa Africa Africa Africaa Total distribution
bymaterial
8 - - 3 11 1
66 73 19 17 175 21
7 9 111 353 480 58
- 71 47 - 118 14
- 25 16 4 45 6
81 178 193 377 829 100
10 21 23 45 100
Note: Detailmaynotaddto totalsduetorounding.
alncludingMadagascar.
Table 3.16b: Importsofmainbuildingmaterialsandcomponents, forAfricabysubregions,1960(source:
ref. 40)
Material North West Central East
Africa Africa Africa Africa Madagascar Total
36 4 4 2 56
Cement (milliondollars) 10
(percentage) 18 64 7 7 4 100
Otherfabricatedbuildingmaterials
(milliondollars) 3 6 - 2 - 11
(percentage) 25 59 - 16 - 100
Bricks, tiles,andceramicwares
(milliondollars) 6 3 - 3 - 13
(percentage) 49 21 2 26 2 100
Ironandsteelproducts
(milliondollars) 131 94 18 50 6 299
(percentage) 44 32 6 16 2 100
Sawnwood,veneers,andplywood
(milliondollars) 52 3 - 8 - 63
(percentage) 82 4 1 12 1 100
Glassandmanufactures
(milliondollars) 5 2 - 2 - 10
(percentage) 53 24 3 17 3 100
Paintsandvanishes
(milliondollars) 12 10 2 4 1 29
(percentage) 41 34 6 15 4 100
Total (milliondollars) 219 154 24 73 9 481
(percentage) 46 32 5 15 2 100
Importsofmainbuildingmaterials
andcomponentsasapercentageof
totalimports (average1959-1961) 8 10 6 8 8 8
ducedscaleofproductionandconsumptionin theseareas. Thedataon
cementproductionandapparentconsumptioninTable3.17showtremendous
disparitybetweenconditionsin theU.S., theworldasawhole,andthe
developingcountries. Nevertheless,the generaltrendis growthofce-
mentproductionand consumption,generallyatafasterratein the deve-
lopingcountries, especiallythoseofAsia,thanin the U.S.andthe
world as awhole.
Therehaverecentlybeenshortagesinthe internationalsupplyof
cementanddelays inthe deliveryofplants,butthe developingcountries
stillappear tobeprogressingfairlywellin thisarea. InLatinAme-
ricaitappearsthat inmostcountries the importsubstitutionprocess
regardingcement hasbeencompleted (35). In1967inColombia,forex-
ample, therewere14 cementplantswithatotalcapacityof 3.0million
tons (48),and the total apparentconsumption for thatyearwas2.3mil-
lion tons (seeTable3.17b). Rawmaterialsforproductionofcement
areavailablein Asiaandthe FarEast, andproductionhasbeenclimb-
ing,particularlywithKorea,Malaysia,Thailand,andSouthVietnam
buildingnewfactoriesandevenbeginningto lookforexport outlets.
Theirproductionis stillgenerallybehindconsumption,however(35).
Thepresent installedcapacityinAfricaismore thanadequate to cover
the aggregate consumption,butAfricastillcontinuestoimportsub-
stantialquantitiesofcement (35). ThedatainTable3.18showthat
in1962Africanproductionas awholeutilizedonly66percentofdo-
mesticconsumption. One encouragingsignisthe relativelyrapidgrowth
ofexports. KenyaandEthiopiaarebothapparentlyexceptionsto these
trends. InKenyain1962 productionutilizedonly66percentof capa-
city,importswerepracticallynegligible,andexportshigh. InEthio-
138
Table 3.17a: Totalandpercapitacementproductionfortheworld,somedevelopingareas,andtheU.S.
(source: ref. 54,55)
Year
World Africa
a
Asia
b
LatinAmerica UnitedStates
1953
6
Totalproduction (10 kg) 177,000 2,878 12,232 10,439 45,001
5.9 25.4
%ofworldproduction 100.0 1.6 6.9
Percapitaproduction(kg) not available
1960 6
6,295 35,463 17,599 56,063
Totalproduction(10 kg) 317,000
%ofworldproduction 100.0 2.0 11.2 5.6 17.7
22.8 82.6 309.7
Percapitaproduction(kg) 106.3 24.8
19646
64,379
196Totalproduction(106kg) 410,000 6,544 39,105 22,502
9.5 5.5 15.7
%ofworldproduction 100.0 1.6
94.9 335.3
Percapitaproduction(kg) 127.3 22.6 23.2
1968
6
Totalproduction (10 kg) 506,000 9,590 53,323 29,975 68,792
5.9 13.6
%ofworldproduction 100.0 1.9 10.5
Percapitaproduction(kg) 145.27 30.3 28.9 112.3 342.2
1970
Totalproduction(10
6
kg) 567,000 10,248 66,811 33,298 67,427
%ofworldproduction 100.0 1.8 11.8 5.9 11.9
Percapitaproduction(kg) 156.1 31.7 34.2 117.7 328.9
aExcludingSouthAfrica.
bExcludingJapanandtheUSSR.
Table3.17b: PercapitaapparentconsumptionofcementinColombia,Ethiopia,Iran,Kenya,Korea,and
theU.S., for1963-1970 (source: ref. 54,55, 61)
Apparent Percapita
Production Imports Exports consumption ' apparent
Countryandyear kilgr )(kilogrn
(thousandkilograms)
iperperson)
Colombia 1970 2,774,000 704,000 248,671 3,229,329 153
1969 2,383,000 351,000 278,185 2,458,815 120
1968 2,367,000 307,000 328,763 2,345,237 I 118
1967 2,146,000 202,000 229,955 2,118,045 1 10
1966 2,107,000 435,000 181,325 2,3609675 127
1965 2,074,000 703,000 189,136 2,587,864 143
1964 1,995,000 309,000 185,733 2,118,267 121
1963 1,838,000 566,000 122,347 2,281,653 135
804 22,621 152,183 6.1
Ethiopia 1969 174,000
1968 164,000 1,876 22,692 143,184 6.0
1967 138,000 2
,
7 0 9
b na na
na
1966 89,000 6
,
2 0 4
b na na
1965 73,000 2 8
,
1 2 0
b na na I na
na na na
1964 34,000 25
,
01 1
b
na
44,000 39,125 na na
88
1963
Iran 1970 2,575,000 54,513 96,991 2,532,522
22,837 34,353 2,330,484 84
1969 2,342,000
(continued)
(Table3.17b continued)
Countryandyear
(Iran,cont.) 1968
1967
1966
1965
1964
1963
Kenya 1970
1969
1968
1967
1966
1965
1964
1963
Korea 1970
1969
1968
1967
Production
2,000,000
1,517,000
1
,
538
,
00 0
c
1,417,000
1,088,000
787,000
792,000
642,000
544,000
493,000
470,000
484,000
422,000
344,000
5,822,000
4,828,000
3,572,000
2,441,000
Imports Exports
(thousandkilograms)
51,132
40,000
16,000
20,000
24,000
23,000
986
1,215
1,265
834
611
175
1,318
771
967
15,727
142,000
467,745
42,903
54,593
92,598
128,509
101,410
63,396
348,575
309,041
239,039
221,189
169,534
199,415
174,124
110,607
450,865
290,970
17,500
5,315
2,008,229
1,502,407
1,461,402
1,308,491
1,010,590
746,604
444,411
334,174
306,226
272,645
301,077
284,760
249,194
234,164
5,372,102
4,552,757
3,696,500
2,903,430
Apparent Percapita
consumption t
consumption
(kilograms)
perperson)
74
65
64
53
44
32
41
32
30
27
31
30
27
26
169
146
121
97
(continued)
(Table3.17b continued)
Production Imports Exports consumption
Countryandyear
(thousandkilograms)
(Korea,cont.)1966 1,884,000 177,615 24,704 2,033,911
1965 1,641,000 6,069 54,884 1,592,185
1964 1,243,000 28,237 21,273 1,249,514
1963 778,000 274,294 - 1,052,294
UnitedStates1970 67,427,000 2,348 144 67,429,204
1969 69,575,000 1,647 100 69,576,547
1968 68,792,000 1,239 160 68,793,079
1967 64,449,000 1,005 167 64,449,838
1966 67,146,000 1,201 182 67,147,019
1965 65,078,000 936 127 65,078,809
1964 64,379,000 618 121 64,379,497
1963 61,609,000 685 78 61,609,607
aProductionfiguresarefortwelvemonthsendingSeptember10oftheyearstated.
bLime,cement,andotherconstructionmaterials.
cExcludingnaturalcement.
Percapita
apparent
consumption
(iorm
perperson)
70
53
45
39
328
342
342
324
342
334
335
326
Table3.18: Production,trade,andconsumptionofcementforAfrica'ssubregions, 1958-1962 (thousand
metrictons) (source: ref. 40)
North West Central EastAfrica 'MadagascazTotal
Africa Africa Africa Kenya Ethiopi Total
Production 1952 2,076 80 240 33 10 291 - 2,687
1958 3,197 262 390 240 32 1,174 8 5,031
1960 3,990 320 200 342 28 1,042 18 5,570
1962 4,106 610 162 342 41 838 17 5,733
Annualrateofgrowth(percentage) 7.1 22.5 - 26.3 15.2 11.6 20.7 7.9
Installedcapacityc 5,230 880 735 520
3 6
d 1,706 70 8,620
Productioncapacity(percent) 79 69 22 66 100 49 24 66
Imports 1958 423 1,147 273 8 8 183 80 2,106
1960 717 1,624 144 1 35 201 84 2,770
1962 847 1,369 193 1 (30) 212 104 2,725
Exports 1958 451 - - 68 - 89 - 540
1960 628 158 164 792
1962 (607) - - (233) - 234 - 841
Consumption
e
1958 3,202 1,406 663 175 40 1,260 88 6,619
1960 4,129 1,882 344 186 63 1,077 102 7,534
1962 4,346 1,979 355 110 71 816 121 7,617
aunlessotherwisespecified, 1952- 1962.
bAnnualrateof growth,1958-1962.
CUnlessotherwisestated,for1962.
d1961.
eConsumptionisnotnecessarilythearithmeticresultof thedataunderproduction,imports,andexports
duetodiscrepanciesinthereportingofannualstatistics.
pia, on theotherhand,productionfully utilizedtheavailablecapacity,
importswerehigh,andexportsnegligible. Kenyathus appears toneed
toincreaseits exportindustryandEthiopiaits capacity,althougha
possiblesolutionwouldbearrangementsforregionalcooperationand
tradebetween thetwo countries.
Steelproductionnot onlyis asymbolofparticipationinmodern
technology,butis also akno'-i acceleratorofmanyareasofeconomic
growth. Ifone considers the firstthreeitemsand apartofthe fourth
in Table3.19tobeprimarilybuildingmaterials,then45 to 50percent
of thesteelconsumedindevelopingregions goes toconstruction. The
growthofsteelconsumptionandespeciallyofproductioninAsiafrom
1953to 1965wasparticularlyhigh; as aresult, in1965 Asiawasonly
slightlybehindLatinAmericain the shareofregionalconsumptionco-
veredby regionalproduction,whileAfricawasfarbehind (seeTables
3.20andA3.37). Atthe sametime, however,thefirst integratedsteel
plants inIran andKoreawerenotduefor completionuntilsome time
between1966and 1975, while Colombia has been expanding its capacity
andbothKenyaandEthiopiawereat leastnotedas producingsomeiron
andsteelproductsin1960(26, 37). Itisoffurtherinteresttonote
the strongtiebetween consumptionandproductioninthatpercapita
steelconsumptioninsteel-producing developingcountries ismuchhigher
thanindevelopingcountrieswhichdonotproduce steel (seeTableA3.38).
Themanufactureofwoodandwoodproducts is asupply-basedindus-
tryrelyingontheextraction and improvementofnaturalresources.
Woodisone oftheplentiful resourcesofmostdevelopingregions (see
Table3.21), andvirtuallyalldevelopingcountrieswiththe exception
ofthe aridMiddleEastpossesssufficient forestresourcesto meetall
144
Table 3.19: Patternofconsumption
ofsteelproductsindeveloping
regionsa
(source:
ref. 29)
Steelproduct Percentof total
steelconsumption
Reinforcing
rods
30
Lightstructural
sections
7
Galvanized
sheets
5
Pipesandtubes
12
Rounds
10
Wire
10
Sheetsandplates
12
Tinplate
7
Miscellaneous
- primarily
rails
7
aNodategiven,originalsourceis copyright
1963.
145
Table 3.20: Steelproductionandconsumptionindevelopingareas,
1953-1965 (source: ref. 26)
Africa Asia LatinAmerica Total
Growthofapparentconsumption
(compoundrate--percentper
annum,1953-1965)
5.45 7.48 7.20
Growthoflocalproduction
(compoundrate- percentper
annum,1953-1965)
10.03 15.08 12.35 13.55
Percentageofregionalsteel
consumptioncoveredby
regionalproduction
1953 5 23 38 27
1960 10 43 56 45
1965 9 52 68 53
146
7.14
Table 3.21: Woodresourcesinvariousdevelopedanddevelopingcoun-
tries, 1963 (source: ref. 29)
Forestarea
Country (thousand
hectares)
U.S. 292,721
France 11,000
U.K. 1,675
Guatemala 4,100
Mexico 39,747
Nicaragua 6,450
Brazil 335,100
Peru 65,300
Angola 72,000
Congo 129,141
IvoryCoast 12,000
SierraLeona 2,300
Uganda 9,167
Burma 45,274
Laos 15,000
Percapita
forestarea
(hectares)
1.48
0.22
0.03
0.89
0.91
3.80
4.00
5.40
13.80
7.95
3.05
0.99
1.18
1.80
7.40
Annualharvestable
woodpercapita
(cubicfeeta)
222
53
4
133
139
550
600
810
2,060
1,190
456
144
176
268
1,110
aApproximationbasedonannualharvestablegrowthof750cubicfeetper
hectare(300cubicfeetperacre)everyfiveyears.
147
domesticdemandinthe foreseeablefuture. Nevertheless, theseresour-
ces are remarkablyunder-utilizedas indicatedbythe figures inTable
3.22. Sinceconsumptionofwoodandwoodproducts generallyexceeds
productionin developingcountries, thesematerialsusuallyare imported
fromthedeveloped countrieswhich,paradoxically,
arerelativelypoorer
inforest resources. SawmwoodinAfricais acase inpoint, andalthough
productionandconsumptionaremorebalancedinthe caseofplywoodand
veneers,productionof thesegoods inAfricais largelylimited toa
fewcountries (seeTableA3.39). Apartialexplanationof thisarrange-
mentisthat manydeveloping countriesexport largepartsoftheir annual
-;oodharvest inthe formof roughlogs, whichareturnedintomanufac-
turediwoodproductsin the developedcountries and thenreturnedtothe
The lowshareof sawnwoodintotalroundwoodpro-
developingnations.
duction,as shownfor AfricainTable A3.40,tends tosupport this hy-
Thewisdomof suchan arrangementappearshighlyquestionable.
pothesis.
Theextensiveuse of importsin the supplyofbuildingmaterials
to theconstructionindustryindevelopingcountrieshasbeenrepeatedly
emphasizedthroughout theabove discussion. Someofthe obvious disad-
vantagesof suchrelianceonimports includethe facts that (1) mate-
rialsarecostly, (2)large amountsof foreign exchangeare used, (3)
and (4) mate-
consumptionlevels ofbuildingmaterialstendtobeldi,
rialsmaybeincompatiblewithlocalconditions. Furthermore,large
quantitiesofnaturalresources areleftuntapped,andtheadvantages
tobegainedfromthe developmentoflocalmanufacturingindustries,
suchasprovidingemploymentandtraining,helpinginincomere-distri-
bution,generatingoutput, andstimulating furtherindustrialandeco-
nomicgrowth, are lost.
148
Table 3.22: Annualwoodbuildingmaterialsmanufactureinvariousdevelopedanddevelnpingcountries,1966 (source:ref. 29)
a oo Ser Veneer Pl -ood Particle Totalwoodbuildingmaterials Pret o od
C sheets board harvestablewood
(thousandsof (cubicmeters (cubicfeet usedinwood
(thousandsof cubicmeters) cubicmeters) percapita) percapita)buildingmaterials
manufacture
a
U.S. 85,982 na 13,014 2,079 101,075 0.51 18.0 8.1
France 8,243 382 71 494 727 9,917 0.20 7.0 13.1
U.K. 856 6 na 38 288 1,188 0.022 0.7 191.0 Glutm 6b c cc
Guatemala 164 2 na 60
c
182 0.039 1.4 1.05
Mexico 1,384 164 0.3 69 36 1,653 0.037 1.3 0.94
Ni-aragua 128 3 na 7 - 138 0.08 2.8 0.51
Brazil 6,072 480 198 220 9 6,979 0.083 2.9 0.48
Perub 224 12 - 7 4 247 0.02 0.7 0.86 c
" Angola
9
Anol.. -- . 95 0.0W8 0.6 0.03
Congod 150 - 40 15 - 205 0.013 0.4 0.04
IvoryCoast 285 - 3i 8 - 328 0.084 2.9 0.64
SierraLeonee 10 - - - 10 0.004 0.1 0.97
Uganda 51 5 - 3 - 59 0.008 0.3 0.15
Burma 594 15 0.1 3 - 612 0.025 0.9 0.32
Laos 33 - - 33 0.016 0.6 0.05
asleepersincludedinsawnwood.
bDataisfor 1964.
cDatais for 1965.
dDemocraticRepublicofCongo.
eTwelvemonthsengineJune30,1966.
The establishment
of basic building materials manufacture in deve-
will depend on both economic and technical considera-
loping countries
to
Thefirststepin establishing
a building materials plant is
tions.
Theexistingbuilding
performapre-investment
surveyandmarketstudy.
skillsalsomustbeassessedbeforethe suitability
ofintroducing
any
buildingmaterialcanbejudged,and regionalcustomsandpracticesre-
latingtobuildingmustbeconsidered. InEastAfrica,forexample,
ce-
buildingcontractors
commonlymanufacture
theirownmaterials (e.g.,
ment blocks)onthe site,andthe introduction
of abuildingmaterial
economically
produceable
on asmallscalewouldthusbe farmorelikely
towin acceptance.
The geographicextentofthemarketisimportantand
dependspartlyuponthe size,weight,andusualrequiredquantityofany
givenbuildingmaterialandupon theabilityofthe availabletransport
thesegoods at reasonablecost (TableA3.41shows
infrastructure
tomove
the levelofdevelopment
of highwaytransportin theU.S. andsomede-
Local,regional,andeveninternational
markets
velopingcountries).
shouldbe consideredforsomematerials,orperhapsregionalcoopera-
tionmightbe possiblein theproductionofthosematerialsrequiring
largemarkets.
Thecapitalexpenditures
necessary to establishvariousbuilding
materialsmanufacturevary fromaverysmallamount forbricks tose-
Thisdiversityof
veralmilliondollars for steel (seeTable 3.23).
minimumcapital costs andeconomicscalesofproductionsuggests that
adevelopingnationmight, forexample,establishamoderate tolarge
capacitycementplantwhilerelyingonimportedsteeltosupplythene-
cessaryreinforcing
rods andmesh; alternatively,
itmightdecideto
relyonitsproductionofbricksandwoodproductsforbuildingmate-
150
Table3.23: Minimumcapitalcostsandeconomicscalesofproductionfor
buildingmaterialsmanufacturit(source:
ref. 29)
Buildingmaterial
(bytypeofplant)
Bricks
Wood
Sawnwood
Plywood
Softboard
Hardboard
Particleboard
Lime
Smallunmechanized
verticalkilm
Largemechanized
verticalkiln
Rotarykiln
Cement
Verticalkiln
Rotarykiln
Aluminum
Steel
Capitalcost
(dollarsper
tonperyear)
Variable
30
96
123
96
55
13.6
14.6
to 18.7
22.8
to28.4
28
40 to 50
800
to 900
250
Minimumeconomic
plantsize
(tonsperyear)
Variable
Variable
5,000
5,000
5,000
5,000
30,000
30,000
30,000
30,000
100,000
10,000
100,000
Capitalcost for
minimumeconomic
plant(dollars)
Variable
Variable
500,000
600,000
500,000
275,000
410,000
440,000
to560,000
680,000
to850,000
880,000
4,000,000
to5,000,000
8,000,000
to9,000,000
25,000,000
aDateof original
sourceis 1968forbricksandlimeand1963forall
otherbuildingmaterials,and dataarefromavarietyofdevelopedand
developingcountries.
151
rialssincethesearemostreadilyadaptabletosmallscaleproduction
andrequirevirtuallynocapitalinvestment. Itshouldalsobenoted
that the existinginfrastructure canhaveconsiderable influenceonthe
initialcapital costs;forexample,withoutavailableelectricalpower,
asteelmillis forcedtoprovideits ownpowerstations,and foralow
tomediumvolumecementplant,thisaddedcostmaymake theentireope-
rationprohibitivelyexpensive.
con-
The costs ofproductionareanotherimportantset offactors to
siderin the establishmentofbuildingmaterialsmanufacture. These
costs are directlyrelatedto the costs oflabor,materials,production
supplies,maintenance,and overhead. Thesefactors, in turn, are in-
fluencedbytheavailability,accessability,andqualityofappropriate
rawmaterials, labor,andproductionsuppliesinthe neededquantities;
the type, location, andsizeof theplant; the labor/capitalratios;
the levelof technicalcompetence required; andsoforth. Theadapta-
bilityofbuildingmaterialsmanufactureto labor-intensivemethods,
whilepreservingoverallefficiency,is ofspecialconcerntodevelop-
ingnations. One roughindicatoroflabor/capitalratios forvarious
buildingmaterials is the percentageofoutputaccountedforbyvalue
added (seeTable2.7). Table3.24giveswagelevelsandproportionof
skilledworkers tototalemploymentin certainbuildingmaterialsin-
dustriesin India. Ifthese figuresare relativelytypicalfordeve-
lopingcountries, it appears that laborcosto ofproductionaredirectly
related to the capitalcostsnecessarytoestablishproduction. The
samecanprobablyalsobesaidaboutthe otheroperatingcosts, and
the total costsofvariousmaterialsmanufacture (capitalplusoperat-
ingcosts) thus tendtoparallelthe disparityofcapital costs.
152
Table3.24: LaborcostsandproportionsinbuildingmaterialsmanufactureinIndia
a
(source: ref.29)
Buildingmaterial
Bricks,tiles, lime
Plywood
Asbestosproducts
Sawmilling
Cementpipes
Secondarynonferrous
metalproducts
Secondarysteelproducts
Cement
Primarynonferrous
metalproducts
Primarysteelproducts
aoriginalsourceisdated 1970.
Averagedailywage (dollars) RatioofskilledWeightedlaborcost
Skilled (W
s
) Unskilled(W)
workers tototal
employment (R) WR
(dollars)
+W (1 -R
s
)
0.51 0.26 0.284 0.330
0.71 0.16 0.384 0.372
0.56 0.325 0.444 0.429
0.56 0.345 0.412 0.432
0.86 0.33 0.262 0.469
0.58 0.35 0.570 0.481
0.65 0.36 0.480 0.499
0.76 0.325 0.433 0.514
0.78 0.375 0.499 0.578
0.82 0.39 0.529 0.618
Theprimaryeconomicbenefitstobegainedfromthe developmentof
building materials manufacture, which include increased employment and
training, improved income distrubution, output generation, and improved
balance of payments, among others, are of considerable importance. Al-
soofimportancearethepossiblesecondaryeconomiceffects arisingout
of the diversity of uses for various building materials. The low capi-
taland labor costsofwoodproducts,coupledwiththe possiblesecon-
darymanufacturingoperations (e.g., furnitureandmatch-making),
make
anaturalareaofgrowth for developingcountrieswithunderutilized
this
forestresources. Thehighcapitalandlaborcostsofprimarysteelpro-
ductionarecompensatedfor, inamacroeconomic
sense,by theeconomic
benefitsresultingfromthesubsequentsecondarymanufacturingof the
Cement, ontheotherhand,hasvirtuallynousesout-
steelproduced.
side the fieldof construction,butsince it is theuniversalconstruc-
tionmaterial,thesecondaryeffectsofcementmanufacturewithinthe
field of construction (e.g., concreteandcementblocks,pipes, andpre-
fabricatedpanels)are likely tobeconsiderable.
As formaterialstechnologyindevelopingcountries,effortsare
beingmadeto developcheap,serviceable,adaptable,andeasilyassemb-
ledbuildingmaterialsmadeoflocallyavailable rawmaterials. This
developmentis currentlygroupedaround twobasicapproaches,one aimed
atthe improvementof traditionalbuildingmaterialsandmethodsanda
secondaimedatthe developmentofnewmaterialsand components. In
line with the first approach, a large part of building materials re-
searchin developingcountries isdevoted toextendingthe usesof ce-
ment, improving the properties and performance of concrete, and deve-
loping the uses of plastics in building. Some current research areas
154
includebuildingblocksmadeof soilcements,lightweightconcretes using
various agricultural wastes as the aggregate, concrete suitable for tro-
pical climates, reinforcem - for concrete in the form of steel suitable
to tropicalclimatesorbamboo orotherharvestableplantsavailablelo-
cally,impregnationofwoodand fiberproductsto improve theirperman-
ancy, and plasticsin the formofwaterproofingofwoodandfiberpa-
nels,plasticpipes, andemulsionpaintsbasedonpolyvinylacetate.
Whereconstructionactivityorneedsareofsufficientlylarge
scale, preplanned building systems can offer significant economies of
bothtimeand money. Developingregionshavesimilarneedsin the types
ofbuildings required,and at least forhousing,oneandtwo-storycon-
struction are most common (seeTableA3.42). This prevalenceofone
andtwo-story constructionaroundtheworldhasled towidespreadin-
terestinthe.use oflightweightstructuralpanels, amongwhichthe
most promising are those made of wood and ferro-cements. In the deve-
lopment of building materials and building systems in emerging countries,
it is importanL that materials not be limited to thoseinstandarduse
in theindustrialized countries;innovativeconsiderationalsomustbe
given to the use of some of the locally abundant raw materials, such as
rice straw, bagasse, and bamboo.
3.4 Maintenance
Onceconstructionhasbeencompleted the facility's lifeasava-
luableassetbegins,butoperationalandmaintenance costs remain. A
considerablepartof constructionactivityis, in fact) devotedtomain-
taining,repairing,altering,orconvertingexistingfacilities. The
datainTable2.8showmaintenanceandrepairas nearly34 percentof
1.55
allconstructionactivityinatypicalWesternEuropeancountry,although
Indevelop-
theproportionvariesconsiderablyamongdifferentsectors.
ingcountriesmaintenanceandrepair consistsofsomewhatless than14
percent ofallconstructionactivity; again,thepercentagesvaryamong
sectors,withmaintenanceandrepair'sproportionparticularlyhighin
the transport,communications, roads, andotherpublicservicessector.
Whilethe majorityofnewconstructionindevelopingcountriesis done
bythe privatesector,themajorityofmaintenanceand repairis done
by thepublicsector. Thedatafordevelopingcountries,however, does
not includeworkinthe subsistencesectorwhichis estimatedat 10to
30percentofthe totaloutput,muchofwhichwouldbeinmaintenance
andrepair (48).
Severalfactorsappearresponsiblef~r the lighterallocationof
constructionresources tomaintenanceandrepairindeveloping thanin
developedcountries. Theseinclude the facts that (1)existingfacili-
tiesarefewerinnumberand generallynewer; (2)lowermaintenance
standardsareusuallytolerated; (3)the uncertaintyassociatedwith
future fundingleads torequestingandimmediatelyspending .. 'emaximum
amountpossible,resultinginoverdesignedfacilitiesandaneglectof
maintenance; (4)lowprestigeisassociatedwithmaintenance,and ad-
ministratorsreceivelittlerewardfrompursuingefficientmaintenance
(5)sincethere is littleemphasison theimportanceof
policies; and
maintenance, themajorshareofscarcemanpower,materials, and capital
resourcesgoes tonewworkand thereeidualtomaintenance andrepair.
Buildingandcivilengineeringmaintenancearequitedistinctope-
rations. Buildingmaintenance,as opposedtonew constructionofbuild-
ings, tendstorequiremoremanpowerandlessmaterials andcapital;
156
itis ahighlylabor-intensiveoperationinbothdevelopinganddeveloped
countries,althoughthe laborit requiresis fairlyskilled. In indus-
trializedcountries smallfirmsare largelyresponsibleformaintenance
andrepairwork. Indevelopingcountriesbuildingmaintenanceis gene-
rallyhandledbyself-employedartisans and thusdemands areasonably
largeportionofthe limitedsupplyofskilledworkers. Thesolution,
however,isnot toskimponbuildingmaliitenance,but ratherto educate
clientsand trainskilledworkers sotheneededmaintenance can andwill
beperformed.
Themaintenanceofcivilengineeringworksinindustrializedcoun-
triestends to followthe resourcerequirementsofnewconstructionand
isgenerallyarathermechanizedprocess. This isnotthe case inde-
velopingcountries,however,wherecivilengineeringmaintenance is la-
bor-intensive,requiresiargemassesofunskilledlabor, andnecessi-
tates particularlyef*ctivesupervision,organization,andmanagement.
Thelimitingfa'toris thus the availabilityofsuitablytrainedmanage-
mentAnd supervisorypersonnel. Whethercivilengineeringmaintenance
shouldbelabor- orcapital-intensiveissubjectto question. Some
costfiguresonvarious operationsinroadmaintenancesuggest that ca-
pital-intensive techniquesare cheapest andlabor-intensivemostcostly,
with abalancedapproachfallinginbetween (seeTableA3.43). While
these figuresand the scarcityofmanagementpersonnelpointtoward
capitil-intcnsivetechniques,the scarcityofcapital, foreignexchange,
andskilledlaborand the abundanceofunskilled laborpointtoward
thelabor-intensive orbalancedapproach. It is thus theoverallcom-
binationof localandproject conditions uponwhichtheoptimalchoice
oftechnologymustdepend, and the stockofresourcesmustbe adjusted
157
accordingly.
Closelyassociatedwithmaintenanceis thestagingofconstruction,
aprocesswherebyafacilityisbuiltinitiallytomeet the immediate
demandsof the userandis thenupgradedthrough reconstructiontomeet
increaseddemands. Thismayresultinreducedcostandinmoreeffec-
tiveuseofresources, and itprovides ameasureofadaptabilityto the
project in case demand for the facilityshouldchange. Inaddition,the
possibilityof usinglabor-intensive technologies insuchstaged construc-
tion is considerable. For these reasons itis importantthat construc-
tiontechnologiessuitable forstaged constructionbeidentifiedand
consideredforuse bythe developingnations.
3.5 ConstructionIndustry'sEnvironment
The regulatoryenvironmentwithinwhichtheconstructionindustry
operates indevelopedcountries isextensiveandincludesbuildingand
relatedcodes, zoningordinances,subdivisionregulations,planning
laws, licensing requirements,environmentalregulations, safetylegis-
lation,monetaryandfiscalpolicies, taxlaws, financialinstitution
operatingrules, andwageregulations. Similarregulationsareemerging
indevelopingcountries andneedtobeexpanded,but thismustbedone
withregardfor the localconditionsof the particualrcountry,andre-
gulationsmustrot simplybetransferredintactfromtheindustrialized
nations,ashasoftenoccurredin thepast.
Someofthese industryregulationshavealreadybeendiscussedin
some detail,and in thissection attentionwillfocusonbuildingand
relatedcodes. Inmanydevelopedcountriestheseregulationshave con-
centratedonsettingthematerialsandmethods tobeusedratherthan
158
the desiredperformancecharacteristics,thus stiflinginnovaticnsand
adding toconstructioncosts. Inthe U.S.andelsewhereefforts are
nowbeingmadetochangethesetomoreperformancebasedcodes,butpro-
gresshasbeenslow, andmanydevelopingcountries havealreadyadopted
materialsandmethods codes. Anadvantageof this typeofcodeover the
performancebasedone intheearlystagesofdevelopmentofthe construc-
tionindustryisthat itrequires lessin thewayofengineeringand
constructionskills onthe partof thedesignerand contractor,although
performancecodes maybebest in the longrun.
Buildingcodes intheU.S. arehighlyfragmentedandoftenoutdated.
Byand largeeach localareahasits ownparticularcode, althoughmore
states arenowbeginningtoadoptstate-widecodes, andregionaland
nationalmodelcodes doexist. If aninnovationis toachievewidespread
use itmust thus satisfythe requirementsofmanycodes andbeaccepted
byeachseparately,and designers and contractorsmustbe familiarwith
avarietyofcodes dependingupon the rangeof theiroperations. Modi-
ficaticnof the codes is dominatedbyasmallgroupofbuildingcode
officials and officials ofthe tradeassociations in thebuildingmate-
rialsindustry, therebyleavingoutmanyotherlegitimatelyinterested
people. Thisis less trueofEurope,wherethecountries are smaller
and uniformcodes, establishedandkeptup todatebynationalgovern-
mentalagencies, are in useinsome countries. Inthe developingcoun-
tires such fragmentationis also less likely tobe aproblem,although
wheremostworkisdonebyexpatriatesthe firmdoingtheworkessen-
tiallymaybringinits own country'sbuildingcodes. WhiletheU.S.
hasnostandardprocedurefor certifyinginnovations,France, the Bri-
tishIsles, andmanyotherWesternEuropeancountrieshaveestablished
159
theAgr~ment
systemwhereby
acommission
of impartial
experts testand,
if satisfied,
certifynewmaterials,
iethods,
andequipment
forusein
construction.
Developing
countries
can andshould consider
thece variouscodes,
systems,
and p'3ctices
andadopt,withthenecessary
modifications,
those
features
mostappropriate
to tbe country's
localconditions.
Thedeve-
lopmentofbuilding
codes requires
considerable
technical
competence
and
mightbestbedonethroughsomesort ofnational
governmental
agency.
Regional
co-operation
ightalsobeappropriate
forsome countries,
as
mightassistance
frominternational
agencies
and the developed
countries.
Closelyassociated
withthe development
ofbuilding
codesis the
standardization
of commonly
usedbuilding
materials
intermsofdimen-
sions, quality,
composition,
performance,
andmethodsofmanufacture
and testing.
In theindustrialized
countries,
thishas largelybeen
done atthenational
level,although
itwouldbehighlyusefulif some
suchstandards
couldbeestablished
at theregional
orinternational
level. Thestandardization
ofthe functional
requirements
imposedon
certain typesofbuildings
and the development
of typified
ormodelde-
signs for certaintypes ofbuildings
mightalsobeuseful,bothforsim-
plifying
the designprocess and foropeningtheway to industrializa-
tionof building.
Thedeveloping
countries
haveanopportunity
toe-
volveandapplyacoherent
national
systemofstandards
as wellasmet-
hods oftestingand qualitycontrol,
andinternational,
orat leastre-
gional,unification
ofstandardization
and standards
isalsocZ consi-
derableimportance
andmerits consideration.
Research,
development,
andtechnical
information
are important
in
the growth ofthe construction
industry
in developing
countries.
While
1 )
institutesand agenciesexistintheU.S.forthepurposeofestablishing
standards andmethodsoftesting,thereare few suchcentralizedorgani-
zations for the performance of research anddissemination of information
pertainingto construction. Such centralizedagencies aremuchmorecom-
moninEurope. Itis generally feltthat technologicalinnovationsin
constructionmaterials,processes,and equipmenthavebeenoccurringat
arapidrateintheU.S., but theresearchhas largelybeendonebya
fewindividualswholackasufficientlybroad-basedfocalpoint, and
the resultshavenotbeentrulyinnovative. Researchalsoisneededin
the areaofmanagerialand organizationalaspectsof construction.
Indevelopingcountries these difficultiesarecompoundedbythe
youthof the industry. Itisthus imperative that the developingcoun-
tries establishsome sort ofcentralizedagenciesorinstitutes, probably
supportedbythe government,alongthe linesof thoseinEurope. The
responsibilities ofthese institutesmightinclude (1) encouragingand
helping to support research donebyothers; (2) performingtheirown
research; (3)collecting,digesting,evaluating,anddisseminatingin-
formation onwhatis occurringinothercountriesand theresults ofre-
search inthe developingcountryitself; and (4) developingorhelping
to developbuildingstandards,methods of testing,and perhapstypified
designs.
As forthe researchitself, anytechnicalororganizationalchanges
whichseemlikelyto lead to theimprovementofindustryoperations
shouldbeinvestigatedin thelight oflocal conditions. Thismight
simplyinvolve thedevelopmentofnewandimprovedtechniquesrequiring
less skilledlaborthan traditionalbuildingandresultinginmoreef-
ficientuseofalreadyavailabletools andequipmentsuchas development
ofprocesseswhichcanbebrokendowninto simpleoperationsandgeneral
rationalizationof workon thesite. Alternatively,if localconditions
inthe country and theindustry deemitappropriate,greaterindustria-
lizationofconstructionoperationssuchas off-siteprefabricationand
iucreasedmechanizationmightbeinvestigated. IntheU.S. andother
developedcountries theacceptanceanduseof technologicalinnovations
bythe industryhasbeenslowdue to awidevarietyofconstrainingfac-
tors, includinglackofaformalcertificationprocedure,limiteddif-
fusionofinformation, tradition,buildingcodeand zoningproblems,
productionand marketingdifficulties, limited capitalinvestment, re-
sistenceoflabor,and factorsrelatingto industrystructure. Similar
constraintsmaybeencounteredin the developiLlgcountries, andmeans
to alleviatetheminbothdevelopedand developingcountriesrequire
furtherinvestigation.
162
CHAPTER4
MULTI-NATIONALFIRMSINCONSTRUCTION
Multi-national firmsinthe constructionindustryare thosefirms
concernedwithplanning,consulting,design,construction,oranycombi-
nationof theseactivities onan internationallevel. Thesefirms
mustbedtstinguished from"multi-national
corporations"likeExxonor
IBM. Constructionfirms arepredominantlyconcernedwiththeexportof
goods andservices to foreigncontries; theyrarely,ifever,engagein
direct investmentabroad,an importantactivityofthe "multi-national
corporation,"and thuscan havenoshort-termadverseeffect ontheba-
lanceofpaymentsof thehome country. In addition,there isnopossi-
ble"exportof jobs" bythis industry,afrequentcomplaintagainst"mu-
lti-nationalcorporations," sincebyworkingabroadmulti-nationalcon-
structionfirms actuallycreatejobs forpeopleintheirhomecountries.
This chapterbeginswithabriefoverviewof the natureandorgani-
zationof multi-nationalfirmsin constructionand the characterof
theirpresentoperations indevelopingcountries, andthen considers
their potentialrole andthemeansofimplementingit. Thepurposeof
this chapterissimplyto pointoutsomeofthepertinentissuesrelated
tomulti-nationalsin constructionindevelopingcountries, so the dis-
cussionisratherpreliminaryandattentionfocusesprimarilyonmulti-
nationalsconcernedwithactual construction. Sincerelativelylittle
Muchof thischapter isbasedon researchperformedbyFredericS.
Mishkin,agraduatestudentintheEconomicsDepartment,Massachusetts
InstituteofTechnology,Cambridge, Massachusetts.
Someof the largermulti-nationalcontractors intheU.S. include
163
researchhasbeendoneonthesefirmsanddataappears ratherscarce,
contactingsome ofthemulti-national firms,internationalagencies,and
developingcountriesinvolvedisprobablyanecessarypartofanyfurther
studyin this area.
4.1NatureandOrganizationofMulti-NationalsandTheirRole inCon-
structioninDevelopingCountries
The sizeofthe constructionmarketservedbymulti-nationalfirms
in developingcountries canonlyberoughlyestimateddue to the scar-
city,poorquality,andlimitedcomparabilityofdata. The construction
marketinthedevelopingmarketeconomiesoftheworldaround1967was
about 25billiondollars, about 6billiondollarsofwhich-wasexecuted
bymulti-nationalconstructionfirms (seeTableA4.1). This figureseems
reasonablycompatiblewiththe dataonthesizeofoverseascontracts
executedby constructionfirms ofthevariousindustrializednations,
includingworkundertakeninbothdevelopedanddevelopingcountries.
Forexample,overseasconstructioncontractsoffirms in theU.S. (those
in the ENR400--seeref. [6]), U.K., France, andItalyamountedto about
6.6billionbollarsin 1969. Unfortunately,similarfigures forvarious
professionalservicesarenotavailable,buttheymaybeexpectedtobe
FluorCorporation,Bechtel,Brown&Root, Inc., TheLummusCompany,and
TheRalphM.ParsonsCompany (seeENR400[61 for others). Someofthe
U.S.-basedmulti-nationaldesignfirms are Gilbert/CommonwealthCos.,
Sargentand Lundy,Dames andMoore,CharlesT.Main,Inc., andBlack
andVeatch (seeENR500 [7] for others). Britishfirms includeRichard
CostainLtd., GeorgeWimpey,andTaylorWoodrow;French,SPIE-Batignoles
andCompagniedeConstructions Internationales; German,Hochtief; Ita-
lian, Impregilo (a permanentconsortiumof threeItaliancontractors)
andImpreseAstaldiEstero; andYugoslav,Energoprojekt. The largest
consultingengineeringfirmin Europeis theSwedishAktiebolegetVer-
tenbyggnudsbyran. The "bigfive"multi-nationalconstructionfirms in
JapanareKajimaCorporation,TaiseiConstructionCompany,TajenakaKo-
mutenCompany,Ohbayash!-Gumi, andShimazu. InTaiwanistheRet-Ser
EngineeringAgency,amulti-nationalcontractor,andinKorea,Hyundat.
3.64
is largely
lacking
in the developing
considerable
since such expertise
countries
andtakes longerto develop
thandoes construction
capability.
Multi-national
firmsgenerally
engageinprojects
andactivities
Typesofconstruc-
thatare beyond
the abilities
of the localindustry.
tiongenerally
include
infrastructural
projects,
such as transport,
com-
munications,
andutilities,
wherethe client
is usually
the government;
andindustrial
plants,
wherethe clientmaybethe government,
aninter-
national
company
headquartered
in theU.S. or Europe,
or acombination
Occasionally
multi-national
ofboth,but rarely
aprivate
local firm.
firmsmayalso construct
hotelsand officebuildings
for the interna-
DatainTableA2.10afur
tional
firmsorhousing
forthe government.
Koreasuggest
thatmulti-national
construction
is about evenly
split
between
civilengineering
worksandbuilding,
primarily
industrial
plant,
and this is probably
the caseinmostdeveloping
countries
although
the
lessdeveloped
onesmaytend to emphasize
public
works.
Professional
services
rendered
bymulti-nationals
include
feasi-
bility
studies,
planning,
design,
supervision
andmanagement
of construc-
Oc-
tion,andeconomic
development
planning,
again for the sameclients.
casionally
multi-nationals
maydobothdesign
and construction,
although
suchdesign-construct
firmsorevendesign-construct
teams encounter
somedifficulty
if theproject
isfinanced
through
international
sour-
ces, manyofwhichrequire
international
competitive
bidding
whichge-
nerally
necessitates
separate
design andconstruction
contracts
andmay
require
thatthe designandconstruction
firmsbeseparate
entities.
Suchclients,
project
types, andservices
areneededbythemulti-
nationals
sinceprojects
mustbelargeinordertobeprofitable.
For
75percent
ofitswork
example,
aU.S. consulting
firmwhichdoessome
project size is 400,000 dol-
in developing
countries
claims its average
lars,with200,000dollarsrequiredtojustbreak-even;
andaU.S. de-
sign-construct
firmclaimsits projectsindeveloping
countries
are
usuallyinthe multi-million
dollarcategory.
Construction
multi-nationals
inthedeveloping
countries
havegrown
First, largeindustrial
andpub-
in importance
for avarietyofreasons.
licworksprojectsoftenrequirehighlysophisticated
technology
for
their planning,
design, andconstruction,
andonlythemulti-nationals
havetherequisite
skillsandexpertise.
Second,even inprojectswhich
itilla
donotrequireparticularly
sophisticated
technology,
there is
needfcrprofessional
andmanagerial
skillsoftenlackinginlocalentre-
preneurs.
Finally,suchprojectsrequire capitaloftennotlocally
The international
available,
andinternational
sourcesmustbeused.
contractor
canhelp the clientget aid fromthesesources,orperhaps
providesupplier's
credit,andcanprovidehis ownworkingandinvest-
ment capital.
Competition
amongmulti-national
firms in construction
is nowin-
tense. ImmediatelyafterWorldWarII continentalEuropeandJapan,
TheU.K.,
withmuchrebuilding
to do,hadnoneedto go abroadforwork.
withits far smallerneedforreconstruction,
wassoonabletoreturn
toits formermarkets,largely theCommonwealth
countries.
Thewider
economicbaseofthe U.S.and the growthofU.S.militaryaidanddi-
rectinvestment
overseasgaveU.S. firms anedgeovertheirU.K.com-
Duringthe middletolate fiftiesthe Italian,French,Ger-
petitors.
man,andYugoslavfirms in construction
enteredtheoverseasmarket.
In1956aconsortiur,ofItaliancompanies surprisedthe international
Japanen-
businessworldbywinningthe contract for theKaribaDam.
166
teredtheworldconstructionmarketmorerecently,forthedemandfor
constructionathome,whichwas fedfirstbyrebuildinganO thenbyra-
pideconomicgrowth,hasnowsubsided.
Multi-national construction firms from these and other developed
countriesdolarge amountsofworkin the developingcountries. Forex-
ample,U.S. firms inthe ENR400 (6) undertook4.5billiondollarsof
foreignconstructionworkin1969,whileBritishforeign construction
workin 1969amountedto233millionpounds (550milliondollars) (4),
French to4.8billionFrenchfrancs (900milliondollars), andItalian
to 290millionpounds (700milliondollars). Evensomedevelopingcoun-
tries areentering the fieldofinternational constru~ction. Korean
firms, for example,executed56milliondollarsworthofconstruction
contractsin 1971 (seeTableA2.10b). U.S.firmsnolongersocompletely
dominatethe industryas theyoncedid,for theyhaveoftenpricedthem-
selvesout of themarketandU.S.militaryandbilateralaidto develop-
ingcountries has beenshrinking,thus eliminatingsomeoftheU.S. firms'
competitiveedge.
Sincemuchforeign aid fromdifferent developedcountries tends to
be concentratedin particularareas of the developingworld,multi-na-
tionalfirms tendto concentratetheiractivitiesin thesesameregions,
one logicalconnectionbeing the availabilityof theircountries' tied
aid. Forexample,about 70percentofBritishoverseas construction
workin 1969wassituatedinthe Sterlingarea,the Frenchhavealmost
completecontrolofthemarket for foreignconstructionservices in
their former colonies in Africa, and U.S. firms have been very busy in
Asia,the FarEast,andLatinAmerica. Multi-nationalfirms indevelop-
ingcountriesarenaturallymostcompetitivein the areas aroundthem.
167
Firms inKorcaandTaiwan,forexample,havebeenabletounderbidex-
patriateWesternfirmsby10to15 percentonprojectsinAsia(1).
Theircompetitiveadvantagearisesfromloweroverallcostoflaborand
associatedservices,familiaritywithlocalbureaucracy,regulations,
and customs, and excellent knowledge of and training in Western construc-
tion techniques.
Developedcountries tendtospecializeincertaintypesofconstruc-
tion aswell. Multi-nationals inItaly,for example,areknownas dam
builders, theU.S. firms asnuclearpowerplantbuilders,andtheBri-
tishas bridgebuilders. EuropeandJapanaremorecompetitive thanthe
UJ.S. ininfrastructure creation,andmulti-nationals in the developing
cuuntries alsotend to coacentrateonbasicinfrastructureprojects.
American firms, in fact, havelargelywithdrawnfromcompetitiononma-
Jornormalinfrastructureprojects in SoutbeastAsia (1), tendingrather
toconcentrateonhighlytechnicalindustrialplantsandthemoresop-
histicatedinfrastructure. The provibionofprofessionalandmanagerial
services,however,stillrestsmainlywiththem'ilti-nationalsofthe
moredevelopedcountries,particularlyWesternEuropeandtheU.S.
Thisstiffer competitionin thedevelopingregions' construction
marketinrecentyearshas resultedinthe governmentsofthe developed
countries supportingtheirmulti-nationalfirms sinceoverseascontracts
improveacountry'sbalanceofpayments. Bilateralagenciesandpri-
vate financinggroupsaregiving improvedcreditterms tothemulti-
nationalsandthe developingcountries. Governmentsarealso researching
possibleprojectsfortheirmulti-nationalfirmsandencouragingcor-
porate cooperation on such projects. Canada, for example, finances
feasibilitystudieswith 50-yearno-interestloans, sincethe country
168
doingthe feasibilitystudyoftengets the constructioncontract. All
thesefactors lowerclient costsinthe developingcountries. Profit
margins for themulti-nationals,moreover,havebeenshrinking,due to
increasedcompetition. ThewinningItalianconsortium,forexample, fi-
gureda3percentprofitmarginin itsbidfor the KaribaDam: British
andU.S. contractors,on the otherhand,hadbeenaimingat 14percent
profitmarginsontheirprojects. Stiffercompetitionhasalsoresulted
in amorevibrantmulti-nationalconstructionindustrywhosefirmsare
forcedtoinnovateandincreaseefficiencyinorderto remaincompeti-
tive.
Itis important to lookatthe natureofthe individualfirmin
multi-national constructioninorderto understandthe characterofits
operations indevelopingcountries. Thusfar,data onmajorU.S.-based
multi-national firms servingas contractors,designers,oracombination
ofbothinthe field of constructionoverseashavebeen found (seeTa-
bles4.1and 4.2). Conclusionswhichcanbedrawnfromthese datashould
give at leastsome insightinto thegeneralnatureof multi-nationals in
construction.
Multi-nationalconstructionis typicallyundertakenbythe largest
Thedataoncontractorsand contractorswhododesignis fromthe ENR
400 (6), whichrepresents the 400largest contractorsin theU.S. ranked
onthebasisoftheir contractawards (primecontractawv As, shareof
jointventures,andsubcontractsawardedto companybyotherprimecon-
tractors) for the U.S.andabroad (exceptin1963, thenrankedonlyby
U.S. awards). The 'itaondesigners is fromthe ENR500 (7), whichre-
presentsthe 438to 460 largestdesignfirms intheU.S. (thisnumber
arisesfrom the fact that 40 to 62 design-construct firms areincluded
inthe ENR500eachyear) rankedonthebasisofbillingsfor profes-
sionalservicesrelatedto construction (includingfees,reimbursables,
staffloans, or temporarystafftransfers) for theU.S. andabroad.
Allforeignworkis reportedas alump sum,and thusdataonworkin
cevelopingcountries connotbeseparatedfromthat indevelopedcoun-
tries.
1.69
Table4.1a: Foreignworkdoneby400 topU.S.contractingfirms
a
(source: ref. 6)
Firms thatdo Contractors awardednewforeigncontracts
Contractvalue
_ Total Alsododesignwork
Forein designw_
Total f
(Percent (Percent (Percentofall
Year (Billion (Billion (Percen
of 400) (Number)
those awarded
400) (Number)
(Number) of
dollars) of tot)
o foreignwork)
dollars) total
52.4
132 33.00 63 15.75 33
1973 55 6.1 11.1
9.0 125 31.25 71 17.75 39 54.9
1972 40 3.6
13.6 130 32.50 65 16.25 33 50.8
1971. 36 4.9
4.0 12.3 120 30.00 64 16.00 31 48.4
1970 32.4
31 50.8
4.45 13.3 109 27.25 61 15.25
1969 33.4
95 23.75 68 17.00 34 50.0
1968 28.6 3.5 12.2
48.5
3.7 15.2 111 27.75 66 16.50 32
1967 24.4
36 53.7
16.9 91 22.75 67 16.75
1966 21.9 3.7
19 3 15.8 82 20.50 61 15.25 39 63.9
1965
2.1 13.0 99 24.75 61 15.25 31 50.8
1964 16.1
32 44.0
b
8.0 100 25.00 50 12.50
196 11.2 0.9
aENR 400.
bRankedtop400 contractorsbydomesticvolumeratherthantotal. ?-a-h of400hadtenmilliondollars
ormoreincontractsinatleastoneofthreeyears, 1961-1963.
Table 4.1b: Foreignworkdoneby40 topU.S. contractingfirms
a
(source: ref.6)
Contract value
Firms thatdo Contractors awardednewforeigncontracts
Total
Fo
dsgwotal
]Also do design work
Year (Billion (Billion (Percent
(Percent
(Percent (Number)((PerenttNumber)l
(Nu oawarded f
dollars) dollars) oftotal) (Number) of40) ( of40) (Number) those
foreignwork)
1973 34.6 5.2 15.0 24 60.0 19 47.5 15 79.0
1972 21r8 2.6 11.9 23 57.5 25 62.5 16 64.0
1971 19.9 4.3 21.6 21 52.5 28 70.0 17 60.7
1970. 17.5 3.6 20.6 24 60.0 24 60.0 19 79.2
1969 18.6 4.1 22.0 26 65.0 27 67.5 22 81.5
1918 15.6 3.0 19.2 24 60.0 25 62.5 19 76.0
1967 13.3 3.0 22.6 24 60.0 27 67.5 19 70.4
1966 il.2 3.2 28.6 26 65.0 31 77.5 21 67.7
1965 9.3 2.2 23.7 27 67.5 27 67.5 20 74.1
1964 7.7 1.9 24.7 25 62.5 26 65.0 17 65.4
1963
b
4.2 0.6 14.3 21 52.5 19 47.5 12 63.2
aTop 10 percent of ENR 400.
bSee footsanote b, Table 4.1a.
top U.S. contractors compared
Table 4.1c: Foreign work done by 40
from Tables 4.1a, 4.1b)
contractors (source: calculated
Contractvalueof40 topcon-
tractorsas apercentageof
Numberof40 top
contractorsthatdo
Year
thecontractvalue
ofthe400
designas apercentage
ofnumberof400
Totalthat
do design
18.1
1973
62.9
85.2
18.4
1972
54.5
72.2
16.1
1971
55.2
87.7
20.0
1970
54.0
90.0
23.8
1969
55.6
92.1
25.2
85.7
1968
54.5
21.6
81.0
1967
54.5
28.5
86.4
1966
51.1
32.9
73.3
1965
48.9
25.2
90.4
1964
47.8
21.0
66.6
1963
37.5
to foreign workdoneby400topU.S.
Numberoftop 40 contractors awarded
newforeigD contractsas apercentage
ofthenumberof the400 awardednew
foreigncontracts
Total
Alsodo designwork
45.4
30.1
41.0
35.2
51.5
43.0
61.2
37.5
70.9
44.2
55.8
36.7
59.3
40.9
58.3
46.2
51.2
44.2
54.8
42.6
54.5
38.0
Table 4.1d: Distributionofthetotalandforeignvolumesof constructiondonebythe400 topU.S.
contractorsaamongvarioustypes ofcontractors (percentof the400'stotalorforeignvolumeofnew
contractawards) (source: ref. 6)
Totalvolume Foreignvolume
Year Industrial Diversified Generalbuilders Industrial Diversified Generalbuilders
constructors
contrutor
contractorsb and heavy and constructors contractorsb and heavy and
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
aENR400.
bDo both heavy
highwaycontractors_constuctor
highwaycontractors
39 32 29 64 28 8
33 36 31 57 32 11
21 39 40 37 47 16
15 43 42 na na na
19 43 38 53 42 5
15 47 38 34 60 6
14 49 37 24 66 10
20 42 38 40 48 12
na na na na na na
cI
38 50 12 25 69 6
and building construction.
Category of industrial constructors includes all building contractors, which in the case of foreign
workarelargelyindustrialconstructorsbutinthecaseoftotalworkaremoresplitbetweenindus-
trialconstructorsandgeneralbuilderswithasomewhatlargersharegoingto thelatter.
Table
4.1e:
Foreign
work
as apercentage
of total
work
andnumer
01
contractors
whose
foreign
work
constitutes
50percent
ormore
of their
total
work,
among
the400 largest
U.S.
contractors
andthe40 largest
ref. 6)
U.S. contractors
(source:
Contractors
whose
foreign
work
constitutes
50%
apercentage
Foreign
work
as
ormore
of total
work
(%of those
Year
Median (Number)
awardednew a
Minimum Maximum
forei n contracts
)
Top
400
b
15.9
10
19.6
100.0
0.3
1973
15.4
10
16.3
86.0
0.2
1971
14.8
9
16.9
82.3
0.2
1969
24.2
16
16.8
1.0
100.0
1967
18.0
11
25.0
c
92.5
1965
18.4
1963
d
0.3
90.9
18.4
9
Top
40
e
21A1
4
96.6
29.8
2.6
1973
21.4
6
16.9
86.0
1.1
1971
22.2
6
26.7
82.3
5.
1969
8
4.8
83,3
27.6
29.6
1967
22.2
1965
c
80.7
32.1
6
15.8
1963
d
2.5
85.2
22.8
3
and 4.1b for number of contractors
awarded new
aSee Tables 4.la
foreign
contracts.
bENR400.
c0.004.
dSeefootnoteb,Table4.1a.
eToptenpercentofthe ENR400.
174
Table 4.2a: Architectural
andengineeringfirmswhichworkabroadintheENR500 (source: ref.7)
Billings
Firmswithforeign
Firmswhichhandle
Year Total
(Million
dollars)
Toa oe-nTotal
Foren
(Million (Percent
dollars) of total)
numberof
firms
billings
(Nb (Percent
umer of total)
foreignwork
(Nb) (Percent
of total)
1973 2600 250
9.6
445 189 42.4
221 49.7
1972 2230 223 10.0
438 161 36.7
280 63.9
1971 2048 195
9.5
449 160 35.6
283 63.0
1970 1869 170.3 9.1 442 164 37.1 280 63.3
1969 1696.5 154.7
9.1
460 160 34.7
291 63.3
1968 1487.6 130
8.7
456 149 32.6
283
62.1
1967 1281.0
na
na 453 na na 280
61.8
1966 1102.5
na
na
455 na na 276
60.7
1965 955.0 na
na 454 na na 279 61.5
1964 728 na
na
456 na na 140 30.7
Table 4.2b: Architecturalandengineeringfirmswhichhandleforeign
workinthe top tenpercentofthe ENR500 (source: ref. 7)
Totalnumberof firms Firmswhichhandleforeignwozk
Year intop tenpercentof
ENR500 (Number) (Percentoftotal)
1973 45 40 88.9
1972 44 42 95.5
1971 45 43 95.6
1970 44 44 100.0
1969 46 46 100.0
1968 46 46 100.0
1967 45 44 97.8
1966 46 41 89.1
1965 45 45 100.0
1964 46 34 73.9
176
Table 4.2c: Numberoffirmswhichhandleforeignworkinthe top ten
percentof theENR500as apercentageof thenumberoffirmswhich
handleforeignworkinthewholeoftheENR500 (source: calculated
fromTables 4.2aand4.2b)
Year
Percent
1973
18.1
1972
15.0
1971
15.2
1970 15.7
1969
15.8
1968
16.2
1967 15.7
1966
14.9
1965
16.1
1964
24.2
177
Table4.2d: Diversificationinthearchitecturalandengineeringfirms intheENR500andin thosein theENR500whichhandle
foreignwork (source: ref.7)
Typeof designfirm 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964
Architect/engineersandengineer/
architects
Total - number
216 197 198 218 215 210 205 192 190
3 1 9
b
- percentofallfirms
intheENR500a 48.5 45.0 44.1 49.3 46.7 46.1 45.3 42.2 41.9 70.0
Foreign- number
- percentofall firms
handlingfureignworka
Foreignaspercentageoftotal
110
49.8
50.9
129
46.1
65.5
133
47.0
67.2
134
47.9
61.5
143
49.1
66,5
131
46.3
62.4
122
43.6
59.5
127
46.0
66.1
119
42.6
62.6
na
na
na
Consultingengineers
Total - number 177 188 190 166 186 178 180 179 178 137
- percentofall firms
in theENR
5 00
a
Foreign- number
39.8
89
42.9
112
42.3
116
37.6
109
40.4
116
39.0
ill
39.7
117
39.3
106
39.2
114
30.0
na
- percentofallfirms
handlingforeignworka
Foreignaspercentageoftotal
40.3
50.3
40.0
59.6
41.0
61.0
38.9
65.7
39.9
62.4
39.2
62.4
41.8
65.0
38.4
59.2
40.9
64.0
na
na
Architects
Total - number
52 53 61 58 59 68 68 84 86 b
- percentofallfirms
inthe ENR
50 0
a
Foreign- number
11.7
22
12 1
39
13.6
34
13.1
37
12.8
32
14.9
41
15.0
41
18.5
43
18.9
46
b
-
na
- percentofall firms
handlingforeignworka
Foreignaspercentageof total
9.9
42.3
13.9
73.6
12.0
57.4
13.2
63.8
11.0
54.2
14.5
60.3
14.6
60.3
15.6
51.2
16.5
53.5
na
na
aseeTable4.2a fortotalnumberoffirms inENR500 andnumberofthosewhohandleforeignwork.
bArchitectsareincludedwitharchitect/engineersand engineer/architects.
rable 4.2e: Diversificationinthearchitecturalandengineering firmsinthetop tenpercentof theENR500andin
thosewhichhandleforeignworkinthe top tenpercentofthe ENR500 (source:
Typeofdesignfirm 1973 1972 1971 1970
Architect/engineersand enLineer/
architects
Total - number 31 30 32 29
- percentofall firms intop
10% of ENR
5 0 0
a 68.9 68.2 71.1 65.9
Foreign- number 26 28 30 29
- percent ofall firmshandling
foreignworkintop 10% of
ENR
50 0
a 65.0 66.7 69.7 65.9
Foreignaspercentoftotal 84 93 94 100
Consultingengineers
Total - number 14 14 13 15
- percentof allfirmsin
top 10%of ENR
5 0 0
a 31.1 31.8 28.9 34.1
Foreign- number 14 14 13 15
- percentofall firmshandling
foreignworkin top 10% of
ENR
5 0 0
a 35.0 33.3 30.3 34.1
Foreignasapercentoftotal 100 100 100 100
Architects
Total - number
0 0 0 0
- percentofall firms in
top 10% of ENR
5 0 0
a 0 0 0 0
Foreign- number
0 0 0 0
- percentofallfirmshandling
foreignworkintop 10% of
ENR500a
0 0 0 0
Foreignasapercentoftotal
ref. 7)
1969
29
63.0
29
63.0
100
16
34.8
16
34.8
100
1
2.2
1
2.2
100
1968
23
50.0
23
50.0
100
19
41.3
19
41.3
100
4
8.7
4
8.7
100
1967
24
53.3
23
52.3
96
19
42.2
19
43.2
100
2
4.4
2
4.5
100
1966 1965
27
58.7
23
28
62.2
28
56.1
75
62.2
100
17
37.0
16
17
37.8
17
39.0
94
37.8
100
2
4.3
2
0
0
0
4.9
100
0
-
aSeeTable 4.2b fortotalnumberoffirms inthetop 10percentoftheENR500andnumberofthosewhohandleforeignwork.
Table4.2f: Comparisonofdiversificationinthearchitecturalandengineeringfirmsinthetopten
percentoftheENR500withthatinthefirmsinthewholeoftheENR500 (source: calculatedfrom
Tables4.2dand4.2e)
Totalnumberoffirms--top 10%as
Year
iNumberoffirmswhichhandleforeignwork--top
apercentageoftheENR500 j 10%asapercentageoftheENR500
Architect/engineers
Consulting Architectsi Architect/engineers
Consulting Architects
andengineer/architects
engineers
land engineer/architects
engineers
1973 14.4 7.9 0 23.6 15.7 0
1972 15.2 7.4 0 21.7 12.5 0
1971 16.2
6.8 0 21.8 12.1 0
o 1970 13.3 9.0 0 21.6 13.8 0
1969 13.5 8.6 1.7 20.3 13.8 3.1
1968 11.0 10.7 5.9 17.6 17.1 9.8
1967 11.7 10.6 2.9 18.9 16.2 4.9
1966 14.1 9.5 2.4 18.1 15.1 4.7
1965 14.7 9.6 0 23.5 14.9 0
Totalandforeignbillings
of thearchitectural
andengi-
Table4.2g:
neering
firms intheENR500,bytypeofdesign
firm(source:
ref. 7)
Typeofdesignfirm
Architect/engineers
andengineer/
architects
Allbillings
- milliondollars
- percentoftotalbillings
ofENR
500
a
Foreignbillings
- milliondollars
- percentoftotalforeign
billings
ofENR
500
a
Foreignbillings
aspercent
of allbillings
Consulting
engineers
Allbillings
- milliondollars
- percentoftotalbillings
ofENR500a
Foreignbillings
- milliondollars
- percentof totalforeign
billings
of ENR500a
Foreignbillings
as percent
ofallbillings
Architects
Allbillings
- milliondollars
- percentof totalbillings
a
ofENR500
Foreignbillings
- milliondollars
- percentof total foreign
billings
ofENR
500
a
Foreignbillingsaspercent
of allbillings
1972
1300
58.3
9
b
117
.
52.9
9.1
779
34.9
100.6
45.1
12.9
151
6.8
b
4.5
2.0
3.0
1971
1200
58.5
1 11
.b
57.0
9.3
687
33.5
81.4
41.7
11.8
161
8.1
2.5
1.3
1.5
1970
1100
58.9
b
98.6
57.9
9.0
604
32.3
69.6
40.9
11.5
165
8.8
2.1
1.2
1.3
1969
929.5
54.8
94.6
61.2
10.2
613.7
36.2
58.5
37.8
9.5
153.3
9.0
1.5
1.0
1.0
aSeeTable4.2a fortotal andforeignbillingsof firmsintheENR500.
bThesefiguresareestimatedfrominformationgivenintextofsource.
181
firmsin thefieldinthe developedcountries.
Amongthe 400 largest
contractors
intheU.S.about16percentofthemareawardednewforeign
contracts
inanyoneyear;forthe top40contractors
this figureis 63
Thetop 10percentoftheENR400
percent (seeTables 4.1aand 4.1b).
contractors
thus accountfor 40percentof the contractors
inthe ENR
400winningforeign contracts
and83percentof theforeignworkawarded
Thedegreeof concen-
tocontractors
intheENR400 (seeTable4.1c).
trationisevengreaterin foreignthanindomesticwork,for these
same 40 firmsaccount foronly55percentofthe totalawards to the
400 top contractors
(seeTable4.1c).
Similar commentscanbemadeaboutthe designfirms intheENR500.
Some60percentofthese firmshandleforeignwork,while95 percentof
(seeTables 4.2aand 4.2b).
the top 10percentofthese firms doso
Thetop 10percentofthe design firms intheENR500thusaccount for
better than16percentof the designers
in theENR500handlingforeign
work (seeTable4.2c). It is not surprising
thatmoreofthe largede-
signfirms thanconstruction
firmsworkabroadconsidering
that thereis
generally
not onlyagreaterneed forthembutalso less riskanddif-
Sizealso appearsmuch less significant
for desig-
ficulties
involved.
nersthan for contractors.
Thesefindingsarenotunexpected,
forino'nrseasworklarger
firmshaveimportantadvantages
over theirsmaller competitors.
The
enormousscaleof the publicworksprojectsandthe technical
sophis-
ticationof the industrial
plantsnecessitate
theuseoflargefirms
for designandconstruction
sinceonly thesefirms can drawonthelarge
quantities
of financial,
managerial,
andtechnical
resources
required
Largerfirms arealsobetterequippedtohandlethe
for suchprojects.
132
greaterrisksinherentin foreignprojects. Informationflowsfromfor-
eignconstructionmarketsareharderto establishthanareflows from
domesticmarkets,and the largerfirmcanaffordtheextraexpenseneeded
toestablishaworld-widecommunications system,whilethegreatercom-
mercialintelligence of thelargerfirmenablesittofindsufficient
foreignwork. Finally,the larger companygenerallyhasmoreexperience
and more varied expertise and is thus better equipped to handle unfami-
liar conditions.
Diversificationofservicesperformedbyasinglefirmis another
Ithasbeenbe-
characteristicofmulti-nationalconstructionfirms.
con-
comingincreasinglycommonfor contractors to dodesignaswellas
structiononeither the sameorseparateprojects;more than30percent
of the contractorsintheENR400havebeendoingdesigninrecentyears
(seeTable4.1a). This figureismorethan50percentamongthe firms
in theENR400doingforeignwork,andhasbeenfor adecade (seeTable
4.1a). Partof this tendency todiversifymustbeattributedtosize,
however,since 60percentofthe top 10percentofthe ENR400contrac-
torshave donedesignfor thepast tenyears; 71 percentofthe contrac-
tors in this groupwinningforeign contractshavedone the same (see
Table4.1b). Itseems the flexibilityaddedbyacontractor'sdoingde-
signaswellas constructionis importantinthemulti-nationalconstruc-
tionmarket.
Diversificationofservicesseems lessimportant forthemulti-
nationaldesignfirms thanfor themulti-nationalcontractors. Archi-
tect-engineers account for about 47percent ofthedesign firms inthe
ENR500,consultingengineers for 40percent, andarchitects for 13
percent; the correspondingfigures for the top10percentofthese de-
183
signfirms inrecentyearsare67, 32, andIpercent (seeTables 4.2d
and4.2e). Diversificationandsizearethusdistinctlycorrelated (see
alsoTable4.2f). Thesefiguresforthemulti-nationaldesign firms
areverysimilar,althoughthereis some tendency forthemulti-natio-
nals tobemorediversifiedin thatabout63percentofthe architect-
engineers,61percent ofthe consultingengineers, and57percentof
the architectsin theENP 500handleforeignwork(seeTables4.2dand
4.2e). Dataonbillingsgiveaslightlydifferentpicturein that about
9percent of allarchitect-engineers', 12percentofall consultingen-
gineers', and 2percentof allarchitects' totalbillingsarefor for-
eignwork (seeTable 4.2g). Thearchitect-engineer'sadvantageinover-
seasworkis flexibility,whilethe consultingengineer'sis the fact
thatmuchoftheworkis publicworksorindustrialplantconstruction
Sizeseems
withconsiderableneed for engineersbutless forarchitects.
particularlyimportant inthe case ofthe less diversifieddesign firms
in thatnearlyallarchitectsand consultingengineersinthetop 10
percentoftheENR500designfirmsaremulti-nationals (seeTable4.2e).
Theextentofdiversificationamong types of constructionis ano-
Thedata
ther featureofmulti-nationalswhichshouldbeconsidered.
inTable4.1dshowthatindustrialconstructorsanddiversified contrac-
torstakeamuchmoreactiverole inforeignworkthandogeneralbuil-
ders andheavyandhighwaycontractorsinthe U.S., andfurthersuggest
thatmulti-nationalcontractorstendtobe lessspecialized thanthe
average contractor. Industrialconstructorsmaybeconsideredfairly
specialized,however,and firmsbuildinghighlytechnicalandindivi-
dualizedindustrialplantsmaydo so onlyforoneindustry,oftenunder
adesign-constructcontract. Diversifiedcontractorsmightbeconsidered
184
somewhatlessspecialized,althoughTheylargelyconcentrateoninfra-
structuralprojectsandbuildonlyafew industrialorotherprojects
overseas. Some companiesmayalso specializeinparticularareasof
civilengineering,likeImpregiloinItalywhichconcentratesondam
construction.
As wasmentionrdabove,developedcountries tend towardsomespe-
cializationamongtypes of construction,afact whichis apparentfor
theU.S.inthe datainTable4.1d. Inthe last tenyears inthis coun-
trythere hasbeenanalmostcompletereversalin therolesofindustrial
constructorsanddiversifiedcontractorsbothintotalandparticularly
in foreignsales,withindustrialconstructorsnowhavingthe leading
role.
Foreigncontract awardsaccount for anywherefromless than Iper-
centto 100percentofanENR400multi-national contractor'stotal
awardswithamedianfigureofabout19 percent (seeTable4.1e). Some-
whatless thanafifthof themulti-nationalcontractorsinthe ENR400
receivemorethan halfof theirrevenue fromforeign contracts (seeTa-
ble4.1e). Themulti-national contractorthus typicallyconcentrates
mostof itsattentionon domesticworkwitharelativelysmallshare
devoted tooverseaswork. Thisappearssomewhatless trueamongthe
largermulti-nationalsin thatthemedian figurefor foreigncontracts
as ashareoftotalcontracts for themulti-nationalcontractorsamong
rhe top 40 in theENR400 is somewhathigher,around 26percent,while
some 22percentof themreceivemorethanhalfoftheirrevenue from
foreign contracts (seeTable4.1e). Eventhis isarathersmallper-
centage,however,and thiswhole issuemayhavesignificantimplications
onthe behaviorofmulti-nationals inconstructionindeveloping count-
185
ries.
Firmsin theconstruction
industry,
particularly
intheU.S.,have
This
longbeencharacterized
ashavinganeasyentry/easy
exitnature.
has to some extent been transferred
to the multi-national
characteristic
acountrytodo aparticular
pro-
firmsin thatafirm typically
enters
does thejob,and thenleaves takingits equipment
andpersonnel.
ject,
Atemporary
officemaybeset upinthecountry,
butitwillremainopen
onlyso longas the companyisworkingthere,andmuchoftheworkmay
Itisbecoming
increasingly
common
thehomecountry.
besentbacktc
formulti-nationals
inconstruction
tosetuppermanent
offices orsub-
sidiaries
abroad,buttheseare primarily
inthe developed
countries.
The toughercompetition,
whichmakescloser contactwithpotential
cli-
entsimportant
inprocuring
work,andthe increasing
demandfor construc-
tionand its related services
in the developing
countries
arehelping
to encourage
themulti-nationals
toset upmorepermanent
officesand
Suchtrendshaveimportant
evensubsidiaries
intheseareas, however.
positive
implications
formulti-nationals'
operations
indeveloping
countries;
theyareevenmorepromising
if thestaffpositions
inover-
faraspossible
withlocal
seasoffices and subsidiaries
arefilledas
personnel
andthemajorportionoftheworkis donethererather than
beingreturned
to thehome country (aconsulting
firminterviewed
(10)
apartofits success topractices
alongthese lines.)
attributed
at least
Jointventuring
andsubcontracting
aretwootherpractices
ofmul-
Jointventuring
ti-national
firms that requireabriefdiscussion.
amongmulti-national
firmsonan international
scale is quite common
Jointven-
and is mostofLendonefor financial
ortechnical
reasons.
turingwithlocalfirms inthe developing
countries
is less common,
1.86
partlybecausemanymulti-nationals feel the locals arenot sufficiently
financiallyandtechnicallycompetent, andtheydo notwantto giveaway
"tradesecrets" andhelp createlocalentrepreneurialtalentwhichone
daymaycompetewiththem,andpartlybecauseinmanydevelopingareas
therearefew competentlocalswithwhichto jointventure. Jointven-
turingmaybedonebecauseit is required,orat leastpreferred,bythe
government (e.g.,in Brazilit isrequired), orbecausethemulti-na-
tionalfinds itbeneficialto do sobecauseof the local's familiarity
withthebureaucracy,rules, regulations,laborsupply,construction
conditions, and so forth.
Subcontractingaportionofthejob toothermulti-nationalsorto
localfirms is also practiced. Subcontractingto localfirms ispre-
ferredoverjointventuringwithlocalsbymanymulti-nationalsbecause
this leavesthe multi-nationalin charge. Bothjointventuringandsub-
contractingare importantin the developmentoflocalindustryandwill
be discussedfurtherbelow.
It is usefultobriefly consider theeconomictheoryunderlyingthe
multi-nationalconstructionindustryandsome of its implicationson
thenatureof multi-nationals'operationsindevelopingcountries. The
multi-national constructionindustryfitsneatlyintothe theoryofin-
ternationaltrade, forit is engagedin the expof:t of goodsandservices.
Morespecifically,itexports its professional,managerial,and tech-
nologicalskills and expertise as well as equipement and materials for
which it is paid foreiga exchange; such activities are clearly benefi-
cial to thebalance of paymentsat home. Theproblemsofthemulti-na-
tional constructionindustry are similarto those of anyexportindustry,
including,for example,foreign competitionand restrictionsonexports
187
localregulations
whichprohibittheuseofmulti-national
firms
suchas
services
or government
visaandjointventuring
regulations
whichres-
trict theiroperations.
Why one country becomes a dam builder and anotheraconstructorof
nuclearpowerplantsinthe developing
countries
is aquestion
of the
TheHeckscher-Ohlin
model (2)takes
movements
ofinternational
trade.
theviewthatdiffering
factorproportions
in areasoftheworldcause
the flowof trade.
Acapital-abundant,
labor-scarce
country,
forexam-
ple,wouldexport
capital-intensive
products
and importlabor-intensive
acapi-
whichshows that theU.S.,
ones.
TheLeontief
paradox
(2,9),
tal-abundant
country,
is exporting
labor-intensive
goods and services
andimporting
capital-intensive
products,
throwsdoubtupontheHeckscher-
This theoryalso cannot ade-
Ohlintheoryand its assumptions,
however.
quately
explain
themulti-national
construction
Industry
whichexports
labor-intensive
services
to labor-abundant
developing
countries.
(3),
Analternative
viewofinternational
trade,that ofLinder
seems somewhat
more appropriate.
Here the precondition
for anon-pri-
exportis thepresence
ofhome de-
marygoodor service
to emerge
as an
mand,forentrepreneurs
reactonly to profitopportunities
ofwhich they
TheLin-
are aware andtheyare usually
firstawareof domestic
needs.
der argument
further
restsonthe assumption
that theproduction
func-
tions of goods demanded
athomebecomethe relatively
mostadvantageous
effects
and the directing
of re-
ones because
of the learning-by-doing
searchanddevelopment
into these areas; itis such comparative
advan-
a good or service
thatenables
the
tagein theproduction
function
of
Anexport industry
thus firststartsproducing
country
to export it.
for thehomemarket,
develops
knowledge
andexpertise
inthe field
188
whichgivesit advantagesoverits competitorsabroad,andthenproceeds
to exportits product.
Acase inpointinthemulti-national constructionindustryisthe
emergenceofItalian leadershipin the dambuildingfield. Therehas
beenalargedemand fordamsandhydroelectricplants in Italy,as evi-
dencedbyits 1500damsandhydroelectricpowerstations,becauseofthe
shortage of fossilfuels butrelativeabundanceofwaterpowerinthe
Alps. Italiancontractors thusgainedmuchexpertiseinbuilding dams
under difficult conditions Ldwereable tobecome themostexperienced
andefficientbuildersin this field. Further, the Italianspioneered
theuse of concrete,whichhasbecome theprimeconstructionmaterial
fordams, and thelearning-by-doingeffectsofusingthismaterialalso
strengthenedtheirsuperiorityin damconstruction. Whendamproduc-
tion thenslowed in Italy,itwasnaturalfor the dambuildertoexport
his superiorskills andtechnology.
TheLinderanalysisofinternationaltradeinthe multi-national
constructionindustryhas somepotentiallyimportantimplicationsin
consideringtherole ofmulti-nationalsin economicdevelopmentin de-
velopingcountries. Agood isfirstproducedin thehome countryin
response to localconditions,and theexpertisethus developedresults
in acomparativeadvantageintheproduction functionforthe product.
Theproductionprocess (e.g., technologicalandmanagerialaspects)is
thusattunedto the conditionssuchas factorproportionsinthe home
country,and alterationof theprocess in ordertoadapt itto local
conditionsmaybedifficult,costly, andresult inloss ofthe compara-
tiveadvantage. Foreign sales,moreover,areonly arelativelysmall
portionofthetotalsales inmostmulti-national firms inconstructio,
189
4.2
andefforts
to adapttheprocess
to developing
country
conditions
may
Theextent
towhichthis actually
appears
notbeconsidered
worthwhile.
tobethe case inmulti-national
construction
willbeconsidered
inthe
nextsection.
TheNature
ofMulti-Nationals'
Operations
inDeveloping
Countries
Multi-national
firms in construction
inthe developing
countries
areprimarily
involved
withthe planning,
design,
andconstruction
pha-
Theirinvolvement
withplanning
and
sesofthe construction
process.
designis predominantly
inthe formofmanpower;
in construction
it is
-rnd labor--and
of capital--
the form both of manpower--management
in
Thissection
briefly
considers
howmulti-na-
equipment.
materials
and
they behave
as they do.
matters
and why
tionals
operate
in these
design
phases
of the construction
process
have
The planning
and
but the needed
man-
capital
and manpower
requirements,
relatively
small
powercomes fromawell-educated,
experienced
cadgeofprofessionals
withcertain
highly
technical
capabilities.
Multi-national
consulting
anddesign
firmsplayamajorrole inthe execution
oftheseactivities
indeveloping
countries,
forlocalcapabilities
are oftenunder-
or
undeveloped.
Multi-nationals
mayjointventure
withlocalprofessional
firms
seems advantageous
to doso.
if competent
onesareavailable
and it
Somedeveloping
countries,
particularly
thosewith greater
construction
expertise
likeLatinAmerica,
require
orat leastprefer
jointventur-
ing,whichresults
inmoreworkbeingdone in thedeveloping
country
to andparticipation
inthe activities
andtherefore
greater
exposure
by localpeople.
Some explicit
training
mayevenoccurwhichcouldbe
190
helpful tothe locallyeducatedengineersandarchitectsprimarilylack-
ingon-the-jobexperience. It can alsobeausefulsourceoftraining
for thosewithmore limitedskillrequirementssuchas themoretechni-
calhelplike draftsmen,surveyors,and clericalworkers. SomeU.S.
firms (10) reported thatoccasionallytheybringlocalprofessionals
to thehomeofficeto exposethemtoU.S.practices, largelyinon-the-
job trainingsituationswithadditionalformaleducation. Thismayal-
so occurwhenthe government is the client andhasprofessionalson its
staffeventhough there isnoexplicitjointventure.
Some multi-nationalsmaysubcontract to localfirms, allowingthe
localtoperformsomecollection andanalysisofdataor asmallpart
of the design,underthemulti-national'ssupervision. Theshareof
workdone in the developingcountry and the potentialinvolvementand
trainingof locals arenaturally less inthis situation,althoughthey
are greater than if themulti-national does thewholejob itselforin
conjunctionwithothermulti-nationals. Some developingcountriesre-
quireorprovide incentivesto encourageinvolvementoflocalprofes-
sionalsorsome amountof training; this mayhelpthe educationandin-
volvementsituation andmayalsoencouragejotntventuringwithand
subcontractingtolocals.
Aprimarydisadvantageofbringinginmulti-nationals at theplann-
inganddesign stageisthat theymaybe insensitivetolocalconditions.
As emphasizedinSection 3.2,planning anddesignplaymajorrolesin
the choiceof technology,largelydeterminingthe resourcemixand
techniquesused in the constructionphase. Aseconddisadvantageis
thatemployingmulti-nationalsmaytendto discourage developmentof
localexpertisein the field,becausewhenthe less industrialized
-19L
countriescome torelyonmulti-nationals todo thework,localpro-
fessionalsmaynotbeableto findositionsworthyof theirabilities.
This latterargumentis similartothatwhichmaintainsthatthe mul-
ti-nationalsarehesitantto jointventure andtrainlocals for fear
theywillprovidecompetition. Whilethismaybetruein the longrun,
inthe shortrunmulti-nationalandlocalprofessionals arereallyin
two separatemarkets, andneitherwillbelikelyto deprive theother
ofwork.
The constructionphaseof the constructionprocessplacesheavyde-
mandsonbothmanpowerand capital. Thisphasenaturallyrequires
greaterinvolvementwiththe localindustrybecauseitwouldbeimpos-
sibletobringin all themanpowerneededtodothe actual construction.
Jointventuringwithlocalcontractorsseems somewhatriskierthanwith
localprofessionals, butthepotentialadvantages to the multi-national
also seemgreater. Subcontractingofless specializedtaskssuchas
earthmovingto locals is common, althoughinsome countrieslocalcon-
tractorsmayhaveacore ofwell-trainedmanagementstaffandmaybe
able tohandlemorecomplextasks. Attheextreme isamulti-national
professionalor contractorsubcontractingallthe constrtiction tolo-
calcontractorswhileitmanagesthe overallconstructionprocess from
startto finish, althoughthe handlingof locallaborisgenerally left
to the local firms.
The chance of explicit training of and assistance to managers seems
tobesomewhatless injointventuresandsubcontractsin construction,
to thehomeoffice
andnomulti-national reportedbringingcontractors
to observeU.S.practices. Thisis probablyalessserious omission
thaninthe caseofprofessionals, however,sinceJustworkingwith the
192
multi-nationals
results
insomeacquisition
ofexperience)
contact
with
newmanagement
and construction
techniques,
andencouragement
ofentre-
Evenin the caseofamul-
preneurship
on thepart oflocal
contractors.
ti-national
contractor
working
alone
orinconjunction
withother
multi-
nationals,
someexperience
maybepassed
onto local
firms
since
assis-
tance
will
probably
beneeded
inthe training
ofthe local
labor
force
Again,
deve-
which
will
undoubtedly
beusedinthe construction
itself.
loping
countries
may require
contractor
involvement
or training
at the
managerial
level
ormayoffer
incentives
toencourage
such
responsive-
tiess.
Themulti-national
contractor's
fearof future
competition
from
lo-
calfirms
seems
more
justified
inthe case
of construction,
forasmen-
tioned
above
some
local
contractors,
particularly
inLatin
America
and
arebeginning
to compete
with
multi-nationals
for the simpler
theFarEast,
Theresult
is that
the
infrastructural
projects
onaregional
level.
multi-nationals
from
developed
countries
will
either
have
tobecome
more
competitive
orturn their
attention
tolarger,
more
technically
sophis-
construc-
ticated
projects
and toproviding
professional
services
such
as
tionmanagement.
As ageneral
rule
multi-national
contractors
try to employ
amini-
Thedeveloping
coun-
mumnumber
of foreigners
inorder
toreduce
costs.
tries
may also
heve
restrictions
that
require,
or incentives
thatencou-
rage
(1)the use oflocals
if they
areavailable,
(2)the useofperson-
nelonly
from
themulti-national's
home
office,
(3)limitations
onthe
or (4)limitations
on
number
offoreigners
the contractor
maybring
in,
Multi-national
con-
the types
(work
category)
offoreigners
whoenter.
tractors
generally
rely
on foreigners
formanagement
because
management
193
capabilitiesinthe developingcountries areoftenunder- orundeveloped,
and because it is this managerial, organizational,
and technical exper-
tise thatthe developingcountryparticularlyseeks. Positionsabove
and including supervisory personnel--superintendents,
senior members
ofadministrative
staff,supervisorsofmaintenanceworkshops,andsite
foremen--arethusoftenheldbyforeigners although theymayhavelo-
calassistants. Clericalworkers,ontheotherhand,whomaybeavail-
ableorreadily crained, are generallylocals, althoughthemulti-na-
tionalmaysendsome ofthisworkbacktoitshomeoffice. Positions
belowthe supervisorylevel,primarilythoseofconstructionworkers
andsome foremen,are also generallyheldbylocals.
Itis impossible to get an averagefigure for theproportionof
foreign to local staffonmulti-nationalprojectssinceit variesamong
projects,projecttypes, partsofprojects,multi-nationals,
developing
countries,andso forth. Someexamples,however,canbegiven. Four
linkcanalprojectsinthe IndusBasinWorksbetweenJanuary 1962and
July1965 showedratiosofexpatriatestolocallabor employedvarying
from1:20.4to 1:67.5 (5); theseratiosare consideredindicativeof
thesituationincapital-intensive
projectsindevelopingcountries
wheremostofthemajoroperationalactivities canbehandledbylocal
labor. AnILOsurvey (8) ofinternational contractors reportedabroad
rangeof figures,withone firmestimatingaratioof 1foreignsuper-
visorto50workerson lowskilljobs, 1:20onjobswithmediumlevel
technicaldifficulty,and1:5 ontechnicallycomplexjobs.
primarily
Multi-national
contractors recruit construction workers
from among the large pool of unskilled and semi-skilled labor, with
the main criteria being good health, discipline, trainability, and ad-
1914
aptability;pretenceis generallygivent.thosewhohavepreviously
workedforaninternationalcontractor. Workers are oftenhiredona
probationarybasis,andaccordingto the ILOsurvey (8) ofinternational
contractorsonlyonein threeworkersthus recruitedare retrained. In
countrieswithless abundantlaborpoolsthemulti-national contractor
mayrecruitworkers fromneighboringnations.
Skillshortageswererepeatedlymentionedas aproblemin develop-
ingcountriesinSection3.33,butmulti-nationalcontractorsgenerally
overcomethese throughtheirowntrainingactivitiesor through theuse
of specialworkmethods. Prefabricatedcomponents mightbeused for
multi-unit constructionwherecarpenters,electricians, andplumbers
are inshortsupply, forexample. Trainingis largelyfor the project
athand andthus its nature andextent dependuponthe size, length,
andneedsof theproject. Since complexjobs requiringskilledworkers
are generallybrokendownintohighlyspecializedcomponents,workers
learnonly narrowly specializedskills. The rotationofworkersamong
thevariousactivitieswouldhelp toproduce amorebroadly trainedla-
borforce,but this is rarelydone. Since trainingis not formaland
systematicandis generallyleft up to thesite foremento organize,its
effectivenessdepends largelyon the abilityofthe foremenandtheir
assistants to impartskills andmanage theirworkers. Locals mayplay
animportantpartin thistrainingprocess.
Workersup tothe foreman levelcanbetrainedinthis short-term,
largelyon-the-jobmanner,but thosemost commonlytrainedbymulti-na-
tionalsare equipmentoperators,maintenancemechanics,welders,car-
penters,shutterers, and,to alesserextent,plumbersandelectricians
(8). IntheManglaDamProject,for example,over1500equipmentope-
195
rators, 1300mechanics,and 500weldersweretrainedbyrelativelyfew
AmericanandPakistaniinstructors, andPakistanisoperated,maintained,
and repairedvirtuallyeveryoneofthe 2000piecesofequipmentused
ontheproject (5). Suchatrainingproceduredoes not andcannotpro-
duce fullyqualifiedcraftsmen,butit doesprovideworkerswithsome
skillsandexperiencewhichmaybeapplicableonotherprojectsormake
themmoretrainable. Multi-national contractorsreallycannotbeex-
pectedto domuchmoreas longas theiroperations are temporaryinna-
ture andtheyarenotrequired toorgivenanincentivetoprovidemore
training.
Beforeconsideringthe capitalrequirementsofmulti-nationalcon-
structionprojectsin the formofmaterialsandequipment,itis useful
tobrieflyreview the financialarrangements. Whilethemulti-national
contractorgenerallyprovideshisownworkingandinvestmentcapital,
project financingis largelybysources outsidethedevelopingcountry.
Whenthe governmentis the clientamajorshareof the financinggene-
rally comes in the formofexportcredits (oftensupplier'sbroughtby
the multi-nationalcontractor), bilateralaid,ormultilateralaid.
The first two sourcesoffunds are usuallytiedto thepurchasingof
goods andservices fromthe donor'scountry-mostoftenthesameas
thatofthemulti-nationalcontractor. Thethirdsourceoffunds com-
monly coversonly the foreignexchange component of theproject. Such
financial arrangementsdiscouragetheproductionanduseoflocalma-
terialsandequipmentand the use of labor-intensivetechniques. One
of the U.S. multi-national firms interviewed (10) related the following
incident which occurred in Korea: themulti-nationalwantedtousere-
inforcedconcretepipe ratherthansteelpipebecausethe formerwas
196
availablelocallywhilethe latterhad tobeimported; the government,
however,saidnobecause theproject financingcoveredonlythe foreign
exchangecomponent and itwantedtoreserve domesticfunds forother
needs. Inprojectswherelargeinternational industrialfirmsare the
clientfinancing islargelyby the industrialfirmitselfandbyother
privatesourcesinits home country,whichis probablythesameas that
ofthe multi-nationalcontractor. Whileonly apartofthe fundingmay
be tied to thehome country,muchofthematerialsandequipmenthave
tobeimportedsincetheyare probablytoo technicallysophisticated
tobeavailablelocally.
Multi-nationaldesigners report thattheytryto designaroundlo-
callyavailablematerialsandmulti-nationalcontractors that theytry
tobuildwiththem. Amajor constraintonthe greateruseoflocal
materialsis theirlimitedavailabilityandpoorquality. Multi-na-
tionalsalsomaynotbe familiarwithcertainmaterialspeculiar toa
particulardevelopingcountryandthus maybehesitantto usethem.
Another constraint may be the financing. As a result of these factors
manyimportedmaterials are used; the most commonlyemployed localma-
terials are sand,gravel,naturalstone, and otherbulkitems,cement
andcementproducts,andwoodproducts.
Aneven greatershare ofthe machineryandconstructionequipment
is imported,althoughit maybe at least partiallyassembledlocally.
Concernover reliableavailabilityof sparepartsaswellas theother
reasonsmentionedabove areresponsible for this. Developingcountries
mayplaceduties on importedgoods inordertoencourage the useof lo-
callyavailable goods. Importdutiesare oftennot placedonimported
constructionequipment,however,unless the contractorintendstosell
197
itwhenhe finishes the project; suchapolicyobviouslydoes notserve
toencouragemulti-nationals touselocally availableequipment.
Thefinalareaofconcerninthissectionisthemixof laborand
capitalin multi-nationals'projects. Multi-nationa].contractors tend
tousefamiliarpracticesemployedin theirhomecountry. Capital-in-
tensivetechniquesare thus generallyusedbymulti-nationalcontrac-
tors,withthe degreeof capital-intensitythe greatest forU.S.-based
firms, less forEuropean-based firms, and leastfordevelopingcountry-
basedfirms.
Accordingto theLinder theoryofinternational trade thisis quite
logical, for it is these practiceswhichhavegiventhemtheir compara-
tiveadvantage,and alterationofthesepracticesandthus factorpro-
portions inan effort to adapt to the local conditionsof the developing
countrymaybedifficult, costly,andresult in the loss of their com-
parative advantage. Thisapparent technologicalinflexibility, Incon-
junctionwithinappropriate factorprices,maymakeitappearmosteco-
nomicalto remainrelatively capital-intensive. Foreign salesareal-
so generallyonlyarathersmallshareof totalsales,andthus efforts
to adapt the practicestodevelopingcountryconditionsmaynotbe con-
sideredworthwhile.
Currentpoliciesofthu agenciesbehind the financialresources
formulti-nationalconstructionalsomilitateagainst theuse of the
more labor-intunsivetechniquesby themulti-nationalcontractors. So,
too, doavarietyofother factors,including: (1)difficulties inthe
managementandorganizationof projects involvinglargemassesofla-
bor,due largely tomapagement'sinexperienceinthis area; (2)lower
productivityoflabor; (3) additionaltime requiredforproject com-
98
pletion; (4)poorerqualityofwork; (5) potentiallyhighcost ofwel-
fareprovisionsif theproject isin aremotelocationand the labor
forceis large; (6)alackof researchandknowledgeabout technologies
otherthan capital-intensiveones; and (7) generalbiasagainst labor-
intensive techniquesinthe developedanddevelopingworld,and infi-
nancialagencies (e.g.,theIBRDrequiredthat constructionoftheMangla
Dambehighlycapital-intensiveandseemedratherunwillingto consider
the useofmorelabor-intensivemethodologies).
Themajordisadvantagesthemulti-nationalcontractorsees inthe
useofthemorecapital-intensivetechniquesarethehighcost of im-
portedmaterialsand equipmentdueto transportandimportduties; the
highcostofequipmentupkeepin the formofsuppliesand spareparts,
maintenanceandrepairs,depreciation, Lndpossibly lowutilization;
and local regulations or incentivespertainingtoincreasingtheemp-
loyment and trainingoflocals and limitingimportsofmaterials,equip-
ment, andmanpower. Onelast elementwhichmayinfluence the contrac-
tor's choiceoffactorproportionsbutoverwhichhehas littleorno
controlis the design andits flexibilityinallowingvarious input
mixes.
Theabovediscussion isnotmeant toimplythatmulti-nationals
makenoeffort tobeadaptiveto localconditions andpractices,but
that they are inbusinessforeconomicratherthan socialreasonsand
thaton amajorityof projectstheyviewcapital-intensiveapproaches
asmost appropriate. Theonlywayto change this, ifitseemsdesirable
todosofor at least somesituations,is todevelopandenforce rules
andregulationsrequiringthemtochange theirmethods, ortodevelop
economicincentives or alterexistingconditionsso as to encourage
199
4.3
themtodoso.
Potential
RoleofMulti-Nationals
intheDevelopment
oftheIndi-
genousConstruction
IndustryofDeveloping
Countries
The firsttwosections
of this chapterhaveconsidered
thecurrent
roleof multi-nationals
in the development
oftheindigenous
construc-
tionindustryofdeveloping
countries.
Associated
witheachoftheprac-
oneeach
twosets ofpotential
benefits
andcosts,
tices discussed
are
Themoti-
for themulti-national
firmand for the developing
country.
vationunderlying
the perspective
of the developing
countryiseconomic
development,
while thatunderlying
theperspective
ofthemulti-national
is firstprofitandsecond,ifat all,altruistic
considerations.
Mar-
ketforces astheypresently
existthus causethemulti-national
tobe-
it does, andifitappearsdesirable
toalteritsbehavior
to
haveas
conformwithcertainobjectives
of thedeveloping
country,itwillthen
benecessary
toalter thesemarket forcesinanappropriate
direction.
orinternational
agencies,
agen-
Developing
countries
themselves
cies indeveloped
countries,
ordeveloped
countries
actinginbehalf
of thedeveloping
countries
mightattempttoaltermarketforcesby
meansofrulesandregulations
requiring
appropriate
changes inmulti-
forsuch changes,orbyal-
nationals'
behavior
byproviding
incentives
toencourage
such changes.
teringexisting
conditions
insuchawayas
com-
Thissectionconsiders
variousactionswhichmightreconcile
the
mercialinterests
ofthe multi-nationals
withthe development
interests
of the emerging
countries.
Inits roleas aclient the government
ofadeveloping
country
can augmentthe roleof multi-nationals
inthe development
of thelo-
200
At theplanning
stagefeasibility
studies
calconstruction
industry.
considering
alllevels of technology
andtheuse oflocal aswellas
(e.g., laborwithsimple toolsversusheavyequipment
foreignresources
forearthmoving
operations,
oraseriesofsmalldamsversusasingle
Perhaps
an evaluation
methodology
like
large dam)canberequired.
whichcombines
"ihe various
national
socialbenefit-cost
analysis
(13),
goalsofeconomic
development
withasinglemeasureofnational
econo-
At the designstagethegovernment
can
micprofitability,
canbeused.
requirethatdesigns
beflexible
andtake localconditions
into account.
Intheplanning
and design contracts
requirements
orincentives
pertaining
tojointventuring,
subcontracting,
orsomeotherformof
involvement
oflocalproiessionals,
provision
ofemployment
andtraining
for suitable
localpersonnel,
andperformance
ofworkin the developing
countrymightbeincluded
if the localindustry
is sufficiently
advan-
ced to gainsomething
fromsuch arrangements.
Construction
contracts
mightincludesimilar
requirements
or incentives
aswellasonesper-
tainingto the useoflocalmaterials
andequipment.
Partof the train-
ingcostsmightberefunded
as an incentive
toencourage
training
of
asatisfactory
training
locals, forexample,
if it is feltthat thisis
method.
Theselection
of the planner,
designer,
andcontractor
mightbe
onoverallqualifications
and/or
basedon such conditions
as wellas
Ameanstodothis forthe contractor
withinthebounds of
price.
competitive
biddingmightbeto (1)requiresubmission,
alongwiththe
bidprice,ofguaranteesofminimumlocalemployment,
trainingprograms,
minimum
involvement
oflocal contractors
andsubcontractors,
maximum
valueof expatriate
salaries,
andmaximum
valueofimported
materials
20.1
andequipment;
(2)use theseguarantees to valuethebidwithshadow
prices for labor,foreignexchange,and capital; and (3) choosethebid
with thelowest costonanationaleconomicprofitability
basisrather
thantheonewiththe lowestmonetarycost. Insuch asituaticnthe
developing
countrymustobviouslymakeits shadowpricesknowntothe
Onefinalsuggestion
concerning
contractual
ar-
contractors
concerned.
rangements
is somemodification
toallowmoreinteraction
andexchange
among the planners,
designers,
and contractors.
Design-construct
or
construction
management
contracts
are twopossibilities,
althoughthe
formermayencounter
somedifficulties
due to financial
arrangements.
Inits roleas clientthegovernment
ofadeveloping
country
mightalso attempt tostabilizeconstruction
demandthroughnational
planningofcoastruction.
Thegovernment
mightevenprovidework
undertake
specialcontractual
arrangements
like the
guarantees
or
the contractor
who is awar-
optionalcontractsysteminKorea (i.e.,
averylargeprojecthas the optiontonegotiate
dedthe firstpartof
for corryingout theremainingparts),whichwouldessentially
assure
tnemulti-national
of futurejobsorgiveit someadvantage
inbidding
onfutueejobs contingentuponpresentperformance. Again,however,
likelyto encounter
some financial
difficulties.
sucharrangements
are
If themulti-national
isprovidedwithworkwhichispotentially
more
thanaone-shot
deal,the firmmayperformalargershareofthework
abroad,establish
permanent
localofficesstaffedwithlocalpersonnel
for the major portion of work, become more involved
and responsible
with the local industry,
train personnel
more fully, more fully
utilize local resources,
and be more innovative
in terms of adapting
technology
tolocalconditions.
202
Onefinalthingthe governmentmustdoinits roleas aclient is
toriditselfofitsbiasagainstlabor-intensive techniquesand change
its attitudetowardmaintenanceso that highsafetyfactorswhichre-
quirecapital-intensiveconstructionmethods donothavetobebuilt
intoprojects.
Thegovernment of adevelopingcountrymayalsoplayanimportant
roleas policy-makerininfluencingthenatureofmulti-nationals'ope-
rations. Economicincentives ortax-cum-subsidyschemes areprobably
themostdirectandefficientmeansbutare difficulttousebecause
ofpoliticalandinstitutionalproblems. Some suchschemesinclude
trainingof locals throughprovision ofsubsidies, dis-
stimulationof
couragingtheuse ofimportedmaterials andequipmentthroughimport
duties,encouragingtheuse oflaboronremoteprojects throughsubsi-
dizationofneededamenities, and encouragingthe involvementoflocal
contractors and professionalswith taxincentives. Itwasnotedin
Section4.2 thatoneofthe reasons themulti-nationalsoperateas
they dois inappropriatefactorprices, andthe useofshadowprices
ratherthanmarketpricesfor the factorinputs inprojectevaluation
andin the selectionofmulti-nationalswassuggested. The government
mightinsteadeliminateany differencebetweenthesetwo pricesfor la-
bor,capital,and foreignexchangebytaxes orsubsidies,thus forcing
the firmto paythe true opportunitycosts. Considerabledifficulties
maybeencounteredin estimatingshadowprices andadministeringsuch
policies,however.
Inits role as policy-makerthe governmentmayalso imposeregu-
lationsandrestrictionsontheactivities ofmulti-nationals, although
this approachis somewhat less direct andeffective thanprovidingeco-
203
nomicincentives. Somesuchregulations includerequiringjointven-
turingwithorsubcontractingtolocalfirms,quotasonimportsofma-
terialsand equipment,requiringthat expatriatepersonnelbefromthe
multi-national'shomeoffice,not allowingvisaswhenunemployedlocal!
havetherequisiteskills, limitationsonthe numberandtypeofexpa-
triatepersonnelallowedtoenterandbeonaproject, andminimumre-
quirements fortrainingoflocalpersonnelatall levels. Asnoted
above,somedevelopingcountries arealreadyusingsuchregulations,
and theirusemaybeexpectedto expandwiththe increasingcompetitioi
andsubsequentlesseni4gofmulti-nationals'monopoly-likepowers.
These government-initiatedactionsmusttake intoconsideration
the levelof developmentof theindigenousconstructionindustry,whe-
thertheparticularactionunderreviewismostbeneficialto the in-
dustryas awhole,and the fact thatthe government'sactionsmayvary
amongprojects, dependingupon individualcircumstances. Thedevelopi
country'sgovernmentmustpromotethe growthof thewholelocalconstr
tionindustry,whichincludeslocalprofessionals, contractors, andma
nufacturersandsuppliersofbuildingmaterialsandequipment. Itap-
pears thatlocal industryneeds tobeat acertain levelofdevelopmen
beforemulti-nationals caneffectivelyhelp itgrow further. Engineer
needaprofessionaldegree fromalocal universitybeforeworkingwith
amulti-nationalwillprovidethemwithneededexperience,constructio
workerscanbemoreeffectivelytrainedbymulti-nationalsiftheyha.
somebasiceducation,andlocalmaterialscanbeusedonlyiftheyare
available and of acceptable quality. The government of the developing
countrymust alsopromote researchin the developmentofmaterials,
technicalandmanagerialprocesses, andequipmentparticularlysuited
204
tothe conditionsof thecountry. Thisresearchmightbedonein gov-
ernmentlaboratories,
buildingresearchstations, universities,and
privatearenas, andits resultsmustbewidelypublicized.
Amongtheinternational agencies, agenciesindevelopedcountries,
anddevelopedcountries' governments,the institutionsresponsiblefor
financingmulti-national
constructionare inaparticularly
strongpo-
sitionto influencethebehaviorofmulti-nationals
in developingcoun-
tries throughtheirpoliciesaffecting funding. Thispowerhasnot al-
waysbeenusedas effectivelyasit might,however,andsomereformsare
the officialandprivate aidcomingdirectly fromde-
needed. Muchof
velopedcountries is inthe formof tiedaidwhileaidfrominternational
coversonlythe foreignexchangecomponent;bothpo-
financingagencies
and the use
licies sere to encourage importing materials and equipment
of capital-intensive
techniques ratherthanthe developmentanduseof
Tiedaid hasadditionaldisadvantages
suchas reducing
localresources.
competitionamongsuppliersofgoodsandservices andthus potentially
raising costs. While "un-tying" some of the tied aid would not help
the exportofgoodsandservices fromthe donor countryandmightmake
leastbepossible forofficial
investmentsomewhatriskier, itmightat
AnUNCTADgroup ofexperts,forexample,suggestedthat
aidsources.
thebeneficiaryof tiedaidmightbeauthorizedtouseit tomakepur-
chases inotherdevelopingcountries aswellas in thedonorcountry
(12). International
agenciesmightalsoprovide funding formore than
the foreignexchange componentalthoughthis, too,wouldprobablymake
The financialagenciesmightadditionally attach
investment riskier.
stipulatingthat the
requirements
to theirprovisionof fundssuchas
multi-national
contractormustjointventurewithorsubcontracttoa
205
local firmorthatthe firmmustprovideacertainamountoftraining
anextrememeasure theymightstipulatethat apor-
for locallabor. As
tionoftheirfundsbeallocatedtoprovidealocalcontractorwithsuf-
ficientcredit tojointventureorsubcontract,
ortoinstitute atrain-
ingprogram.
Anotherareainneedofreformis thepracticeofinternational
financingagencies restricting
fundsbyrequiringinternational
compe-
titivebiddingwhichgenerallynecessitates
theseparationofdesignand
casesbyevenexplicitlyrequiringthatthe
construction,
andinsome
firmresponsible
for thedesignnotworkonthe construction.
Ithas
beenmentionedrepeatedlythat closercollaboration
betweenthe multi-
nationalprofessionalandcontractorwouldbeusefulandmightresult
in innovativeapproachesmoresuitable for localconditions inconstruc-
It seems theinternational
agenciesmight
tionindevelopingcountries.
relaxtheserestrictions
andallowthe useofnewcontract formssuch
Ifcompetitive
bidding
as design-construct
and construction
management.
werestilldesirable thisshouldbenoproblemwithconstruction
manage-
ment,and amodifiedformmigbtevenbepossiblewithadesign-construct
contract. Somefinancingagenci-s also appeartohaveabiasagainst
labor-intensive
techniques;poriblythebestwaytoalleviatethis is
for themto acquiregreaterknowledgeaboutsuchtechniques through
theirownresearchandthatofothers.
International
agencies,agenciesindevelopedcountries,andde-
velopedcountries' governments
can probablyhavetheirgreatestimpact
onthe role ofmulti-national
firmsinthe developmentof the indige-
nousconstruction
industryofdevelopingcountries throughtheirpro-
moting,supporting,
andperformingresearch,andcollecting,
digesting,
206
anddisseminatinginformation. Researchinconstructioninthedeveloped
countries haslongtendedtowardincreasingcapitalintensity,andthere
is ascarcityofresearchandknowledgeofless capital-intensive tech-
niqueswhichmightpotentiallybemoresuitable for conditionsindeve-
lopingcountries. Researchis alsoneededin the area ofmaterialsin-
digenous toorparticularlysuitedtodevelopingcountries. The research
must encompassnotonlytechnicalbutalsomanagerialandeconomicas-
pects of thisfield. Researchintohowtheoperations ofmulti-national
firmsmightbemoreattunedto thedevelopmentofthe indigenousindustry
is also important.
The resultsof such researchmustbe collected,digested,anddis-
seminatedif themulti-nationals andothers areto begintoapplythem.
Researchintothe effectiveorganizationandcontrolofalargemassof
constructionworkersmight beundertakenbyoneofthese agencies, for
example; oncesufficientmanagement techniqueshavebeendevised, the
agencymight sponsoreducationalprogramsto teach themtomanagement
personnelandpublish anddistributemanuals onthese techniques. In
this wayone of the obstacles to labor-intensiveconstructionmethods
mightbegintobealleviated. Inorderto effectivelyperformsuchre-
searchand tobetterassistthe developingcountries inthe entire
fieldof construction,the agencieswhichdo notyethaveseparatecon-
structiongroupsordivisions mightwantto formthem; Cockburn(4),
for example,suggests that theMinistryofOverseasDevelopment,as
the department responsible forofficialaidpolicies in theU.K., es-
tablishsuchadivision.
207
CHAPTER5
SUMMARYANDRECOMMENDATIONS
5.1 Summary
Thisreportpresentsastate-of-the-art reviewof theconstruction
industryinthe developingcountries,andidentifiessomeofthepoten-
tialsandbarriersthatexistforthetransfer adaptation,anddevelop-
mentofanindigenousindustry. Itdiscussesthe roleofconstruction
in theprocess ofdevelopmentandits importanceto economicgrowth,
employmentcreation,andincome generationand re-distribution.
Ourreportconsiders the issuesfacingthe growthofaviablein-
digenousconstructionindustryinthe developingworldwithinthe con-
textof theactivitiesinvolvedin the creationofconstructedfacili-
ties--planning,design, construction,andmaintenance; it alsoexami-
nestheevnironmentwithinwhichthe industryhasdeveloped. Foreach
constructionactivitythereportreviewsavailablecapabilities, the
variousresourcesneededfor the developmentofanindigenousindustry,
andsomepossiblemeansof accommodatingthese needs.
Inordertoprovideaspecificfocus for thediscussions,the aut-
horsutilizedinformationavailableonfiveemergingnationsatdiffe-
rent stagesof development--Columbia,Korea,Iran,Kenya,andEthipoia.
Thesecountriesdifferednotonlyineconomic,social,andpolitical
structureand intheirextent ofdevelopment,butalsopresentedawide
variationinthe availabilityofnaturalresources.
Thereportreviewsmulti-nationalconstructionfirmsas apoten-
tialmeansfor the transfer,adaptation,and developmentof appropriate
technologiesto lessindustrializedcountries,consideringthe firms'
nature,the scopeof theiz activities,and theirevolvingroleinthe
208
development
process.
Opportunities
available
to theemergingnations
for usingthe multi-nationals
asavehiclefor the developmental
pro-
cess andpossibleincentives
for suchusearealso discussed.
5.2 Recommendations
Ourreviewof the state-of-the-art
of the construction
industryin
developing
areashas identified
threebroadcategories
ofconcern,
the
of which would assist in the growth of an
clarification
and resolution
Thesearethe
indigenous
construction
industryinemerging
nations.
ofdetailed
andwell-documented
availability
of data, the execution
case studies,
and theexistence
ofnational
planning
ofconstruction.
The lack of accurate,
detailed,
and comparable
data on almost all
aspectsofconstruction
activities
in thedeveloping
andeven inthe
developed
countries
hasbeenamajor difficulty
inperforming
quanti-
tativeanalyses
ofissues facingthe industry.
Thisdifficulty
ispar-
ticularly
seriousonceonebecomesinterested
inaspecificaspectof
the industryorinaspecificgeographic
region. Amajorreasongiven
for this lackofdatais thatsinceconstruction
is highlyfragmented
Its outputfluctuates
andis
it is adifficult
industry
to identify.
of this output is outside the
difficult
tomeasure,and alargepart
Because itusesgoods andservices fromsomanyot-
monetary
sector.
herindustries,
its inputsalsoaredifficult
tomeasure,
butso too
is its valueaddedbecauseof casual,oftenseasonalemployment,
piece-
workpaybasis, and thepractice
ofmovingequipment
andpersonnel
amongsites,makingitdifficult
to allocate
amortization
ofplantand
toindividual
jobs. Measuring
expen-
equipment,
overhead,
andprofits
dituresonconstruction
byothersectorsoftheeconomyis alsodiffi-
209
cult.
While many of these arguments are valid, it is nevertheless
cru-
These
cialthatat leastsome fundamental
statistical
seriesbesetup.
should covtrthe structureoftheindustry;theproductionanduseof
construction
output,materials, components,
and equipment; themanpower
Suchdatais neededon
situation; financial data;andsimilaritems.
anational,regional, andlocalbasis; unfortunately,
it maynotbe
availableformanyyearsinthe developingcountries. Inthemeantime,
sample surveysandexample studiesoftheindustry's capacitiesand
needswillhave to suffice.
Thereportthereforerecommendsthat the international
agencies
involvedwiththe construction
industrysuch as the International
Bank
for Reconstruction
andDevelopment,
theUnitedNations,theInternational
LabourOffice,andthe UnitedNations IndustrialDevelopmentOrganiza-
tioncommitcertainresourcesto asystematicgathering,evaluating,
Thepossi-
and disseminating
of informationpertinentto the industry.
bilityofcreatinginternational
databanksandinformationretrieval
systems inthisareawouldbehighlyvaluableto thedevelopmentof
quantitativeanalysesofissuesfacingconstruction
inemergingnations.
Carefullydesignedand implementedcasestudiesoftheconstruc-
tionindustryinvariousregionsoftheworldareneededif the issues
facingthe industryandits developmentare tobemorefullyexamined.
Thereportrecommendsthat suchcasestudiesbedoneat the country,
Onacountrylevel the specificfeaturesof
firm,andprojectlevel.
theindustryinoneorseveral countries canbeexamined,andcross-
Thestudyofse-
sectionaldata canbedevelopedonanationallevel.
lectedinternational,
national,and local firmsin constructionshould
210
andthe nature
the dynamics
of their operations
provide
insight
into
their
activities;
issues
suchasmanagerial
anddesign
capabilities,
of
laborrelations,
modesof financing,
andsoforthcanbeexamined
in
Theissues
ofplanning,
organization,
labor,
depth
for several
cases.
on a project
level.
materials,
and financing
could
bestudied
as a service
industry,
Construction
has traditionally
been viewed
andits output
hasbeenassumed
tobedependent
uponthe demands
gene-
Conse-
rated
bythe sectors
considered
innational
development
plans.
quently,
noefforts
haveeverbeenmadeexcept
insomeEastEuropean
the construction
industry
itself
in national
plann-
countries
toinclude
-askandmayrequire
someaidinthe
ing.
Suchplanning
is notaneasy
formofregional
cooperation
andinternational
technical
assistance,
butit is important
thattheconstruction
component
ofthevarious
partsofnational
development
plansbeextracted
andthatexplicit
na-
tional
planning
of construction
be considered
indeveloping
countries.
Planning
departments
needto knowbytype,
region,
andyear the amount
of the industry
to
andcostofbuilding
and engineering
work required
Suchknowledge
isnecessary
fillthe country's
development
proposals.
inordertodefine
thedemand
for the industry's
resources
intheform
of manpower,
capital,
materials,
Padequipment.
Thisknowledge,
in
conjunction
withanassessment
of the industry's
available
resources,
to indicate
areas
ofover- orunder-supply,
andmeasures
can
canserve
beproposed
andefforts
undertaken
tomakethemmorecompatible.
For
example,
short-
and long-term
training
programs,
investment
inplant
and equipment,
and the development
ofnewbuilding
materials
industries
mightheplanned;
someconstruction
might
bepostponed
togive the in-
and supply
fluctuations.
dustry
a chance
to develop
and to lessen
demand
211
Staingofconstructionisanadditionalpossiblemeansbywhichthe
industrymightbesomewhatstabilized,for thismakesconstructiona
continuous rather thanaproject-oriented
process. Onlyinthisway
canthedevelopmentofthe constructionindustryprogresssmoothlywith
therestoftheeconomy.
212
APPENDIXA
AdditionalTablesandFigures
Chapters 1through4
TableAl.la: Estimates oftotalandpercapitanationalincome inmarketprices (source: ref. 3)
Total (millionsofdollars) Percapita (dollars)
Regionor country 1960 1963 1968 1969 1970 1971 1960 1963 1968 1969 1970 1971
Marketeconomies
a
1,027,500 1:264,000 1,869,200 2,052,300 2,234,500 na 520 600 800 860 20 na
Oevelopedmarket
economiesab 1 857,800 1,058,300 1,579,100 1,730,100 1,883,100 2,093,200 1,360 1,620 2,290 2,480 2,670 2,940
Develoningmarket'
economiesa 169,700 206,200 290,100 322,200 351,500 na 130 140 180 190 210 na
Africaa 32,100 38,800 54,400 59,800 na na 120 130 160 170 na na
c
Ethiopia na 964 1,387 1,527 na na na 44 57' 62 na na
d d d d d d d d
Kenyac na 831 1,208 1,321 1,469 1,598 na 91 115 121 131 137
MiddleEasta 17,600 21,800 35,800 39,900 na na 220 250 360 390 na na
Iran 3,861 4,556 7,736 8,852 9,764 na 179 195 302 312 334 na
EastandSoutheast
Asia(excluding
Japan)a 67,600 82,000 103,200 115,300 na na 90 100 110 120 na na
Korea na 3,556 5,402 6,729 7,804 8,455 na 132 181 220 250 265
Caribbea- and
LatinAmericaa 60,100 73,300 112,000 124,400 140,000 na 290 330 430 460 510 na
Colombia 3,461 4,101 6,030 .,730 7,734 na 225 242 304 329 366 na
d d d d d
UnitedStates 462,306 540,505 782,035 838,961 879,702
94 6
,
7 78
d 2,559 2,857
3
,
8 98
d
4
,
1 39
d4,294 4,573
aEstimates fortotals havebeenroundedtohundredsandfor percapitas to tens.
blncludingEurope,NorthAmerica(U.S.andCanada),Oceania (AustraliaandNewZealand), Israel,Japan,andSouthAfrica.
cTheseestimates involvedadjustmentofofficialestimatesofanincomemeasurerelated tonationalincome; allothersare
officialestimates ofnationalincome.
dTheseareinterms ofthepresentSNA; allothersareinterms of the formerSNA.
eTwelvemonthsbeginningMarch21oftheyearstated.
Income
distributions
inless
developed
countriesa
Table
Al.lb:
(source:
ref.1)
Country
LatinAmerica
Argentina
(1963)
Brazil
(1960)
Chile (1960)
Colombia
(1960)
Mexico(1963-64)
Venezuela
(1960)
Asia
Ceylon
(1963)
India(mid-1950's)
Pakistan
(1963-64)
Philippines
(1965)
Taiwan
(1964)
Africa
Congo(Brazzaville
(1958)
Gabon(1960)
Madagascar
(1960)
Senegal
(1960)
United
States
(1962)
Percentage
oftotal income
received
byincome
receivers
inincomebrackets
of:
Lowest
Highest
Highest
Lowest
Lowest
10%
60%
20%
20%
50%
50
37
7
na
32
56
42
6
20
26
na
na
na
15.6
na
57
43
6
20
na
4 15 na 59 41
na
17
na
na
na
52
37
5
20
30
42-52
28-36
4-8
20-28
27-36
45
30
7
25
33
57
40
4
na
23
41
26
8
28
37
na
na
na
54
44
na
na
na
71
60
na
na
50
na
64
48
na
na
16
na
48
34
6
23
31
aIncomereferstopre-taxincomeof the individual
for theAfrican
countries
and tothatof family
unitsforallother
countries.
bVariousestimateshavebeenmadeforIndia,as indicatedbythe
ranges
shown.
A2
FigureA2.1: Indexnumbersof GDP
a
,for theeconomyasawholeand cer-
tainsectors,inallmarketeconomies (source:ref. 30)
/to
dN : 1q63 "IOo
0 ~ j1IANQACWV.iN'4
16o -
/
/
/ o" *
I'o
.
.00,-
~o
/0
'io
'to
qo h0i ,6"3 4 rb 67 &a -0 71
YEAR
4.8
5.2
(GD?
Construction
5.1
3.9
5.7
( Manufacturing
6.7
Agriculture
2.2
3.4
aIndexnumberswerecompiledasweightedaveragesof countryindexes
Thecountryindexesweregenerally
ofgrossproductat1963prices.
derived fromofficialestimatesof GDPatconstantpricesbykindof
economicactivityin termsof the formerSNA.
Averageannual growth ratesat constantprices (percent).
A3
GDPanditsdistribution
amongvariouseconomicactivities,
forfivedeveloping
countries
TableA2.1:
andtheU.S. (source: ref.12,29 )
Countryandyear GDPin
purchaser's
Percapita
GDPin
values
purchaser'
s
(millionsof
U.S. dollars)
values
(U.S.dollars)
Ethiopia
na
na
1961
47
1020
1963
61
1469
1968
65
1615
1969
b
Kenya
na
na
1960
924
d
l1d
1964
128
1344
1968
134
1454
1969
144
1618
1970
na
na
Korea
139
3732
1963
190
5685
1968
232
7085
1969
?65
8281
1970
Irane
203
4365
1960
226
5278
1963
348
8912
1968
359
10198
1969
Percentage
distribution
ofGDPamongcertaineconomic
activitiesa
Agriculture
Manufacturing
Construction
62
6
5
61
7
6
55
9
6
52
10
5
c8
3
c
38
10
4
33
11
5
3?
11
6
31
12
6
37
14
3
42
15
3
29
20
5
29
21
6
28
21
6
27
25
4
25
28
4
21
32
5
19
32
5
(continued)
(TableA2.1continued)
GDPin Percapita PercentagedistributionofGDPamongcertaineconomic
Countryandyear
activitiesa
purchaser's
GDPin
values purchaser's
(millionsof values
(U.S.dollars) Construction
Manufacturing
Agriculture.
U.S. dollars)
Colombia
3 18 32
1960 3893 253
21 29
1963 4620 273 4
5 18 28
1968 6738 340
368 5 18 28
1969 7522
19 27
409 5
1970 8648
U'
U.S.
4 28 4
1960 509028 2817
4 28 4
1963 596341 3152
5 28 3
1969
b
927876 4578
5 26 3
19 7
0b 972581 4747
5 25 3
1971
b
1045753 5051
aThepercentagedistributionis oftheGDPincurrentproducer'svaluesbykindofeconomicactivity
interms oftheformerSNA.
bEstimatesrelate topresentSNA(GDPbykindofeconomicactivityrefers to thesumof thevalueadded
ofresidentproducers, inproducer'svalues,plusimportduties).
%ata is calculatedfromGDPatcurrent factorcosts.
dData is for 1963 and relates to former SNA.
eTwelve months beginning March 21 of year stated.
awholeandcertain
, fortheeconomy
as
TableA2.2a:
Indexnumbeisof
CDP
a
(index:
1963
=
100)
sectors,
intwodeveloping
countries
andtheU.S.
(source: ref. 29)
Agriculture
b
Total
econ-
ConAtruction
Manufacturing
Country
(allcomodities)
omy (GDP)
and year
Iran9
99
92
89
94
1.962
96
113
120
108
1964
105
125
122
121
1965
105
139
121
132
1966
127
157
115
147
1967
134
174
106
162
1968
I
0 0
d
195
131
180
1969
132
218
102
d
1970
196
10 6
d
256
126d
na
1971
Colombia
na
54
65
65
1953
104
95
110
97
1962
110
106
100
106
1964
108
ill
103
110
1965
ill
118
121
116
1966
116
122
146
121
1967
120
130
160
128
1968
126
140
176
136
1969
135
151
183
146
1970
140d
na
na
na
1971
U.S.
na
74
81
75
1953
95
95
98
96
1962
100
107
103
105
1964
100
118
105
112
1965
100
130
109
120
1966
108
132
114
123
1967
109
139
120
129
1968
108
146
130
132
1969
108
139
139
1970
132
149
116d
138
135
1971
GDP at constant prices by kind of economic acti-
aIndex numbers relate to
terms of the former
SNA.
vity in
bThe data for 1966 and earlier years was compiled on the basis of a split-
under
1964 refers
to the
data shown
year time reference
period,
e.g.,
up to the
1964/65
extending
generally
harvest
during
the split year
has been compiled
on a calendar-
first
half of 1965.
Since1966,
it
yearbasis.
21 of year
12 months
beginning
March
data
relates
to
canufsaturing
of petroleum.
and products
tobacco
excludes
stated
and
dprovisional,
preliminary,
or estimated
figure.
A6
TableA2.2b: Averageannualrates of growthofGDPat constantpricesby
kindofeconomicactivity,for fivedevelopingcountries andtheU.S.
(percent)(source: ref. 29)
Total
Country
and period economy
(GDP)
Ethiopia
1965-69 4.6
1961-69 4.9
Kenya
1965-70
7
.3a
1964-70
7
.
0
a
Korea
1965-70 12.2
1960-70 9.5
Iran
1965-70 10.3
1960-70 9.2
Colombia
1965-70 5.7
1960-70 5.1
U.S.
1965-70 3.4
1960-71 4.3
aEstimates relate to the
Construction
6.4
6.9
12.6
11.6
25.2
19.5
7.7
9.7
12.5
7.3
-0.1
1.1
present SNA.
Manufacturing Agriculture
13.1 1.8
11.8 2.3
8.1 6.5
7.6 5.5
22.6 3.0
17.6 4.3
15.2 5.9
13.1 4.3
6.2 4.8
5.7 3.6
3.0 4.4
4.9 2.7
A7
Table A2.3: Employment and index numbers of employment, in
the U.S.
economic activity, in two developing countries and
Number (thousands)
Country
I
and year Total Construc- Manufac- Agricul-
ture
economy tion turing
Kenyaa
60.8 208.3
1964 589.6 22.0
209.5
1965 594.0 21.4 65.7
211.9
1966 577.5 31.0 66.5
29.9 68.3 190.1
1967 597.5
190.2
1968 606.4 31.9 70.7
72.7 195.0
1969 627.2 28.9
204.5
1970 644.5 30.8 82.3
92.8 211.1
> 1971 679.7 34.8
b
Korea
200 631 5,021
1963 7,947
670 5,084
1964 8,210 192
1965 8,522 245 800 5,000
857 5,013
1966 8,659 213
1967 8,914 264 1,043 4,924
1968 9,261 317 1,181 4,863
1969 9,347 333 1,222 4,798
1970 9,574 279 1,260 4,834
1971 9,708 333 1,287 4,709
5,078
1972 10,026 371 1,372
U.S.
c
1963 67,762 2,963 16,995 4,687
1964 69,305 3,050 17,274 4,523
1965 71,088 3,186 18,062 4,361
3,979
1966 72,895 3,275 19,214
ck
the economy as a whole
(source: ref. 12)
Index (1963
Total on-agricul-
economy uralsectors
96.3 100.0
97.4 100.8
98.0 95.5
100.0 100.0
101.5 102.2
105.0 106.1
107.9 108.0
113.8 115.0
100.0 100.0
103.3 107.0
107.2 120.5
109.0 124.8
112.2 136.6
116.5 150.5
117.6 155.7
120.5 162.2
122.2 171.1
126.2 169.3
100.0 100.0
102.3 102.7
104.9 105.8
107.6 109.3
and various branches of
= 100)
Cons truc- Manufac-
tion turing
100.0 100.0
97.2 106.4
141.1 106.6
100.0 100.0
106.7 103.5
96.8 106.4
103.1 120.5
116.4 135.9
100.0 100.0
97.6 100.2
113.7 125.8
106.5 138.0
140.5 175.4
177.4 206.2
178.0 210.7
144.6 215.6
179.8 204.2
204.8 242.2
100.0 100.0
102.9 101.6
107.5 106.3
110.5 113.1
(continued)
(TableA2.3continued)
100)
Country Number (thousands)
Index (1963 1
andyear Total Construc- Manufac- Agricul- Total ion-agricul- Construc-'Manufac-
economy tion turing ture economy turalsectors tion turing
1967 74,372 3,208 19,447 3,844 109.8 111.8 108.3 114.4
1968 75,920 3,285 19,781 3,817 112.0 114.3 110.9 116.4
1969 77,902 3,435 20,167 3,606 115.0 117.8 115.9 118.7
1970 ?8,627 3,381 19,349 3,462 116.0 119.2 114.1 113.9
1971 79,120 3,411 18,529 3,387 116.8 120.1 115.1 109.0
1972 81,702 3,521 18,933 3,472 120.6 124.0 118.8 111.4
% aDateisJuneofeachyear. Dataisbasedonstatistics ofestablishments (numberofemployees).
Employmentinruralareas, exceptforlargeenterprises, isexcluded (thusagricultureis largefarcts
only), beginningin1964for the totaleconomyindex,in1966for emplcnmentinnumbers,and in1967
fortheotherindexes. Baseyearforthe total economyindexis 1967; atfor theotherindexesis
J964for1964 through1966and1967 for1967 through1971.
bDataincludespersons aged14yearsandoverand is basedonlaborforcesamplesurveys (civilianlabor
forceemployed).
cDataincludespersonsaged16yearsand over. Figures forconstructionandmanufacturingarefrom
statisticsofestablishmentsinthe privatesector (numberofemployees); therestarefromlaborforce
samplesurveys (civilianlaborforceemployed).
<3
TableA2.4: Percentagedistributionofgrossfixedcapitalformation
a
inconstruction,bytypeofcon-
struction,forColombia,Kenya,Korea,andtheU.S. (percent)(source: 30)
Countryandyear
Residential
buildings
Nonresidential
buildings
Otherconstruction
exceptland
improvement
Landimprovement and
plantationand
orcharddevelopment
Colombia 1960
1963
34.6
37.6
11.6
12.1
45.1
41.7
8.7
8.6
0
Kenyab
1966
1967
1968
1969
1970
1964
33.3
27.2
26.7
24.4
26.2
34.6
5.2
4.6
5.2
5.6
4.3
24.0
49.8
57.7
58.2
57.2
56.2
33.7
11.7
10.5
10.0
12.8
13.2
7.7
1965 34.8 23.1 36.7 5.4
1966 32.5 21.6 41.0 4.9
1967 31.1 25.4 39.6 4.0
1968
1969
31.2
32.0
27.9
28.1
36.6
35.2
4.3
4.7
1970 33.7 25.4 36.8 4.1
1971 31.1 22.9 42.7 3.3
Koreac 1960 29.4 35.6 35.0
1963 16.5 34.1 49.4
-3
1966 18.7 34.3 47.0
(continued)
(TableA2.4continued)
Otherconstruction Landimprovementand-
Country and year Residential
buildings
Nonresidential
buildings
exceptland
improvement
plantationand
orcharddevelopment
(Korea,cont.) 1967 19.2 35.9 44.9
1968 21.0 33.9 45.0
1969 16.7 32.6 50.7
1970 21.1 33.3 45.6
1971 23.6 31.8 44.7
UnitedStatesc 1940 42.2 33.1 24.7
1963 42.2 30.6
27.2
-
1966 33.2
37.4
29.4
-
1967 31.9 37.4
30.7
-
1968 34.3 34.7
31.C
-
1969 34.9
36.0
29.1
-
1970 33.2
35.4
31.4
-
1971 39.0 32.1
28.9
-
Note: Detailmaynotaddtototalsduetorounding.
a Grossfixedcapitalformationinformersystemofnationalaccountsinpurchasers' valuesatcurrent
prices.
bPresentSNA.
cLandimprovement andplantationandorcharddevelopmentincludedwithotherconstructionexceptland
improvement.
TableA2.5a: Negotiatedbuildingcontractsasapercentageofthe
dollarvolumeofallbuildingcontractsof333generalcontractorsin
theU.S.a (source: ref.6)
Dollarvolumeof
Percentage
negotiatedcontracts
Numberof
respondents
distribution
asapercentageof
allcontracts
none
25
7.5
less than10%
101
30.3
10-19%
72
21.6
20-39%
57
17.1
40-59%
39
11.7
60-100%
39
11.7
100.0
Total 333
Note: Percentagesdonotaddto 100.0becauseofrounding.
aThesearetheresultsofamailsurveycarriedoutbyCoxandGoodman
(6)presumablysometimearound1962 thoughthe authorsdonot
specifyadate.
A12
n-
Table A2.5b: TypeofcontractadjudicationfortheconstructionindustrIinKorea(source: ref.9)
Typeof 1966 1967 1968 1969 1970
contract
awarded Number %of
total
Number %of
total
Number % of o
total
Number Zof
total
Number %of
total
Numberofcontracts
awarded:
Total
18,569 100.0 19,827 100.0 24,336 100.0 28,625 100.0 32,225 100.0
Contractsletby
opencompetitive
bidding
9,913 53.4 7,813 39.4 10,532 43.3 9,953 34.8 10,605 32.9
Contractsletby
invitedbidding 5,337 28.7 8,162 41.2 8,038
Contracts
let
by
33.0 12,489 43.6 14,714 45.7
negotiation
3,319 17.9 3,852 19.4 5,766 23.7 6,183 21.6 6,906 21.4
Value
ofcontracts
awarded (million
won):
Total
46,263 100.0 66,625 100.0 123,331 100.0 173,056 100.0 183,256 100.0
Contractsletby
opencompetitive
bidding
9,364 20.2 8,897 13.4 21,236 17.2 22,180 12.8 26,337 14.4
Contractsletby
invitedbidding 23,911 51.7 34,057 51.1 52,212 42.3 81,821 47.3 89,999 49.1
Contractsletby
negotiation
12,989 28.1 23,671 35.5 49,883 40.5 69,054 39.9 66,920 36.5
(source: ref.27)
Table A2.6: Developmentofsizeofbuildingfirmsinvariousdevelopedcountries
Numberof Intheyear
Changeof
Country averagenumber Intheyears firms
ofemployees
1962
9.4-11.2
1953-62
473,000
UnitedStates
1962
6.7-10.4
1954-60
245,500
Japan
9.8-11.1
1953-63
24,915
1963
Belgium
4.9-5.2
1958-62
252,549
1962
France
8.9-13.2
1950-61
160,196
1961
Germany (Fed.Rep.)
1961
12.5-11.3
1951-61
81,494
Italy
11.5-9.5
1936-53
7,141
1953
Norway
1951
8.3-8.9
1931-51
27,440
Sweden
UnitedKingdom
13.8-16.4
1958
1954-48
95,629
Table A2.7: Concentrationofbuildingproductioninvariousdeveloped
countriesa(source: ref. 27)
Corresponding
Percentof percentageof
Country
constructionfirms buildingproduction
UnitedStates
1.7
80.0
1.9
58.3
UnitedKingdom
4.8
45.8
Germany (Fed.Rap.)
47.6
6.0
Canada
4.2
70.0
France
0.01
24.7
Sweden
aSourcelists nospecificyear,butdataarepresumablyfrom1964
or1965.
A15
FigureA2.2:NumberofreportingunitsforcontractconstructionandmanufacturingintheU.S.,
bythenumberofemployees theestablishmenthad,inMarch1966 (source:ref. 16)
CONTRACT CoST~ULCIoM(-ro-rAL LJNtT.5:3Z.7F31
,to7 wr,,4
2oto4 1 Jzo,'7=j
V0 JOOtOZ'9 =Z.835
J~ alo'to l 9 q IT 8-
500orman, 188
SMAAtF-ACTULL.PING
E
03
sto1)
--
0. b,1
CTO-rAL
252
ULNTS:29),541)
jj,-g4
600oru00A
0 10,000 Z0,000 30,000 140000 50,000 (0000 -70,000
FigureA2.3a: Numberof reportingunits andnum7,er ofreturnsforcontract
constructionandvariousother industriesintheU.S., for 1965 (source:
ref. 16)
-- S
A
COUNI'I btIl.IN S 1PAT- IerNis RepO TING&, UNITS (1OTAL WIS"3r2)
AR.IC4LTU.TRAL SEVIC -.
FOR,tSTRy FISHO.ZISe
3
CONTILAC'rCVNs~rPL"to- r
A-MIN- ING.
31?.
1"P~PT.tf L. 0THCR " -' Z
WJOILES.SrL. &M'TA
FNrTvt INSLA
IL'-R6D
NCC -
.L.SirN3SS "'AARE.ILLRNS
b
(TOTALI'TR IJ501,42
-
O)
IFortc'srt &FI - L
RI
.S
MIN IWQ=0.(
COnTRACTyo s
" r
I
q
x-0r 4
MAW CiLi. IW
TXANSOTATION
9LOT C
PLULIC. ,4TILITIC-S
tMOLE.6ALC &PR-.TAIL TR.1
ANJC.,INSL.lLLAN CG.,
ReQAL cvrTV(
_ _ __
4f76,,
4.'
_
"
i ir_.
30.B
too 200 zoo 400
aNumberofreportingunitsindicates thenumberof establishmentswhich
haveemployees (notincludingself-employedpersons)subject to theSo-
cial Securityprogram.
bNumberof returnsindicates thenumber ofbusinesses,withandwithout
employees,whichfilefederalbusinesstax returns. Thedifferencebe-
tweenthisand thenumber of reportingunitsincontractconstructionis
primarilyaccountedforbythe soleproprietorshipswithoutemployees.
cCountybusinesspatterns,unlikebusinesstaxreturns,includeonlythe
agriculturalservicespart of theagriculturesector; agriculturalpro-
duction isexcluded.
A17
FigureA2.3b: Businessreceiptsforcontractconstruction
andvarious
otherindustriesintheU.S., for 1965 (billionsofdollars) (source:
ref. 16)
CONSTR.C.T gON
48SZ.4. /u -
TIZAAMPO.TATI ON
)I4OLCSLC
AIdD
J
RCTAILT-ADZ
AMoi-MEfg. PL4bLIC I M
LMJIOTIQ5
BL. AN,,SS Mr.CCl"PT5
"TTr"AL" 10 Z4.0
A18?
Table A2.8: Numberof firms,numbersemployed,andgrossoutputinthebuildingandconstructionindustry
intheUnitedKingdom,for1935 and1954 (source: ref.3)
1935 1954
Numberof Firms Employees IGross Firms Employees Gross
output
employees
%of Number %of %of %of Number %of %of
Number total (1000'si totaltotal Number total (1000's) total total
Notmorethan10
persons 67,450 88.6 255.0 33.7 28.5 72,407 81.7 235.3 19.3 11.9
11-99persons 7,716 10.1 252.9 33.4 31.7 14,462 16.5 417.5 34.2 32.0
100-499persons 868 1.1 163.0 21.5 24.4 1,464 1.6 281.4 23.1 24.9
500personsandover 78 0.2 86.3 11.4 15.4 202 0.2 286.4 23.4 31.2
Total 76,112 100.0 757.2 100.0 100.0 88,535 100.0 L220.6 100.0 100.0
Table A2.9: Constructionfirmsandoperativesanalyzedbytradeinthe
UnitedKingdoma(source: ref.24)
Numberof Average
Description
of firm
Numberof
operatives
numberof
bypredominant
trade
firms
operatives
8
284,866
Generalbuilders
34,732
Buildingandcivil
engineeringcontractors 3,022 350,785 117
1,473
89,749
61
Civilengineers
8,417
35,595
4
Plumbers
5,624
24,331
4
Carpentersandjoiners
13,907
56,911
4
Painters
1,508
14,902
10,
Roofers
3,141
20,985
7
Plasterers
301
3,905
13
Glaziers
290
3,365
12
Demolitioncontractors
81
6,674
82
Scaffolding
specialists
ReLiforcedconcrete
11,857
55
specialists
216
HeatingandVentilating
1,315
36,226
27
Electricalcontractors
4,434
59,367
13
Asphaltcontractors
250
14,122
57
1,006
18,221
18
Planthirers
716
8,466
12
Flooringcontractors
436
25,854
59
Constructional
engineers
80,869 1,064,191
13
Total
aNospecificdateisindicatedfor thisdata,butthedateof the
publicationis1973.
A20
112
Table A2.10a:Volumeof constructionworkperformedbycontractorsainKorea (millionsofwon)(source:
ref.9)
Amountof contracts 1962 1965 1966 1967 1968 1969 1970
performed
Residential,commercial,and
industrialbuilding 8,063 11,484 20,612 31,060 60,138 77,926 86,075
byKoreanfirms na na na na 55,806 69,236 77,228
byforeignfirms na na na na 4,322 8,690 8,847
%byforeignfirms na na na na 7.2 11.2 10.3
Civilengineeringworks 6,568 11,952 19,769 29,187 66,724 88,123 83,830
byKoreanfirms na na na na 61,740 79,831 77,463
byforeignfirms na na na na 4,984 8,292 6,367
%byforeignfirms na na na na 7.5 9.4 7.6
Grandtotal 14,631 23,436 40,381 60,247 126,862 166,049 169,905
byKoreanfirms na na na na 117,546 149,067 154,691
byforeignfirms na na na na 9,316 16,982 15,214
%byforeignfirms na na na na 7.3 10.2 9.0
aDoesnotincludeworkcarriedoutbysmallcontractorsnotlicensedby theMinistryofConstruction(of
2626contractingenterprises,including 1584 "individuals" activeinKoreain1971, only713werethus
licensed)orresidentialbuildingdonebyartisansemployeddirectlybytheprospectivehouseowner.
A2.10b:Value
ofconstruction
contracts
executed
byKorean
firms
Table
abroad(source:
ref. 9)
Number
Value
Year
Number
(thousandsof ofcountries
a
Uof U.S.dollars)
contracts
3
11,003
7
1966
3
15,604
13
1967
3
20,578
12
1968
2
14,400
12
1969
9
47,989
19
1970
9
56,139
17
1971
aBefore
1970, construction
wasdonein Vietnam
(36of the44 contracts
In1970and 1971,
and Thailand.
for 1966-1969),
Japan,
Guam,
Ryuku,
workwasalsoexecuted
in Saipan,
lidonesia,
Taiwan,
Brunei,
Pakistan,
Australia,
Alaska,
Canada,
Dominica,
andMalaysia.
L22
Table A2.1Oc:ConstructionengineersinKoreain 1971bygrade(source:
ref. 9)
Classification
Typeofengineer
Total
GradeA GradeB GradeC
Civilengineers
451 1,691 4,288 6,430
Mechanicalengineers 47 200 374 621
Architecturalengineers 268 1,183 4,420 5,871
Total ',922
A23
)
Table A2.11a: Registeredcontractorsin Iranbytypeofworkand
qualificationa(source: ref.9)
b
Contract
qualification
Typeofwork Total
Class I Class2 Class3
Roads 60 160 106 326
Building 150 214 40 404
Largebridges noclassification 24
Municipalwatersupply
andsewerage 70 100 6 176
Powerdistributionand
transmission 18 26 - 44
Deepwelldrilling noclassification 13
Steelstructures 21 18 - 39
Heating,ventilating,
airconditioning 16 21 - 37
Dams,irrigationcanals
anddrainage 45 39 - 84
Totalregistrations 1147
aSourcegivesnodatefor figures,butdateofpublicationis 1973.
bContractsareclassifiedbyvalueandvarywiththe typeofwork.Values
listedareinmillionrials. Roads- Class 1: over100, Class2: 15-
100, Class3: to 15; Building- Class 1: over40,Class2: 10-40,
Class3: under10; Municipalwatersupplyandsewerage- Class1: over
20, Class 2: 5-20,Class3: to5; Power- Class 1: over7.5,Class
2: to7.5; Steelstructures- Class1: over5,class2: to5; Heating-
Class1: over 7.5, Class2: to 7.5; Dams- Class1: over20, Class2:
to 20.
A24
TableA2.11b: ConstructioncompaniesregisteredinTehran,Iran(source:
ref.9)
Capital
Number
Year
(millionrials)
1966/67
105
715.5
146
630.8
1967/68
1969/70
86 816.1
78
383.6
1970/71
A25
q
Table A2.11c:ConstructioncompaniesdissolvedinIran(source: ref. 9)
Capital
Year Number (millionrials)
1966/67 14 25.1
1967/68
22 95.7
1968/69
34 185.4
1969/70
28 134.5
1970/71
24 265.7
A26
Table A2.12a:ContractorsregisteredunderprevailingclassificationsysteminEthiopiaa (source: ref.9)
b
Classification
Typeofcontractor
Total
Class 1 Class 2 Class3 Class4 Class5 Class6 Class7
Generalcontractors
11 8 8 8 11 5 2 53
Numberofforeignc 8 6 4 6 5 3 1 33
NumberofEthiopian
3 2 4 2 6 2 1 20
Buildingcontractors
- 2 2 12 12 15 29 72
> Numberofforeign
c
- 2 2 8 9 6 6 33
NumberofEthiopian
- 0 0 4 3 9 23 39
Specialcontractors
- - 2 0 1 1 1 5
Numberofforeign
c
- - 2 0 1 1 1 5
NumberofEthiopian - - 0 0 0 0 0 0
Registeredconsultants
6
Numberofforeign
noclassification
6
NumberofEthiopian
0
aSourcegivesnodateforfigures,butdateofpublication
is 1973.
bClassification
bymaximumcontractlimitationinEthiopiandollars. Class 1: 5,000,000,Class2:
2,500,000,Class3: 1,000,000,Class4: 500,000,Class5: 250,000,Class 6: 100,000,Class7: 50,000.
Localresidentcontractors
offoreignnationality
andlocalbranchesofinternational
construction
firms.
A1
_
Table A2.12b:Contractors,architecturalandengineeringconsultants,
andprofessionalarchitects,engineersand surveyorsregisteredin
Ethiopiaundernewguidelinesa (1971-72) (source: ref.9)
Typeofcontractorand Numberof Numberof
classification foreignb Ethiopian Total
Generalcontractors 6 4 10
Class 1 2 1 3
Class2 2 0 2
Class3 0 1 1
Class4 0 1 1
Class5 0 1 1
Class6 2' 0 2
Buildingcontractors 5 8 13
Class2 2 0 2
Class4 1 1 2
Class5 0 1 1
Class6 1 1 2
Class7 1 5 6
Specialcontractors 0 1 1
Class4 0 1 1
Architecturalconsultants 2 0 2
Engineeringconsultants 2 0 2
Professionalarchitects 0 1 1
Professionalengineers 0 4 4
Professionalsurveyors 0 1 1
aNewguidelinesincludethe samemonetarycontractlimitationsasthe
old system(seefootnoteb,TableA2.12a)butaddmorestringentnon-
monetaryrequirementsforregistration. Newsystemwasnotmandatory
whenthesedataweretaken.
bLocalresidentcontractorsof foreignnationalityand localbranchesof
internationalconstructionfirms.
A28
Table A2.12c:Employmentandwagesfor theconstructionindustryin
Ethiopia(source: ref. 8,9)
Numberoffirms
andyear
For
93
firmsa
1966/67
1967/68
1968/69
For
29 large
firms
b
1966/67
1967/68
1968/69
1969/70
1970/71
aReference 9.
Numberof
employees
6,844
10,968
8,579
6,145
10,037
7,718
9,074
9,142
Wagesandsalaries
(thousandEthiopiandollars)
10,567
15,370
11,200
8,455
12,894
8,838
14,047
14,334
bAccountfor 90%of thetotalconstructionemployment,ref.8.
A29 1
A2.13a:Number
offirms, numberengaged,andindustrialproductionforthe constructionandmarv-
facturing
industries
inKenya,for1963to1967 (source:
Table ref. 17)
Industryandyear
Building
and
construction
1963
1964
1965
1966
1967
Manufacturing
andrepairs
1963
1964
1965
1966
1967
a
Gross
product
Output
Numberengaged
(thousandsofKenyanpounds)
Numberoffirms
1,726.8
4,419.9
5,321
29
1,294.3
3,792.0
4,639
33
1,497.7
4,699.7
5,847
35
2,722.7
8,057.8
9,599
47
5,020.7
13,997.7
13,545
63
22,931.6
68,660.2
46,148
191
27,368.4
81,859.3
47,910
187
29,918.8
90,317.4
48,374
195
33,507.5
99,516.0
50,379
189
34,235.7
110,350.4
51,360
208
Itincludes
laborcosts,interest
aGrossproduct
is theaggregate
difference
between
outputandinput.
payments,
depreciation
charges,
andnetprofitbeforetax.
-C
A2.13b:SummarydatafromacensusofindustrialproductioninKenya,for1967 (source: ref. 17)
Table
a
Grossproduct
Output
Numberof
Numberof
Industry
establishments personsengaged (thousandsofKenyanpounds)
Buildingandconstruction 349 28,704 29,353.6 11.645.9
Private 292 17,249 18,354.8 6,503.3
Public 57 11,455 10,998.8 5,142.6
Miningandquarrying 78 3,185 3,901.5 1,942.4
Manufacturingandrepairs 1,043 63,946 134,821.8 41,821.1
Electricity 6 2,492 4,951.1 3,410.5
Total 1,476 98,327 173,028.0 58,819.9
aSeefootnoteainTable A2.13a.
4)
C
ref. 19)
Table A2.13c:Summarydataforvariousindustrial groupsinKenya,for1963 (source:
Value
Numberofestablishments Gross
Numberof accordingtonumber production
added
Numberof
Industry
establishments
employees
ofemployees
of
_______(thousands
Kenyanpounds)
5-19 19-49 over50
72 67 15,502 7,k62
Buildingandconstruction
220 29,660 81
52 34 5,965 2,732
146 6,990 60
Private
14 31 8,966 4,121
56 22,142 11
Public
6 2 570
528 10
Electricalcontracting
18
22 22 8 2,270 1,614
52 2,638
Miningandquarrying
2 7 5,281 3,433
9 2,194 -
Electricity
175 74,803 28,580
775 49,829 41' 183
Manufacturing
andrepair
520 279 257 97,856 40,789
1,056 84,321
Total
308
Table A2.13d:SizedistributionoffirmsinKenya,for1968 (source: ref. 17)
Industry
Numberoffirmsbysizeof
firma:
Buildingandconstruction
Agriculture,forestry,fishing
Manufacturingand repairs
Totalb
Numberofemployeesbysize
offirmc:
Buildingandconstruction
Agriculture,forestry,fishing
Manufacturingandrepair
Totalb
Numberofemployeesperfirm
0-4 5-9 10-19 20-49 50andover Tota
77 50 72 94 123
170 238 362 557 745 2,072
772 351 235 298 244 1,901
5,980 2,503 1,932 1,977 2,041 14,433
189 331 1,035 3,014 27,268 31,837
472 1,627 5,046 18,290 132,139 157,574
1,762 2,345 3,307 8,080 54,536 70,030
12,865 16,543 26,600 62,443 393,037 511,488
aRefersonlyto thosefirmsthathaveresponded forthelasttwoyearsandthereforeexcludesdormant
firms.
binadditionto theindustriesinthe table,this includes: miningandquarrying; electricity,gas, and
sanitaryservices; commerce; transport,storage,andcommunication; services; andactivitiesnot
adequatelydescribed.
CThesizeoffirmandnumberofemployeesreferalmostwhollytotheprivatesector.
416
A2.14:Outputandemployment inconstructionandmanufacturing (source: ref. 29)
Table
Construction
Manufacturing
Countryandyear
Personsb l
en aed npoy
S atitcleggds
units usands)
(tho
scWages angi Value
salaries add
(millionsofnation-
al currencyunits) _
tical
a
units
_al
Personsb EployeesCWagesand Value
engaged saiariesd added
(millionsof nation-
(thousands! (lcurnc nts)
currenyunits)-
Ethiopia
f
(dollar)
1958
1961
na
125
na
na
na
30.0
na
17.2
nta
2 0
.3h
133
na
19.9
na
19.9
na
12.5
na
35.5
g
na
1962 na na na na na 164 32.6 32.6 21.3
1
Kenya
(shilling)
1963
1963
1967
na
200
291
na
na
na
na
9.1
na
na
104.8
200.5
na
3.
135.0
j
247.7
j
111
6
164
214
na
34
43.4
48.7
33.6
n
a
na
22.3
4k
247
3 5 3
k
na
431
431
634i
1968
1969
1970
416
423
438
3 2
.
0
m
2 8
.9
m
30.8
m
3 1
.9
m
27.0
m
28.7
M
215.7
232.1
308.4
295.8i
39 5
.2i
431.6i
232
267
307
51.4
55.9
65.4
na
na
na
38 6
k
4 37
k
494
7031
828k
962
n1,62
1971 425 34.8
m
24.1
m
235.2 391.11 na
na
302.4

na
291.4
ana
4,287 18,318
Colombia
(peso)
Iran
p
1968
1969
1963
na
741
2,364
na
38.1
12.1
na
na
8.5
na
1,106
na
na
2,137
15,160
11,060
7,6820
111,992
0
326.60
441.2
318.8
290.5
5,050
8,900
k
21,754
40,.00
(rial) 1968 na na na na 30,100 160,378 684.6 462.9 19,100 75,900
Korea
q
(won)
1968
1969
2,591
2,626
314.9
399.4
na
397.8
24,700
47,796
55,654
93,624
23,808
24,752
741.6
820.1
715.5
792.2
76,600
105,700
300,100
r
424,200r
UnitedStates
(dollar)
1970
1958
1963
2,998
na
na
309.6
3.513
3,715
307.2
2,794
2,958
52,295
14,025
17,802
99,649
18,991
24,198
23,905
303,405
293,030
854.8
16,209
16,313
835.3
16,025
16,160
137,100
78,300
93,000
547,900
141,500
191,600
1965 na 3,994 3,216 19,446 29,065 na na 18,105 114,600 227,000
1967 na 4,012 3,268 24,238 33.223 289,346 na 18,422 123.200 261,300
1968 na 4,114 3,393 26,985 36,270 na na 18,610 132,200 284,200
1969 na 4,323 3,544 30,533 40,862 na na 19,085 142,200 303,500
1970 na 4,227 3,481 32,348 42,792 na na 18,231 140,900 297,400
1971 na 4,305 3,532 135,000 46,509 na na na na na
(continued)
\6
(TableA2.14: continued)
aumnberofentities (i.e., establishments,localunits,enterprises, etc.) forwhichthestatisticsare
compiled.
bAveragenumberofallpersonsengagedduringtheyear,includingworkingproprietors,employees,and
unpaidfamilyworkers.
CAveragefortheyearofnumberofpersonswhodidworkforwhichthey receivedpay,excludingworking
proprietors.
dAllpaymentsmadeto employeesduringtheyearofreferenceinconnectionwithworkdone,whetherin
cashorinkind.
evalueaddedgenerallyrepresentsthe "censusvalueadded" (i.e., grossofthecostofnon-industrial
servicesrenderedbyothers)andisgenerallygiveninapproximatefactorvalues (i.e., producers'
valuesless allindirecttaxes reducedbyallsubsidies leviedontheproductionofgoodsandservices).
fConstructiondataareforlicensedenterprises engagedincontractconstruction. Manufacturingdata
Li includeestablishmentswith5ormoreemployees exceptthoseengagedinflourmillingfor client's
account,coffeeandgraincleaning,shoemaking,andrepairingandtailoring.
gExcludessugarcanegrownonplantationsofsugarrefiningenterprises.
hAtpurchaser's
value.
iConstructiondataareforestablishmentswith5ormoreemployees;manufacturingdataincludepublicand
privateenterpriseswith50ormorepersonsengaged.
3Valueofgrossdomesticproduct.
klncludingemployees'contributionsto socialsecurityandpension.
XNetofthecostofnon-industrial
servicesrenderedbyothers.
mAs of30Juneof theyearindicated.
nConstructiondataareforallenterprises.Manufacturingdataareforestablishmentswith5ormore
personsengagedorgrossvalueofproductionof24,000pesosormore.
0
Foroneperiodofyearindicated.
(continued)
(TableA2.14: continued)
PIranyearstarts21 Marchofyearstated. Constructiondataareforallenterprises. Manufacturingdata
includeallestablishmentsotherthanthoseoftheIranianNationalOilCompany.
qConstructiondataareforallregisteredunits exceptthoseof 1968,whicharefor establishmentswith5
ormorepersonsemployed. Manufacturingdataareforestablishmentswith5ormorepersonsengaged
excludinggovernmentestablishmentsotherthanrailroads,workshopsandtobaccofactories.
rInproducers'values.
SConstructiondataincludeallenterprises engagedincontractconstructionas ofJanuary1. Manufacturing
dataareforestablishmentswithatleastoneemployeeexcludingcentraladministrativeofficesand
auxiliariesservingmanufacturingestablishments (inallcategories in1963and 1967-70andinthepersons
engagedandvalueaddedcategores in1958and 1965)andexcludingthoseestablishmentsengagedinmanu-
facturingorrepairingfortheretailtrade (in1958and1965).
0'
a
Table A3.1a: Construction,gross fixedcapital formation,and grosscapital formation forvariousdevelopingcountriesand theU.S. (source: ref.56)
b
GFCF GFCF-C GFCF-Cas GCF GFCF-Cas GDP GFCFas GCFas GFCF-Cas
Countryand year (millionnational (millionnationalshare ofGFCF(millionnationalshareofGCF (millionnationalshareof GDPshare ofGDP shareof GDP
currencyunits) currencyunits) (percent) currencyunits) (percent) currencyunits) (percent) (percent) (percent)
Colombia
(peso)
1960
1963
1966
1967
1968
1969
1970
4,843
7,167
12,304
14,720
18,815
21,230
25,850
2,698
4,420
7,468
9,18
11,72.
13,873
15,468
55.6
61.6
60.6
66.1
62.1
65.3
59.8
5,495
7,844
15,040
15,341
20,406
22,715
28,130
49.0
56.3
49.6
63.4
57.4
61.0
54.9
26,747
43,525
73,612
83,083
96,422
110,933
130,591
18.1
16.4
16.7
17.7
19.5
19.1
19.7
20.5
18.0
20.4
18.4
21.1
20.4
21.5
10.0
10.1
10.1
11.7
12.1
12.5
11.8
Ethiopia
(dollar)
1963
1966
1967
312
448
511
226
304
362
72.4
67 9
70.8
321
459
522
70.4
66.2
69.3
2,499
3,370
3,375
12.4
13.2
15.1
12.8
13.6
15.4
9.0
9.0
10.7
1968 554 363 65.5 565 64.2 3,606 15.3 15.6 10.0
1969 500 355 71.0 511 69.5 3,861 12.9 13.2 9.1
Kenya
(pound)
1964
1965
1966
44.3
45.7
61.2
20.8
22.1
28.3
47.0
48.4
46.2
46.6
51.2
77.4
44.6
43.2
36.6
355.0
356.4
415.9
12.5
12.8
14.7
13.1
14.4
18.6
5.9
6.2
6.8
1967 82.2 40.2 48.9 88.9 45.2 440.2 18.7 20.1 9.1
1968
1969
1970
1971
89.5
93.7
112.7
140.9
48.4
50.6
55.5
72.6
54.1
54.0
49.2
51.5
92.1
102.2
126.1
163.5
52.6
49.5
44.1
44.4
479.2
519.2
577.8
630.5
18.7
18.0
19.5
22.3
19.2
19.7
21.8
25.9
10.1
9.7
9.6
11.5
Korea
(won)
1960
1963
1966
1967
1968
1969
1970
1971
26,500
68,000
28,700
27' 00
41L,700
552,900
650,2Su
729.700
18,000
41,700
113,600
146,600
231,000
330,800
416,500
428,600
67.9
61.3
54.4
53.7
56.1
59.8
64.1
58.7
26,800
9n,300
224,500
281,000
427,900
620,700
704,700
805,300
67.2
46.2
50.6
52.2
54.0
53.3
59.1
53.2
244,500
485,200
1,019,100
1,248,000
1,574,900
2,056,500
2,577,400
3,153,800
10.8
14.0
20.5
21.9
26.1
26.9
25.2
23.1
11.0
18.6
22.0
22.5
27.1
30.2
27.3
25.5
7.4
8.6
11.1
11.7
14.7
16.1
16.2
13.6
UnitedState; 1960
(dollac) :1963
:1966
1967
1968
L96,
.1970
-971
35,900
99,500
130,300
i33,600
146,200
158,600
160,000
178,100
54,700
63,700
76,200
78,300
87,700
94,400
95,200
110,700
63.7
64.0
58.5
58.6
60.0
59.5
59.5
62.2
89,600
105,000
142,200
140,000
154,700
167,200
163,800
181,900
61.0
60.7
53.6
55.9
56.7
56.5
58.1
60.9
509,000
596,300
758,600
803,600
874,800
942,600
988,600
1,061,900
16.9
16.7
17.2
16.6
16.6
16.8
16.2
16.8
17.6
17.6
18.7
17.4
17.6
17.7
16.6
17.1
10.7
10.7
10.0
9.7
10.0
10.1
9.6
10.4
aDatais for theformer SystemofNationalAccounts (SNA)exceptforKenyawhere it is forthepresent SNA. All figuresare inpurchasers'valuesatcurrent
The
GFCFforgross fixed capital formation,GFCF-Cforgross fixed capitalformationinconstruction,GCFforgross capital
pricesexceptGDPwhichis inproducers'valuesatcurrentprices,whichmightresult in slightlyoverstatingGFCF,GCF,and GFCF-CasashareofGDP.
fallwing abbreviationsareused:
formation, andGDPforgrossdomesticproduct.
bIncludesre!;idential andnonresident.albuildings,landimprovement,plantationandorcharddevelopment,and allotherconstruction.
Grossdomesticfixedcapitalformation
asapercentage
of
Table A3.lb:
grossdomesticproducta,
averages
for1960-1962
and1966-1968
(source:
ref. 39).
1966-1968
1960-1962
Regionorcountry
17.4
Developing
countries
16.6
17.7
18.1
Westernhemisphere
16.3
18.1
Colombia
15.9
16.2
Africa
Ethiopia
b
11.9
13.3
14.7
15.2
Kenya
17.9
15.3
Asia
18.9
14.7
Iran
24.7
11.4
Korea
24.0
Developed
marketeconomies
21.7
16.7
16.6
UnitedStates
a{easuredatconstant1960marketprices.
bGrossdomesticcapitalformationasapercentageofGDP.
A38
Table A3.1c: Averageannualrateofgrowthof grossfixedcapitalfor-
mationatconstantprices,fortheperiods1965-1970and1960-1970
(percent)(source: ref.55,56)
Regionorcountry
1965-1970
1960-1970
5.9
6.3
Marketeconomies
Developedmark-"economies
5.5
6.2
8.1
6.7
Developingmarketeconomies
8.9
4.5
Colombia
13.0
12.6
Iran
.
9
b
15.7
14
Kenyaa
29.1
23.5
Korea
4.3
c
2.5
United
States
apresentSNA; allothersareformerSNA.
b1964-1970.
c1960-1971.
A39
TableA3.2a: Grossdomestic
savingsandgrossforeignsavingsasa
percentage
of grossdomestic
product,averges for 1960-1962
and 1966-
1968 (source:
ref.39)
a
Grossdomesf csavings Grossforeignsavings
Regionor country
1966-1968
1960-1962
-966-1968
1960-1962
1.4
16.1
1.9
Developing
countries
14.7
1.6
1.2
16.5
15.9
Western
hemisphere
3.8
18.0
14.9
2.2
Colombia
4.1
-0.3
12.3
16.5
Africa
4.2
10.0
9.1
1.9
Ethiopia
3.6
1.4
11.6
13.3
Kenya
1.7
13.8
16.2
1.5
Asia
-0.3b
19.2
-0.2
b
14.9
Iran
7.5
4.2
18.1
7.6
Korea
22.4
1.7
Developed
mark teconomie
21.6
3.0
-0.9
-0.5
18.2
18.3
UnitedStates
aDifferencebetweengrossdomesticcapitalforma-ionandgrossdomestic
savings,
expressed
asapercentage
ofGDP.
bDifferencebetweengrossdomesticfixedcapitalformationandgross
domestic
savings,
expressed
as apercentage
ofGDP.
A40
Table A3.2b: Grossaccumulationandits financeforColombia,Kenya,Korea,andtheU.S., formerSNA,
1960-1970 (miilicasofnationalcurrencyunits) (source: ref.56)
Financeofgrossaccumulation Grossaccumulation
Consumption Netcapital Increase Gross fixed
Countryandyear Total Saving of fixed transfersfrom instocks capital Other
capital therestofthe formation
world
Colombia 1960 5,196 2,529 2,667 na 650 4,845 -299'
na 677 7,157 -
1
,
304
a
(peso) 1963 6,540 2,459 4,081
na 948 8,654 -1,
5 9 1
a
1964 8,011 3,707 4,304
1965 10,464 5,468 4,996 na 1,238 9,504 -2
7
8a
2,737 12.304 -
3
,
1966 11,616 5,327 6,289 na 4 25
a
1967 14,609 7,498 7,111 na 612 14,729 -732F,
a
-2,755
1968 17,652 9,522 8,130 na 1,591 18,815
na 1,485 21,230 -
3
,
285
a
1969 19,430 10,417 9,013
25,850
1970 22,901 12,681 10,220
na 2,280
-
5
,
229
a
c
Kenya
0
1964 66.7 54.2 -c 12.5 2.3 44.3 20.1
a
a
.
0
c c 5.8 5.5 45.7 2.6
{pound) 1965 53.8
48
a
1966 73.8 70.5c c 3.3 16.2 61.2 -3.6
1.0 6.7 82.2 -18.3a
1967 70.6
69
.
6
c -c
a
1968 81.3
72
.
3
c c 9.0 2.6 89.5 -10.8
a
c 8.2 8.5 93.7 -0.6
1969 101.6
93
.
4
c
c
1970 110.2 101.1 c 9.1 5.3 114.9 -10.0
a
Forea 1960 27,900 10,000 12,300 3,600 300 26,500 1,100
7 1 200
d (won) 1963 , 40,000 26,300 1,200 21,600 68,000 -18,500
1964 96,000 55,300 36,900 700 20,700 80,500 -5,200
119 800
d 1965 , 69,000 45,700 _e 800 117,600 1,300
1
95
1
00
d 1966 123,000 57,900 -e 17,100 206,000 -28,000
1967 220,300d 123,800 73,800 -e 8,200 264,000 -51,900
(conzinued)
(TableA3.2b coutlnued) Financeof grossaccumulation
Grossaccumulation
Netcapital Increase Gross fixed
Consumption
Saving offixed transfers from increas
capital Other
Countryan2year Total
formation
capital therestof the
world
-e 19,000 402,300 -121,800
(Korea,cont.) 1968 299,500d 171,400 99,700
e 67,300
5,,7,300 -158,200
1969 456,500 297,200 126,200
60,700 651,700 -193,300
1970 519,000 316,600 156,800
e
f -e 3
,
7 00
g 8590h 1,0
9 1
,
300
d
d
13,200
49
,
100
f e 85,900. 1,700
UnitedStates1960
5
,
500
g 99,500" 3,100
1963 1
08
,
10 0
d 4j,200 59,200fe
(dollar)
e 4
,
900
g 108,000h 5,700
1964 118,600 56,300 63,600
e 8
,
500
g 120,000 4,100
1965 132,600d 67,70C 67,900
1
30
,
300
h 2,400
1
29000
g
1966 ILA4,700d 72,400 73,300fe
1967 d 64,100 79,200f _e
6
,
900
g
133
,
600
h 2,200
700
d
7
' 9 h -0
197
142
, '
400
0
f e 1 0
-400
154
85
e 8,400
g
146,200h
1968 ,
300
d 71,600 ,
157
,
900
h -900
1969 165,00 76,500 92,8U0
_ 8
,
10 0
g
160,500 1,300
1970 500
d 68,200 98,800'
900 1
,
700
g
16 3
,
aSomeofdatagoinginto this isnotavailable.
bpresentSNA.
CSavingincludes consumptionoffixedcapital.
dIncludesastatisticaldiscrepancy.
e'essthan50millionnationalcurrencyunits.
fCapitalconsumptionestimates forprivatenonfarmenterprisesarevaluedatoriginalcosts, agricultural
estimatesarevaluedatreplacementcosts,andgovernmentcapitalconsumptionis equaltocivilnewpublic
constructionplusnetpurchaseofusedstructuresbygovernment.
glncludes changeinstockoffederalgovernmententerprisesandstockpilingofstrategicmaterials.
hIncludescivilnewpublicconstructionandnetpurchasesofusedstructuresbygovernment.
TableA3.3: SourcesofsavinginKoreaandtheUnitedStates, 1960-1970,formerSNA(source: ref.56)
Savingsofcorporateand Savingsofgeneral Savingsof
Country quasi-corporateenterprises government householdsa
and
(percentof (billionsof (percentof (billionsof (percentof
year (billionsof
national national national
zurrencyunits)totalsaving)currencyunits) totalsaving)currencyunits)tofalsaving)
Korea 1960 2.6 26.0 10.1 101.0 -2.6 -26.0
(won) 1963 12.6 31.5 21.2 53.0 6.1 15.3
1964 13.0 23.5 31.3 56.6 11.1 20.1
1965 20.7 30.0 46.0 66.7 2.3 3.3
1966 23.6 19.2 57.4 46.7 42.0 34.1
1967 29.8 24.1 82.3 66.5 11.7 9.5
1968 30.3 17.7 125.9 73.5 15.3 8.9'
1969 32.4 10.9 150.3 50.6 114.4 38.5
1970 .37.3 11.8 195.1 61.6 84.2 26.6
U.S. 1967 24.1 37.6 -4.4 -6.9 44.4 69.3
(dollar)1968 20.9 29.2 6.8 9.5 43.9 61.3
1969 14.5 19.0 19.4 25.4 42.6 55.7
1970 11.7 17.2 -2.3 -3.4 58.9 86.4
aIncludesprivatenon-profitinstitutions servinghouseholds.
ofcentralbanksinafewdevelopingcountriesand theU.S. (percentper
Table A3.4: Ratesof discount
a
annum) (source: ref. 55)
Countryanddateofratechange Rate
Colombia May 1963
8.00
00
b
March1970 14
.
Iran
October1963 4.00
August1966
5.00
November1968 7.00
August 1969
8.00
October 1971 7.00
10.22
June1960
March 1964
Korea
10.50
November1965 21.00
December1965 28.00
March1968
21.00
October 1968 23.00
June 1969
22.00
April1970
21.00
December 1970 19.00
Juue1971
16.00
Countryanddateofratechange
UnitedStates
c
July1963
November1964
December1965
April1967
November 167
March 1968
April1968
August1968
December1968
April1969
November 1970
December1970
January1 9 7 1
d
February 1971
July1971
November1971
December1971
Rate
3.50
4.00
4.50
4.00
4.50
5.00
5.50
5.25
5.50
6.00
5.75
5.50
5.00
4.75
5.00
4.75
4.50
aRatesshownrepresentthoseratesatwhichthecentralbankeitherdiscountsormakesadvancesagainst
Forcountries
eligiblecommercialpaperand/orgovernmentsecurities forcommercialbanksorbrokers.
withmorethanonerateapplicableto suchdiscountsoradvances, therateshownis theoneatwhich
Themostrecent
rateshownforeachcountryis thatwhichwasstilleffectiveonDecember'31, 1971.
bperiodaverage.
CDataforFederalReserveBankofNewYorkonly.
dEndofperiod.
thelargestproportionofcentralbankcreditoperationsisunderstoodtobetransacted.
Table A3.5: Netflowoffinancialresourcesfrommultilateralagenciestodevelopingcountries, 1961-
1971 (millionsofdollars) (source: ref. 64)
Averageannualnetflow
Multilateralagency
1961-1963
1964-1966
1967-1969
WorldBank 262.0 318.3 363.0
IDA 43.7 232.3 277.7
IFC 10.3 15.0 31.0
TotalBankGroupb 316.0 565.7 671.7
Inter-AmericanDevelopmentBank 68.7 182.7 248.3
AsianDevelopmentBank - - 4.0c
E AfricanDevelopmentBank - - 1.0d
EuropeanDevelopmentFund 44.7 115.0 150.3
f
UnitedNationsDevelopmentProgram
e
67.5 108.0 164.3
aBasedpartlyon1971 figureswhichareprovisional.
bOnlyloans to IDAPartIIcountriesareincluded.
c1968-1969average.
d1969only.
eUNDPprogramcostsinprojects; therearenorepaymentsinUNDPassistance.
f1962-1963
average.
1970-1971
a
598.5
225.0
62.0
885.5
351.0
45.0
6.5
181.0
217.0
.1
Table A3.6a: Proportion
ofofficial
commitments
fromsomeof theDAC
countriestoless
developedcountriesand international
institutions
in
the formofgrantsa,
1964-1969
(percentage)
(source:
ref.39)
Country
1964 1965
1966 1967 1968 1969
Norway
95 96 100 100
92 91
France
80 80 83 74 71 75
Japan
51 37 42
38
b
57
b 20
Denmark
77 70 63 64 57 78
Austriac
21 18 26 29 51 54
UnitedKingdom
54 55 50 57 46 48
UnitedStates
58
62
61
56
45
60
Portugalb
18 27 19 19 21 17
Average,
56 51
DACcountries
60 61 62
a Lessdevelopedcountriesare thedevelopingcountriesplusCyprus,
Greece,Malta,Spain,Turkey,andYugoslavia.
Grantsincludesales
ofcommodities
forrecipients'
currencies.
bOfficialdevelopmentassistanceonly.
CLoanscalculatedpartlyonagrossdisbursementsbasis.
A46
55
TableA3.6b: Weightedaveragerateofinterestonofficialloancommit-
mentsfromsomeof theDACcountries tolessdevelopedcountries, 1964-
1969 (percentageperannum)(source: ref. 39)
a
1968 1969
Country
1964 1965 1966 1967
Denmark 4.0 5.3 0.0 0.0 0.0 0.0
UnitedKingdom 4.1 3.3 1.0 1.1 1.0 1.2
Norway 4.5 3.0 - - 2.2 1.7
UnitedStates 2.5 3.3 3.0 3.6 3.6(2.6) 3.0
France 3.2 3.7 3.5 3.7 3.7 3.7
Japan 5.8 4.4 5.2 4.8 3.7 3.7
Austria 5.2 5.5 5.4 5.2 5.1(3.2) 2.6
Portugal 4.1 3.8 3.6 4.8 5.6(2.4) 2.3
Average,
DACcountries 3.1 3.6 3.1 3.8 3.6(2.7) 2.9
acalculatedonthebasisofofficialdevelopmentassistancecommitments
only,asare thefigureinparenthesesfor 1968.
bcommitmentswereingrantform.
A47
Weightedaveragematurityofofficialloancommitments
TableA3.6c:
fromsomeoftheDACcountriesto lessdevelopedcountries, 1964-1969
(years)(source: ref. 39)
1968
1969
a
1966
1967
1964
1965
Country
UnitedStates 33.4 27.9 29.3 28.2 30.0(38.0) 37.1
24.0
25.0
Denmark
19.1 13.7 18.7
24.9
22.2
24.1 24.0 24.1
UnitedKingdom 24.0
23.9
b _b 23.0 36.0
Norway
L7.0 16.0
21.5 25.4 16.2 22.6(31.7) 30.1
Portugal
16.3
16.0 12.0 14.1 16.6 18.1(17.9) 19.5
Japan
15.3 15.1 17.6 17.0
France
15.6 16.8
8.8 7.7 9.4 14.6 16.8(21.9) 27.2
Austria
Average,
25.1 24.0 26.0(30.7) 28.4
DACcountries
28.6 22.6
aCalculatedor thebasisofofficialdevelopmentassistancecommitments
only,as are the figuresinparenthesesfor 1968.
bCommitmentswereingrantform.
A48
Table A3.6d: Weightedaveragegraceperiodonofficialloancommitments
fromsomeoftheDACcountriesto lessdevelopedcountries, 1964-1969
(years)(source: ref. 39)
1965 1966 1967 19 69
a
Country
1964
1968
UnitedStates 7.7 5.9 6.6 6.7 7.0(9.0) 8.7
Denmark 5.5 2.4 4.2 6.6 7.0 8.7
UnitedKingdom 5.1 4.8 6.0 5.5 5.6 5.6
Norway 6.0 6.0 - -b 5.5 7.9
Japan 4.5 2.4 4.5 4.7 5.5(5.6) 6.1
Portugal 1.4 3.8 4.1 2.2 5.5(8.4) 8.0
Austria 1.4 0.9 2.0 3.7 1.9 4.2
France 3.1 2.8 2.4 1.8 1.7 1.9
Average,
DACcountries 6.5 4.6 5.8 5.5 6.0(7.2) 6.7
aBasedonofficialdevelopmentassistancecommitmentsonly,asarethe
figuresinparenthesesfor 1968.
bCommitmentswereingrantform.
A49
IBRDloansandIDAcreditsbycountry,netasofJune30,
19 71
a(source: ref.27)
TableA3.7:
Korea Iran
Source
Colombia
Ethiopia
Kenyab
BankLoans
19
12
6
48
11
Number
228,824,026 194,500,000
612,146,457
Amount(dollars)
871,877,840
97,800,000
IDACredits
6
11
6
1
Number
-
Amount (dollars)
19,500,000
44,500,000
61,300,000
64,938,129
Total
12
19
49
17 23
Number
259,438,129
612,146,457
142,300,000 290,124,026
Amount(dollars)
891,377,840
aInitialcommitmentsnetofcancellations,refundings,andterminations.
bsixloansaggregating$162.8millionshownagainstKenyaaresharedwithTanzaniaandUgandas
e
TableA3.8a: Distributionofthe economicallyactivepopulationbyoccupationalgroup (source: ref.22)
Economically Percentagedistributionbyoccupationalgroup
Country andyear activepopulation
(number) 0 1 2 3 4 5 6 7 8 9 10 11 12
Colombia 1964 5,134,125 3.9 2.6 4.6 5.6 47.4 0.8 3.0 17.4 11.2 - 3.5 - -
1951 3,755,609 2.3 -a
8
.1a 1.7 53.1 1.3 1.9 17.2 10.6 1.0 2.8 - -
3.4
c d
_d 9.6
2.7 6.7 41.3 b b 26.8 6.7 -c
Iran 1966 7,584,085 2.7 0.1
1956 6,066,643 1.6 0.5 2.5 5.7 54.0 0.9 2.3 19.9 7.5 0.8 1.7 - 2.6
Koreae 1972 10,500,000 3.1 0.4 6.1 11.1 48.5 _b _b
19
.7b 6.6 - - - 4.5
1966 8,654,360 2.6 0.8 3.9 9.8 52.4 0.7 1.3 15.6 4.9 - - - 8.0
1960 7,543,060 2.2 1.2 2.5 7.8 61.8 0.6 3.0 9.0 4.8 1.0 1.6 - 4.5
b
-
U.S. 1972 88,991,000 13.2 9.2 16.8 6.3 3.5 b _b 34.2 13.2 2.8 - 0.8
3.9 - 0.7 -
1966 80,164,000 11.8 9.3 15.2 6.1 4.9 -f 18.1f 17.3 12.7
6.1 0.5 4.6 31.4 10.7 2.5 4.9 0.2 -
1960 69,877,476 10.8 7.9 13.0 7.4
Note: Occupationalgroupsareasfollows:
0- Professional, technical,andrelatedworkers
1- Administrative,executive,andmanagerialworkers
2- Clericalworkers
3- Salesworkers
4- Farmers, fishermen,hunters,loggers,andrelatedworkers
5- Miners,quarreymen,andrelatedworkers
6- Workersintransportandcommunications
7- Craftsmen,productionprocessworkers,and laborersnotelsewhereclassified
8- Service,sport,andrecreationworkers
9- Armcdservicesmembers
10 - Workersnotclassifiablebyoccupation(mayinclude someunemployed)
11 - Personsseekingworkforthe firsttime
12- Unemployed(usedwhenunemployedarenotclassifiedaccordingto theoccupationinwhichtheyareusuallyor
weremostrecentlyengaged) (continued)
(TableA3.8acontinued)
aCategory1includedin2.
bcategories5and6includedin7.
CCategory9includedin10.
dcategory11 includedin12.
Fdr-1960,
eFor1966and1972, economically
activepopulation
figuresdonotincludecategories
9and11.
militarypersonsinbarracksand24,945personsofunknownstatusareexcluded.
fCategory5includedin6.
TableA3.8b: Unemploymentforoccupationalgroupsasavercentageof totalunemployment
a
inKoreaandthe
U.S. (source: ref.22,43,63)
Totalunemployment
:Percentagedistributionbyoccupationalgroup
Countryandyear (thousands)
0 1 2 3 4 5+6+7 8 10+11
Korea 1972 474 1.5 0.4 6.5 9.3 4.6 31.-2 3.4 43.0
1971 457 1.5 0.4 6.3 7.2 5.5 18.6 3.9 56.5
1970 446 1.3 0.2 5.6 4.9 7.2 16.8 2.9 61.0
1969 471 0.6 0.6 2.8 4.5 6.2 19.3 2.5 63.5
1968 496 1.4 1.8 6.5 3.2 7.5 17.7 3.0 58.9
1967 590
1.5 0.8 4.4 6.4 7.1 16.4 3.6 59.7
1966 666 0.9 1.1 2.7 5.7 9.3 12.5 0.6 67.3
1965 677 1.9 -.0 4.9 5.2 8.0 16.2 3.,7 59.1
> UnitedStates1972 4840 5.8 3.0 14.5 4.9 1.7 40.8 15.2 I..
b
1971 4993 6.7 2.9-- 13.7 4.5 1.6 43.6 14.4 12.6
b
1970 4088 5.6 2.7 14.2 4.8 2.0 45.1 13.2 12.4
b
1969 2831 5.1 2.7 14.8 4.9 2.2 40.8 14.8 14.6
b
1968 2817 4.5 2.7 13.9 4.7 2.6 41.7 15.5 14.5
b
1967 2975 4.5 2.3 13.4 5.1 2.9 42.6 14.8 14.5b
1966 2875 4.3 2.6 12.1 4.6 2.8 41.5 15.5
6
b
16
.
1965 3366 4.0 2.5 11.1 4.8 3.3 43.4 14.9 16.1
b
1964 3786 3.9 2.7 10.8 4.1 3.6 45.3 14.9 14.7
b
1963 4070 3.8 2.7 10.6 4.6 3.3 47.7 13.9 13.4
b
Note: Se&r NoteinTableA3.8a.foroxplanationofoccupationalcategories.
alnemploymentincludespersonsseekingworkwhetherornot theywerepreviouslyemployedandpersons
availableforworkwhowerepreviouslyemployed,includingpersonstemporarilylaidoff.
bcategory11 only.
Rangeofaveragenumberofman-hours
for construction
ofonethousand
squarefeetofdwelling
TableA3.9:
inEuropeandtheUnited
Statesa
(source:
ref.62)
Elevator
apartments
Walkupapartments
Typeofconstruction
OfstOnieOf-teOn-site
Europe
b 200-350b
Housingbuiltby industrialized
200-450
350-2100
systems
1750-2600
Housin,.ofcomparablerating
b
17502900
b
builtconventionally
~ UnitedStates
850-1486
na
na
Housing
builtconventionally
aSource (dated1970)givesnoyear.
bHighfiguresarereportedfromGreatBritain.
cC
TableA3.10:Ratioof thenumberoftechnicalandadministrativeemploy-
ees to thetotalnumberofworkersemployedin thebuildingindustry
forvariousdevelopedcountries (source: ref.38)
Countryandyear Ratio (percent)
Sweden (1960) 23.5
EasternGermany (1963) 22.5
Poland (1964) 21.0
Norway(1960) 20.0
Netherlands(1960) 20.0
Czechoslovakia (1964) 18.2
Austria (1951) 18.0
FederalRepublicofGermany (1950) 18.0
UnitedKingdom (1951) 18.0
Hungary (1964) 17.0
USSR (1964) 15.0
United States (1962) 14.0
A55
Table A3.1la:FixeAcapitalformationinconstructioninKorea,1953-1965,andfixed assetformationandstockinconstructionin
Mexico, 1950-1967 (source: ref. 9,42)
Countryandnatureof 1950 1952 1954 1956 1958 1960 1962 1964 1966 1967
investment
Koreaa
GroLzdomesticf'i:ed
capital formation:
Total (billionwon) na 3.28 5.86 14.99 19.80 25.42 45.30 71.26 95.28
c
na
Construction
(billionwon)
(percentoftotal)
na
na
0
.
01
b
0
.
3
b
0.02
0.3
0.11
0.7
0.26
1.3
0.22
0.8
1.59
3.5
1.03
1.4
1.59
c
1.6c
na
na
Mexicod
Gross fixedasset ormation:
Total (MiliMLpesos) 13,572 18,329 17,444 22,285 22,271 25,507 26,887 37,041 43,143 48,710
bytypeofactivity
Construction
.(million pesos) 68 240 123 146 234 291 80 221 138 71
(percentoftotal) 0.5 1.3 0.7 0.7 1.1 1.1 0.3 0.6 0.3 0.1
By goodsproduced
Construction
(millionpesos)
(percentoftotal)
-,456
54.9
10,291
56.1
9,422
54.0
12,050
54.1
12,124
54.4
14,043
55.1
14,796
55.0
19,755
53.3
22,308
51.7
25,118
51.6
Stockoffixedassets:
Total (millionpesos) 232,139 259,208 282,746 312,656 345,561 379,424 477,193 467,089 528,966 566,607
Bytypeofactivity
Construction
(millionpesos) 866 1,156 1,283 1,467 1,953 2,312 2,297 2,551 2,823 2,824
(percentoftotal) 0.37 0.45 0.45 0.47 0.57 0.61 0.55 0.55 0.53 0.50:
aAtcurrentmarketprices,ref. 42.
bFigures tiefor 1953.
CFiguresarefor1965,preliminary.
dinconstant1960pesos,ref. 9.
TableA3.11b: Assetsofcorporatefirmsincontractconstructionandvariousotherindustries,inthe
U.S., 1965 (source: ref.2)
Allindustries
Agriculture
Mining
Construction
Manufacturing
Transportationand
utilities
Trade
Finance,insurance,
andrealestate
Services
1,427,606
27,582
13,326
113,403
186,613
59,846
441,538
389,634
188,284
Totalassets
(millionsofdollars)
1,736,349
6,765
19,560
26,794
372,583
187,390
126,945
965,042
33,727
Assetsperfirm
(dollars)
1,316,000
245,000
1,468,000
236,000
1,997,000
3,131,000
2,875,000
2,477,000
179,000
TableA3.12:Constructionmaterialssuppliedbygovernment toprivatecontractorsinKorea,1966-1970
(source: ref. 12)
Cement Steelreinforcementbars Timber
Yearandamount (thousandbags) (thousandkilograms) (thousandcubicmeters)
Government Contractors Government Contractors Government Contractors
1966
Quantity 7,837 8,534 57,706 96,406 53 304
Percent 40"2 51.8 37.5 62.5 14.8 85.2
1967
Quantity 9,234 12,425 55,802 86,837 27 347
Percent 43 57 37 63 17 83
1968
Quantity 21,139 21,483 104,931 118,706 29 401
Percent 49 51 48 52 7 93
1969
Quantity 24,201 22,222 155,168 124,572 31 455
Percent 52 48 55 45 6 94
1970
Quantity 24,386 23,599 160,630 165,626 46 840
Percent 50.8 49.2 49.2 50.8 5.2 94.8
TableA3.13:Heavyequipmentavailableto theconstruction
industryin
Koreain1971 (source: ref. 12)
Typeof equipment
Government
578
Bulldozers
97
Loa"'rs
Motorgraders
107
38
Cranes
Rockcrushers
15
Motorscrapers
32
Dumptrucks
238
Aircompressors
64
Payloaders
170
8
Concretemixers
Compacting
machines
60
137
Miscellaneous
1534
Total
Contractors
Total
1538
2116
1202
1299
155
262
578
616
139
154
307
339
652
890
437
501
499
669
706
714
214
264
417
554
6844
8378
A59
TableA3.14:.Occupational
distributionof applicantsontheliveregis-
ter oftheemploymentexchangesinIndiaattheendofDecember 1964
(source: ref.20)
Percentage
of totala
Occupationalclass
4.4
Professional,
technical,andrelaedworkers
Administrative,
executive,andmanagerialworkers
0.1
Clerical,sales,andrelatedworkers
2.8
Agricultural,
dairy,and relatedworkers
0.4
Miners,quarrymen,
andrelatedworkers
0.2
Workers intransportand communications
operations
1.9
Craftsmenandproduction
processworkers
6.6
Serviceworkers (e.g.cooks, sweepers,etc.)
3.4
Laborerswithworkexperiencenotelsewhereclassified
4.7
Personswithoutprofessional
orvocationaltrainingor
previousworkexperience
75.5
aTotalnumberofapplicantsis2,489,102.
A60
TableA3.15:AdultliteracyratesaforColombia,Iran,Korea,Kenya,
Ethiopia,andtheUnitedStates (source: ref.39,54)
Literate Illiterate
Countryandyear
Number Percent Number Percent
Colombia
195 1
b 4,020,921 62.3 2,429,333 37.7
1964 6,802,389 72.9 2,526,590 27.1
Iran 1956 1,397,037 12.8 9,522,949 87.2
1966
c
3,077,588 22.8 10,407,726 77.0
Korea
1955
d 9,702,976 76.8 2,934,353 23.2
1960
e
11,486,328 72.1 4,454,004 27.9
1966
f
11,223,120 68.1 5,252,600 31.9
Kenya- early1960's na 22 na 78
Ethiopia- early1960's na 5 na 95
UnitedStates
g
1950
h 108,080,400 96.9 3,623,000 3.2
19591 118,754,000 97.8 2,619,000 2.2
aBased oncensusstatisticsofpopulationaged15 andover (Kenyaand
Ethiopia- ref.39;all other - ref. 54.
bExcludesadjustmentsforundernumeration (estimatedat191,683people)
andalsoexcludesindigenous populationof 127,980.
cForsettledpopulationonly (unsettledpopulationestimatedat 244,141
andnomadictribesat462,146). Theliteracyof 33,280 (0.2%)of those
includedisunknown.
dSemi-literatepopulationis includedinliteratecategory. Includes
onlyKoreannationals.
eAges13 andover. Excludes alienarmedforces,civilianaliens em-
ployedbyarmedforces, and foreigndiplomaticpersonneland their
dependents.
fDejurepopulation. Excludesalienarmedforces,civilianaliensem-
ployedbyarmedforces,andforeigndiplomaticpersonneland their
dependents.
gage 14andover. ExcludesAlaskaandHawaii.
hBasedonatwentypercentsampleofcensus returns. Dejurepopulation
excludingarmedforcesoverseas (estimatedat 435,000).
iEstimatesbasedonsampleuurveys. Relates to civilianpopulation
excludinginmatesofinstitutions.
A61
TableA3.16aEstimatedcalorieandproteincontentotpercapitaaveragedailyfoodsupply,1960and1967,
forColombia,Kenya,Ethiopia,Iran,Korea,andtheUnitedStates (source:
Colombia Ethiopia Kenya Iran
Assumedrequirementsper
personperdaya:
Calories
2400 na 2270 2330
Protein(g.) 66 na 63 62
Percapitaaveragedaily
foodsupply:
Calories- around 1960 2370 2040 2120 2050
- around 1967 na 2280 2240 1950
%ofrequirementa 95 na 99 84
Protein- around1960 (g.) 55.6 na 64.4 59.6
- around1967 (g.) 53.3 na 67.9 52.1
%ofrequirementa 81 na 108 84
aFAO/WHOreferencestandardsofphysiologicalneedsofvarioussubregions.
1967data.
ref.16,39)
Korea U.S.
2200 2710
56 74
2090 3120
2430 3240
111 120
59.0 92.4
69.5 96.1
124 129
Percentageis calculatedon
TableA3.16b:Per capitacalorieandproteinintake byincomeclass forvarious
ref.36)
developing
countries
(source:
Country,year,and Percentage
Percapita
Percapitaprotein
of calorie intake
intake(rams)
family income/
Total
Animal
families
(calories)
expenditure group
LATINAMERICA
Brazil (1960-61)
Annualfamilyincome
(newcruzeirosperyear)
Urbanareas:
4.16 1,315
35.6
10.5
Under100
49.1
15.1
21.94 1,788
100-249
66.9
25.6
31.48
2,227
250-499
95.7
40.1
30.54
2,830
500-1,199
119.9
65.1
11.88
3,569
-- 2,345
73.2
31.2
1,200&over
Average
Rural areas:
7.94
1,755
50.0
13.2
Under 100
64.9
21.7
27.30
2,267
na
100-249
29.68
2,577
75.9
250-499
39.1
24.56
3,144
95.4
500-1,199
52.5
10.52
3,674
116.6
-- 2,083
80.6 31.0
1,200&over
Average
Colombia (1956-62)
1,535
30
9
"Verypoor"rural
na
na 1,538
34
15
"Verypoor"urban
na 2,138
52
22
"Middleclass"rural
na 2,183
60
31
"Middlecla~s"urban
Mexicc (1958/59)
na 1,788
45
na
"ierypoor"rural
na 1,803
51
na
"Verypoor" urban
na
2,275
57
"Middleclass"rural
na
na
2,331
64
na
"Middleclass"urban
Peru (1951-58)
na
na 1,754
47
Mountainarea
na
na
2,205
64
Coastalareas
ASIA
Ceylon
na 1,864
44
8.3
Rural (1961-66)
na
UpperclasCobmbo(1957) na
3,271
84
(continued)
A63
--
(TableA3.16b continued)
Country,year,and
iamilyincome/
expendituregroup
Irana
Peasants
Urbanwageearners
Landowners
India (1958)
MaharashtraState
Expenditurepercapita
(rupees)
Urbanand ruralareas:
0 - i1
11- 18
18- 34
34 and over
Average
AFRICA
Madagascar(1962)
Income (thousandfrance
perfamilyperyear):
1 - 20
20- 40
40- 80
80 - 130
130 - 190
190 - 390
390 - 590
Other classes
UAR(1965)
Lowincomeclass
Middle incomeclass
Higherincomeclass
Tunisia (1965-67)
Dinarsperperson
Ruralareas:
Less than 20
20- 32
32 - 53
53- 102
Percentage
of
families
na
na
na
21.3
18.9
20.7
39.1
54.7
27.7
11.0
3.8
1.5
0.8
0.3
0.2
na
na
na
8.2
16.2
30.8
32.4
Percapita
calorieintake
(calories)
1,842
2,132
2,658
1,340
2,020
2,485
3,340
2,100
2,154
2,292
2,256
2,359
2,350
2,342
2,456
na
2,204
2,818
3,130
1,782
2,157
2,525
2,825 1
Percapitaprotein
intake (grams)
Total Animal
60 na
65 na
74 na
37.9 1.4
56.6 2.6
69.0 6.6
85.7 11.9
59.7 4.5
47.3 5.5
54.1 8.5
53.6 9.4
61.2 15.2
59.1 15.2
64.6 21.8
65.4 23.6
na na
71 15.0
84 18.0
98 37.0
na na
na na
na na
na na
aoriginalsourcedated1961. (continued)
A64
(TableA3.16b continued)
Per capitaprotein
Country,year,and
Percentage Per capita
familyincome/
of :alorie intake
intake (grams)
expendituregroup families (calories) Total Animal
10.9 3,215
na na
102 - 200
200 andover
1.5 3,150 na na
-- 2,609
na na
Average
A65
TableA3.17a:Ratiosofactiveapprentices,
apprenticeship
completions,
andjourneymenlossestoactive
ref. 28)
journeymen,bycraftfor52majorcitiesintheU.S. (source:
Averageratioof Apprenticeship
Journeymenlosses
per 1000active
Occupation
apprenticesper100 completionsper 1000
journeymenc
activejourneymena activejourneymenb
1965-1968
1950-1964 1965-1968 1950-1964
1950-1964 1965-1968
na 27.2
na 41.5
na 20.5
Asbestosworkers
Bricklayers,
marble,
terrazzo,
mo-
19.7 19.5
25.7 iO.8
saic,stone,andtileworkers
7.4 5.3
4.8 15.7 14.2
4.3 4.4 7.2
Carpenters (includingsoftfloor
layersandmillwrights)
28.0
27.3 20.6
13.2 12.4 32.0
Electricians
21.5 23.0
16.7 15.5
5.0 6.3
Ironworkers (includingrodmen)
na 26.0
na 18.2
na 7.0
Lathers
8.8 22.6 24.2
4.2 7.9
Painters,glaziers,andpaperhangers
3.3
9.0 21.4 20.5
4.3 19.3
6.8
Plasterersandcementmasons
23.5
19.3 16.0 20.8
10.2 11.3
Plumbersandpipefitters
29.0 32.0
33.3 28.2
12.3 12.7
Roofers
25.2
15.5 17.2
12.7 12.7 27.9
Sheetmetalworkers
aRatioofnumberofpersonsworkingunderapprenticeship
agreements tonumberofjourneymenworkingor
availableforworkonJulyIof thespecifiedyear.
bRatioofnumberofpersonscompletingprescribedapprenticetrainingduringtheprevioustwelvemonthsto
thenumberofactivejourneymenonJuly1of thespecifiedyear
cRatloofnumberofjourneymenwhobecameunavailableforworkbecauseofdeath,permanentdisability,or
retirementduringtheprevioustwelvemonthstothenumberofjourneymenactiveonJuly 1of thespeci-
fiedyear.
Table A3.17b:Ratioofapprenticestocraftsmen (excludingelectricians)
employedbycontractorsinthe constructionindustry,bycraftforGreat
Britain,1962 (source: ref. 3)
Craftsmen Apprentices RaLioofappren-
Occupation (thousands) (thousands) ticesper 100
craftsmen
Carpentersandjoiners 143.0 29.0 20
Bricklayers 95.7 13.3 14
Slatersand tilers 10.5 1.5 14
Plasterers 26.5 3.5 13
Painters 116.0 14.0 12
Plumbersandglaziers 44.3 12.7 29
Masons 7.0 1.0 14
Heatingandventilating
engineers 19.8 3.2 16
Total 462.8 78.2 17
A67
Enrollmentineducationalinstitutions inKoreaandIran,1961-1971(thousands)(source:
TableA3.18a:
ref.43)
Secondlevel
Country
an r- Frt General ortechnical training Toal ThrvSeca
and Pre- First Vocational Teacher Total Special
level
year school level
10 928 142 na
Korea 1961 15 3855 789 119
3 999 134 1
1962 17 4089 855 142
2
- 1049 132
169
1963 19 4422 880
1085 143
1964 17 4726 904 182 -
2
- 1201 142 3
1005 196
198 - i280 175 3
1965 20 4941
1966 22 5165 1082
209 - 1380 171 3
1967 22 5383 1171
223 - 1510 172 4
1968 22 5549 1287
3
- 1Ni2 187
1442 271
1969 22 5623
na na 1935 201 4
1970 22 5749 na
na na 215 5
na na
1971 22 5807
9.1 7.5 314.2 22.8 na
Iran 1961 13.1 1554.5 300.9
9.2 5.8 341.9 24.3 na
1962 12.9 1719.4 326.9
10.5 3.8 383.3 24.9 na
1963 13.3 1841.2 369.7
12.9 4.2 443.5 25.7 na
1964 13.6 2030.7 426.4
4.7 561.2 29.0 1.4
1965 13.7 2181.7 493.7 15.2
5.7 658.5 36.7 na
1966 14.7 2378.1 579.8 16.0
6.7 690.8 46.9 1.4
1967 15.2 575.6 674.6 16.2
6.0 806.6 58.1 1.4
1968 19.5 2753.1 781.6 19.0
930.0 67.3
1969 20.2 2916.2 897.4 23.3 9.3
2.1
30.5 13.2 1012.9 74.7 na
1970 19.3 3002.8 969.2
TableA3.18b:Enrollmentandoutput
a
ofeducationalinstitutionsinColombia(source: ref. 21)
1960 1964 1968
Educationallevel
Enrollment Output Enrollment Output Enrollment Output
Primary 1,960,000 na na na 2,733,000 na
251,000 na 390,000 na 587,000 na
Secondary
140,000 8,070 236,000 13,902 406,000 23,728
Bachillerato
12,000 199 16,000 445 28,000 1,223
Industrial
69,000 1,200
Commercial 40,000 725 50,000 873
Agricultural 3,000 90 3,000 92 8,000 220
Teachertraining 28,000 2,099 52,000 2,706 54,000 7,095
Vocational 8,000 450 11,000 529 12,000 675
Other 19,000 na 23,000 na 11,000 na
24,000 na na na 62,000 na
Higher
Total 2,235,000 na na na 3,382,000 na
aAlthoughthesourcedoesnotdefineoutput,presumablyitrepresents thenumberofstudentswhocompleted
aparticularlevelofeducationintheyearindicated. Colombia'shighdropoutrate(e.g., only5.3%of
thestudentswhoenrolledinagriculturalschoolsin1963completedthecoursein1968)andthelargenum-
berofstudentswhorepeatayear'swork(e.g., nearly18% ofallstudentsenrolledinprimarylevel
schoolsin1968wererepeaters)mayexplaintheseeminglydisproportionatefiguresforenrollmentand
output.
TableA3.19a: GrossdomesticproductperemployeeandgrossdomesticproductpereconomicallyactivepersoninU.S. dollarsfor
ref.22,54,55)
construction,manufacturing,agriculture,andtotaleconomyforKorea,Kenya,andtheU.S. (source:
pereconomically
GDPperemplyeeGD
TotalGDP Sector's shareof GDP
(former
SNA,
emloe Economically active aciv ero
coutry Indutry
IdsrcutyIEmployment
holas populationin sec (thousandUSdollars
(million US
(thousands)
nsector
andyear
millionUS
(thousands)
USdollars
ll S (percent)
ollars)
perperson)
peson)
dollars)
dollarsper
CONSTRUCTION
a na
na
1.8
6 496.9 279
1970 8,281
333
a na
Korea
na
1.3
6 425.1
a 0.8
1969 7,085
340
284.3 317
200
a 200
0.6
1968 5,685 5
0.9
112.0
na
1963 3,732 3
0.6
b
3 0
.8c 3.2
6 97.1
na
Kenya 1970 1,618
c na
h 28.9 3.0
na
6b 87.2
1969 1,454
na
na
1
,
3 4 4
b 5b 67.2 3 1
.9c 2.1
1968
1.7
na
na
4 37.0 2 2
.0c
1964 924
9.6 d 5,447
b 15.3
5b 52,288 3,411
UnitedStates1971 1,045,753
b b
d
14.4
4,572
10.6
1970 972,581 5 48,629 3,381
d 9.2
5,061
b 13.5
46,393 3,435
1969 927,876
5b
d 8.8
4,887
5 43,135 3,185 13.1
3
,
20 8
d 12.5
4,807
1968 862,700
8.3
1967 799,300
5 39,965
4,924
6.1
4 30,092 3
,
2 75
d 9.2
1966 752,300
e 8.8
na
na
27,935 3
,
18 6
d
na
1965 558,700
5
2
,
9 6 3
d 8.1
4 23,853
na
1963 596,341
4.7
na
4,302
4 20,361
na
1960 509,028
MANUFACTURING
na
1
,
26 0
a 1.38
1,739.0
na
1970 8,281 21
Korea
na
1,487.9 1
,
2 2 2
a
na
a 0.92
1969 7,085 21
1.22
1,231
C-96
20 1,137.0 1,181
a 631
1968 5,685
0.89
0.89
15 559.8 631
1963 3,732
b 2.36
na
na
12 194.2 82.3
c
Kenya
1970 1,618
b 2.20
na
na
1969 1,454 1lb 159.9 72
.7c
(continCtd-
(TableA3.19a continued)
GDP peremployeeEconomicallyactive activMpron
Sector's shareof GDPEmployment
TotalGDP
Industry, country
insector (thousand populationinsector a Uson
and SNA, US(former
(mipercentS(thousands) USdollars (thousands) (thousandUSdollars
millionUS (percent)
perperson)
perperson)
dollars)
dollars)
(Manufacturing,cont.)
(Kenya) 1968
1
,
3
,
4
b 147.8
7 0
.7c 2.09 na na
1964 924 10 92.4 60.8c 1.52 na na
UnitedStates1971 1,045,753
b
25
b
261,438 18,529
d
14.1 20,972 12.5
1970 972,581
b
26
b
252,871 19,349
d
13.1 20,837 12.1
1969 927,876
b
28
b
259,805 20,167
d
12.9 21,964 11.8
1968 862,700 28 241,556 19,781
d
12.2 21,555 11.2
1967 799,300 28 223,804 19,447
d
11.5 21,472 10.4
1966 752,300 28 210,644 19,214
d
11.0 21,017 10.0
1965 558,700
e
31 173,197 18,062
d
9.6 na na
1963 596,341 28 166,975
1 6
,
9 9 5
d 9.8 na na
1960 509,028 28 142,528 na na 18,536 7.7
IAGRICULTURE
Korea 1970 8,281 28 2,318.7 4,834
a
0.48 na nn
1969 7,085 29 2,054.7 4
,
7 98
a 0.43 ne na
1968 5,685 29 1,648.7 4,863
a
0.34 4,900 0.34
1963 3,732 42 1,567.4 5,021
a
0.31 5,022 0.31
Kenya 1970 1,618 31
b
501.6 204.5
c
2.45 na na
1969 1,454
b
32
b
465.3 195.0
c
2.39 na na
1968
1
,
3 4 4
b
3 3
b 443.,
1 90
.2c 2.33 na na
1964 924 38 351.1 208.3
c
1.69 na na
UnitedStates1971 1,045,753
b
3
b
?A,373 3
,
38 7
d 9.3 3,619 8.7
1970
9 72
,
5 8 1
b
3
b 29,177 3
,
46 2
d 8.4 2,840 10.3
1969 927,876
b
3
b
27,836 3
r
606
d 7.7 3,781 7.4
1968 862,700 3 25,881 3
,
8 1 7
d 6.8 4,005 6.5
1967 799,300 3 23,979 3
,
8 4 4
d 6.2 4,045 5.9
1966 752,300 3 22,569 3,979
d
5.7 4,439 5.1
(continued)
(TableA3.19acontinued)
Industry, country
andyear
TotalGDP Sector'sshareofGDP EGDP
(formerSNA,
Emlet ImillionUS }.ecn.(millionUSinsectorI
idollirs) __ _)_ dollars) (thousands)
(percent
peremployee
(thousand
USdllr
USdollars
perperson)
E lonoi actv opulationinsector
(thousands)
GDPper economically
activeperson (huadU olr
(thousandUSdollars
perperson)
(Agriculture,cont.) I
(U. S.) 1965
558
,
700
e 4 22,348 4
,
361
d 5.1 na na
1963 596,341 4 23,854 4
,
687
d 5.1 na na
1960 509,028 4 20,361 na na 4,519 4.5
TOTALECONOMY
Korea 1970 8,281 - -
9
,
5 74
a 0.87 na na
1969 7,085 - - 9,347 0.76 na na
1968 5,685 - - 9,261 0.61 9.757
0.58
1963 3,732 - - 7,947
a
0.47 8,653
0.43
Kenya 1970
1
,
618
b - - 6 4 4
.5c 2.51 na na
1969 1,454
b
- - 627.2
c
2.32 na na
1968
1
,
34 4
b - -
6 06
.4c 2.22 na na
1964 924 - -
5 8 9
.6c 1.57 na
na
UnitedStates 1971 1,045,753
b
- - 79,120
d
13.2 86,929
12.0
1970 972,581
b
- - 78,627
d
12.4 82,049.
11.9
1969 927,876
b
- - 77,902
d
11.9 84,239
11.0
1968 862,700 - - 75,920
d
11.4 82,272
10.5
1967 799,300 - - 74,372
d
10.7 80,793
9.9
1966
1965
752,300
5 5 8
,
70 0
e
-
-
-
-
72:895
d
71,088d
10.3
7.9
80,164
na
9.4
na
1963 596,341 -
67,762
d
8.8 na
na
1960 509,028 - - na na 69,877
7.3
aDataincludespersonsaged14 andoverandisbasedonlaborforcesamplesurveys (civilianlaborforceemployed).
bEstimatesrelatetopresentSNA.
Dataisbasedonstatisticsofestablishments.
Employmentin ruralareasexcept forlargeenter-
CDateisJuneofeachyear.
prisesisexcludedbeginningin1968.
dDataincludespersonsaged16 andoverand isbased onstatisticsof establishmentsintheprivatesectorformanufacturingand
constructionand laborforcesamplesurve7s fortherest.
eprivatesectoronly.
gross domestic productpereconomicallyactivepersoninconstant national currencyunitsfor construc-
Gross domestic product per employee and
6,22,36,54)
Table A3.19b:
tion,manufacturing,agriculture,andtotaleconomyforColombia,Iran,Kenya,Korea,and theU.S. (source:ref.
TotalEconomy
Agriculture
Manufacturing
Totalemployed
Construction TotalGDP
active
B
C tional cur- na- oreconomically C
(millin
Countryand year
CyAear
Conr thousands an units renc
Colombia (1958pesos)
Eccnomically
active
5,938
6.48
38,500
9.16 10,691 2,670 4.00
4.44 7,404
316
808
5,134
5.30
1970
1,402
2,427 3.52 27,200
7.84 8,541
3.57 5,141 656
789 221
1964
Iran(currentrials)
71.2
7,584
540,300 .0
Economically active
121,500 3,169 38.4
125.0 4.a697
136 65.8 158,600 1,268 .3
22,100 211
1966
Kenya(1964 pounds)
b
548.2 0.807
a
Employment
34.8
a
0.598 59.5' 92.8 0.641 175.2
211
.
1
b 0.830 679.7
1971 20
.
8
a
0.
7.
5
b 0.601
2b
0.3 a
5
b 0.843 516.2' 644
.
b 82.3 0.638 172.3 2 0 4
a
30.8 0.617 52.5' a
2
b 0.771
1970
19.0 a
b 0.848 483.3 627
.
a
b 0.669 165.4 195
.
0
a
28
.9b 0.644 4R.6 72
.
7
.4b 0.750
1969
18.6 .
3
a 190
.2b 0.817 454.8a 606
b .
7
b 0.631 155 a
31.9 0.577 44.6' 70 b b 0.709
1968
18.4
0.775 423.7' 597
.
5
.3b 0.600 147.3a 190
.
1
0.70 a
.9b 0.545 40.9' 68
5 7 7
.
5
b 0.706
1967
16.3 29
.9b 0.683 407.9a
.5b 0.574 144
. 211
0.481 38.2 66
8
a
b
.7
"
0
b 0.599
1966
14.9
a 31
.
0
b a
209.5 0.562 355 ' 594
a
.
7
b 0.551 117.7 b
a77b5a a
0.607 36.2 65
a
0.602
589.6
b 0.563 130.2 5 4
1965
13.0 21.48
b
a
208.3 0.625 355.
60.8
22.0 0.573 34.2a c14
12.6' 1,2,09
1964 7
,834c
Korea (1965won)
27
c
4,834 76 1,412,200 9,574 148
Employment 379,300 1,260 301 367,400
1970 79,100 279c 284
347c
137
9,
77 1,283,100
798
c
224 321,600 119
263 370,400 4
,
1,222'
333' 9,261'
74,400 68 1,105,100
1969
223 330,800 4
,
863
c
1,181
170 263,000 i09
317c 8,914'
53,900 66 973,600
1968 043
4
,
924
c
197 326,900
264c I16 205,300
1. 7
8,659'
104
38,500 69 900,700
1967
193 345,900 5
,
013
c
22c c 857'
163 165,800 94
213 o,5
34,800 62 798,200
1966
800
c
179 311,600 5
,
00 0
c
113 142,800 91
27,600
245c
62 743,800 8
,
210
c
1965
174 314,300 5
,
084
c
670
c
114 116,800 86
21,800 192
c
54 686,200
7,947'
1964
631
c
177 270,600
5,021c
104 111,600
200c
20,700
113
1963
9
65 1,105,100
Economically
active
214 330,800
4,900
1,231
340 159 263,000
9,504
102
53,900 66 973,600
1968 4,924
197 326,900
264 146 205,300
1,043
8,654
104
38,500 76 900,700
1967 4,553
173 345,900
958
182 165,800 97
191 8,199
34,800 62 798,200
1966 5,006
180 311,60C
113 142,800 84
27,600
245
792
62 743,800
8,894
1965
174 314,300
5,084
671 79
21,800
191 114 116,800
54 686,200
8,653
1?64
631 177 270,600
5,022
104 111,600
7,543
77
20,700
200
43 581,700
1963
166 244,000 4,670
487
IL3 80,600
127
14,400
196C
(TableA3.19b continued)
Construction Manufacturing Agriculture I Total Economy
Countryand year
aTotal GP I employed
aI(Ilo r cnmcly
A B C A B C A B C (Oillionna-Ioreconomically
tional cur- active
C
rencyunits) (thousands)
UnitedStates (1963dollars)
Employant
1971 29,100 3.411
d
8.53 227,300 18,529
d
12.3 27,300
3
,
387
d 8.1 805,100 79,120
d
10.18
1970 28,400
3
,
381
d 8.40 223,500
19
,
349
d 11.6 26,600
3
,
462
d 7.7 785,100
78
.
627
d
9.99
1969
1968
19,100
28,700
3
,
43
5
d
3,285
d
8.47
8.74
234,900
225,200
20
,
167
d
19,781
d
11.6
11.4
25,800
25,200
3
,
606
d
3
,
817
d
7.2
6.6
789,400
768,400
77
,
902
d
75,920
d
10.13
10.12
1967 27,800 3,208
d
8.67 211,000 19,447
d
10.9 22,700 3,d
44
d 5.9 731,900
74
,
372
d 9.84
1966
1965
29,800
31,600
3,275
d
3
,
186
d
9.10
9.92
211,500
195,900
19
,
214
d
18
,
062
d
11.0
10.8
21,200
22,600
,
979
d
4
,3
61
d
5.3
5.2
712,300
668,000
72,895
d
71
,
0
88
d
9.77
9.40
1964
1963
28,700
26,400
3
,
0
50
d
2
,
963
d
9.41
8.91
178,600
167,000
17
,
274
d
16
,
99
5
d
10.3
9.8
21,200
21,600
4
,
523
d
4
,
687
d
4.7
4.6
628,300
596,300
69
,
035
d
67
,
762
d
9.10
8.80
Economicallyactive
1971 29,100 5,447 5.34 227,300 20,972 10.8 27,300 3,619 7.5 805,100 86,92 9.26
1970 28,400 4,572 6.21 223,500 20,837 10.7 26,600 2,840 9.4 785,100 82,049 9.57
1969 29,100 5,061 5.75 234,900 21,964 10.7 25,800 3.781 6.8 789,400 84,239 9.37
1968 28,700 4,887 5.87 225,200 21,555 10.4 25,200 4,005 6.3 768,400 82,272 9.34
1967 27,800 4,807 5.78 211.000 21,472 9.F 22,700 4,045 5.6 731,900 80,793 9.06
1966 29,800 .,924 6.05 211,500 21,017 10.1 21,200 4,439 4.8 712,30C 80,164 8.89
1964 28,700 4,903 5.85 178,600 19,468 9.2 21,200 5,057 4.2 628,300 76,971 8.16
1960 26,200 4,302 6.09 144,900 18,536 7.8 20,700 4,519 4.6 528,400 69,877 7.56
Note: Headingcodesareas follows:
A- Sector'sshareofCDP (millionnational currencyunits)
B- Economicallyactiveor employedin sector(thousands)
C- GDPperemployeeorpereconomicallyactive (thousandnationalcurrencyunitsperperson)
aPresentSNA,all restformerSNA.
bDate isJuneof eachyear. Datais basedonstatisticsof establishments. Employment inruralareasexceptfor largeenterprisesis excludedbeginningin 1966.
CDataincludespersonsaged 14 yearsofage andovez and isbasedonlaborforcesamplesurveys (civilianlaborforceemployed).
dData includespersonsaged16 andoverand isbasedonstatisticsof establishmentsin theprivatesectorformanufacturingandconstructionandlaborforcesample
surveysfor therest.
Table A3.19c:Valueaddedperpersonengaged
a
inconstructionandmanu-
facturingforEthiopia,Kenya,Colombia,Iran,Korea,andthe U.S.
(source: calculatedfromTable A2.14).
Construction
Manufacturing
Countryandyear (thousandsofnationalcurrencyunitsperperson
engagedb)
1.78
d
na
Ethiopiac
1958
(dollar) 1961 (
0
.
68
)e na
1.87
d
na
1962
9.93
h
.
83
)g
Kenya
f
1963
(
14
(shilling) 1967 na
13.02
h
13.68h
.
24
g
1968 9
14.81h
.
67
g
1969 13
14.71
h
.
0 1
g
1970 14
1971
1 1
.
24
g na
na
60.58
J
Colombiai 1968
(peso) 1969 -56.09 66.61
J
Irank 1963 1,252.9 91.1
(rial) 1968 na 110.9
Korea
1
1968 177 405
m
(won) 1969 234 517
m
641
m
322
1970
UnitedStatesn1958 5.41 8.73(8.83)
(dollar) 1963 6.51 11.75(11.86)
1965 7.28
(12.54)
1967 8.28
(14.18)
1968 8.82
(15.27)
1969 7.06 (15.90)
1970 10.12 (16.31)
1971 10.80
na
aFordefinitionsofvalueaddedandpersonsengagedandforfigures for
this tablesee TableA2.14.
(continued)
A75
(TableA3.19c continued)
bFiguresinparenthesesarevalueaddedperemployee.
cConstructiondata arefor licensedenterprisesengaged incontract
Manufacturing
data include establishments
withfive
construction.
ormoreemployees
exceptthose engagedinflourmillingfor client's
account,coffeeandgraincleaning,
shoemaking,and repairingand
tailoring.
dExcludesvalueaddedfor sugarcanegrownonplantatiousofsugar
refiningenterprises.
eValueaddedatpurchasers'values.
fConstructiondataare forestablishmentswithfiveormoreemployees.
Manufacturing
data includepublicandprivateenterprises
withfifty
ormorepersons engaged.
gcalculatedfromvalueofgrossdomesticproductandpersons engaged
asofJune30ofyearindicated.
hCalculatedfromnetof thecostofnon-industrialservices rendered
byothers.
Manufacturing
dataare
iConstruction
dataarefor all enterprises.
forestablishments
withfiveormorepersonsengagedorgrossvalue
ofproduction
of 24,000pesosormore.
engagedbasedononeperiodofyearindicated.
iCalculatedfromperson
kIranyearstarts 21 Marchofyearindicated. Constructiondataare
for allenterprises.
Manufacturing
dataincludeallestablishments
otherthanthoseof theIranianNationalOilCompany.
Thesefigures
forconstruction
areclearlyinvcalid butarepresented
herealong
withothers fromthe samesource. Theycause somedoubtas tothe
validityof the figures for IraninTable A2.14.Foranother estimate
or A3.19d.
ofproductivity
inIranseeTableA3.19b
1Constructiondata are forallregisteredunits,exceptthoseof 1968
whichare forestablishments
withfiveormorepersonsemployed.
Manufacturing
dataarefor establishments
withfiveormorepersons
engagedexcluding
government
establishments
otherthanrailroadwork-
shopsandtobacco factories.
mCalculated
fromvalueadded inproducers'
values.
nConstructiondataincludeallenterprisesengaged incontractcon-
struction
asof January 1. Manufacturing
dataareforestablishments
withatleastoneemployeeexcluding
centraladministrative
offices
andauxiliaries
servingmanufacturing
establishments
(inallyears)
andexcluding
thoseestablishments
engagedinmanufacturing
orrepair
for theretailtrade (in 1958and 1965).
A76
ref. ,
TableA3.19d:ValueaddedperemployeebyindustrysectorforKenyaandIran (source:
3 7
)
Iran(1966)
Kenya (1963) added
ValueaddedValue
peremployee
Valueadded
Employees
added
Industryuad
InuseaValue Employees peremployee (millions (numberin (thousandsof
thousands) rial o
(thousands (number) (poundsper ofrials)
ofpounds)person)
41
20,700
7,162
29,660
245
510
Construction
43a
1,231a
52,500a
573
49,829
28,580
Manufacturing
28
3,745
na
105,800
na
na
> Agriculture
4b
484
b 7,296
59
432,000
4 0
,
7 8 9
b 8 4
,
3 2 1
b
Total
aExcludespetroleumrefining.
blncludesminingandquarrying,buildingandconstruction,electricity,and manufacturingandrepairs.
3
Table A3.20:Theeffectofdistanceandslopeonlaborproductivityin
haulingandunloadingactivitiesinIndiaandIndonesiaa (cubicmeters
perman-hour) (source: ref.14)
Slope
Distance (meters)
0.004 0.032 0.079 0.116 0.15 0.25
India 15 na na 0.69 0.66 0.64 0.60
25 0.73 0.59 0.50 0.47 0.46 0.43
50 0.46 0.37 0.31 0.30 0.29 0.27
100 0.29 0.24 0.20 0.19 0.18 na
150 0.22 0.18 0.15 0.15 0.14 na
200 0.18 0.15 0.13 0.12 0.12 na
Indonesia 15 na 1.04 0.91 0.87 0.83 0.77
25 na 0.74 0.65 0.61 0.59 0.53
50 na 0.45 0.39 0.36 0.35 0.31
100 na 0.26 0.23 0.21 0.20 na
a Fieldstudies inIndiaranfromDecember1971 to mid-June1972and in
IndonesiafromJulyto December1972.
A78
TableA3.21:Theeffectofdifferentlevelsofsupervision
onreso rceproductivities
inIndiaand
Indonesiaa (source: ref.14)
Output (m3/hour) Ratioofhigherout-
Methodofray-
]
put
put
ActivityAciiyment
ofoflabor ab
D
Supervisionratin
. toloweroutput
2
_ _ _
3 4_ _
India
1 na 0.35 0.6 1.97
Excavatingandloadingcohesivesoils
3
na 0.51 1.01
1.97
intoheadbaskets
haulingandunlcadinghomogeneousloose
na 0.21 0.28 1.33
3
materialsbyheadbaskets
Indonesia
na 4.81
1 50.6 243.4
Unloadingdumper
Compactingandfinishingstonebases,io
na 5.7 na 10.9 1.91
quality
Compactingandfinishingsurfacedressfrg,
na 208.8 469.1
2.25
lowquality
aseefootnotea,Table A3.20.
bThreemethodsofpaymentoflaborareconsidered: 1- dailypaidormusterroll(wagesandsalaries
taskwork(dailywageforagiventaskorquantityofworkeach
lirectlyrelatedtohoursworked), 2-
and3- piecework(payatratesforeachunitofworkcompleted).
day),
CSupervisionis ratedfrom1to 5(verypoor,poor, fair,good,verygood)basedonthelevelofeffec-
tivenessofsupervisioninrelationtoitseffect,inthejudgmentoftheobserver,ontheinput/output
relationship. Supervision,levels3and4,covarieswithhealthandnutritionsotheeffectofbetter
supervisionmaybeoverstated.
TableA3.22:Comparison
oflaborproductivities
fordifferent
methods
ofpayment
inIndiaandIndonesia
a
(source: ref.14)
Activity
Supervision
rating
India
Excavatingandloadingcohesivesoils
intoheadbaskets
Haulingandunloadinghomogeneous loose
materialsbyheadbaskets
3
4
2
0
Indonesia
Excavatingnon-cohesive
soils
Loadinghomogeneous loosematerials
intobaskets
Unloadinghomogeneousloosematerials
fromheadbaskets
3
3
3
3
3
aSeefootnotea,TableA3.20.
bseefootnotec,Table A3.21.
cSeefootnoteb,TableA3.21.
I Output (m3/hour)
Ratioofoutputfor
Paymentmethod
pieceworktooutput
Dailywages
0.35
0.69
0.22
1.03
0.74
0.64
3.85
2.88
Piecework fordailywages
0.51
1.46
1.46
1.01
1.27
0.28
0.55
0.55
0.92
1.24
1.24
0.79
1.69
6.52
4.87
1.69
TableA3.23:Replacementofhumanlaborbymachines (source: ref.38)
Typeofmachine
Excavators,0.15- 3cubicmeters
Motor-scrapers, from6cubicmeters
Dozers, from890 kilograms
Motor-graders, 50- 120kilograms
Machinesforearthcompaction,4- 25 tons
Buildingcranes,30 - 80metrictons
Dump-cars,3- 5cubicmeters
Motor-cranes,5tons
Mixers,250- 750tons
Conveyors,4- 15meters
Numberoflaborersreplaced
20 - 160
50- 120
70- 90
30- 50
20 - 50
30- 40
20- 30
10- 20
5- 20
3- 5
A81
2
60A
forthe
for specific
industrial
groups,
Unemployment
ainnumbers and asapercentage
oftotalunemployment
Table A3.24:
S.andKorea (source:
ref. 22)
U.
1972
1971
1970
1969
1968
1967
1966
1965
1964
Country
andindustry
1963
b
466
United
States
378
271
259
234
394
447
298
405
476
(thousands)
1404
Construction
(percent) 11.4 10.4 10.9 10.0 9.1 9.2 8.3 9.6 9.0 9.6
1155
1197
709
697
780
654
77S
944
1065 23.9
28.17 29.3
Manufacturing
(thousands)
26.2
24.7
25.0
22.0
22.5
24.4
25.6
(percent)
108
108
100
79
92
102
Agriculture,
forestry,
and9
122
99
174
171 2.2
fishing
(thousands)
3.3
2.8
2.4
2.2
3.4
3.3
3.5
4.5
4.1
(percent)
4840
4088
4993
2817
2831
Totalunemployment
4166
3456
2976
2975
3876
(thousands) 31
12
01
1
41
oo 13
17
Korea 23
23
21
14
20
14 8.6
Construction
(thousands)
16
4.6
4.9
2.9
3.7
3.6
2.1
3.0
2.0 78d
(percent)
2.3
49
51
55
50
56 d
56
41 16.4d
63 11.2
Manufacturing
(thousands)
6.2
9.5
10.1
11.7
65 11.0
8.3
9.2
92
(percent)
.9
30
22
40
37
Agriculture,
forestry
and
55
63
29
69 4.6
fishing
(thousands)
69
9.5
7.5
6.2
6.5
6.6
6.8
8.1
10.0
9.7
(percent)
474
457
446
471
496
590
Totalunemployment 677
666
683
705
(thousands)
Figures
arebasedonlaborforcesamplesurveys.
alunemployment
includes
persons
seeking
workwhether
ornottheywerepreviously
employed
andpersons
available
forworkwho
werepreviously
emplcyed,
including
?erons
temporarily
laidoff.
bPersonsaged16orover, 1963-1966aged14 ormore.
CNewindustrial
classification
cameintoeffectin1971.
dExcludes
all repairservices.
TableA3.25:Full- andpart-timeemploymentintheconstructionindua-
tryinKorea, 1966-1970(source: ref.12)
Typeofemployment 1966 1967 1968 1969 1970
Full-timeemployeesin
construction
21,753 26,203 48,631 31,513 55,935
Daylaborersin
construction
(thousandsofman-days) 38,427 48,103 68,520 117,925 93,922
A83
TableA3.26:Instabilit inthemanufacturing
andconstructionindustriesofvariousdevelopedanddevel-
ref. 23)
,inpercentagepoints) (source:
opingcountries, 1956-1964 (averageannualdeviationfromtrend
a
Country
14anufacturing
Construction
Country
Manufacturing
Construction
Developingcountries
EasternEurope
"1.7
26.8
Cameroon
4.4
8.2
Bulgaria
13.6
13.4
3.5
Gabon
1.3
Czechoslovakia
7.7
3.5
Kenya
1.8
2.9
Hungary
5.5
5.8
2.7
Malawi
1.5
Poland
8.7
8.0
8.4
SierraLeone
2.8
Romania
2.2
2.5
Uganda
1.4
3.5
Yugoslavia
2.3
9.8
Zambia
3.7
8.3
TrinidadandTobago
> Developedmarket
Philippines 1.1 6.8
economies
Singapore 2.7 15.7
6.1 22.4
Malta
3.4
2.4
Canada
4.7
2.6
Turkey
2.5
2.2 40.0
UnitedStates 5.6
Tuke
1.3
2.3
Fiji
Japan 2.7
1.2
Austria
1.1
2.4
France
1.4
0.8
Norway
2.8
7.1
Switzerland
NewZealand
0.8
1.3
aThetrendhasbeenmeasuredas theaverageannualpercentagerateofchange (asimpleannualaverage
rateof changewasadoptedratherthanacompoundone,yieldingalineartrend)recordedbetweenthe
averagelevelofemploymentinthethreeyearsatthebeginningofthisperiod, 1956, 1957, and1958.
andtheaveragelevelofemploymentinthethreeyearsattheendofthisperiod,1962, 1963,and1964.
,nedeviations,plusorminus,of theactualemploymentlevelrecordedineachof thenineyears,1956
to 1964,fromthis trendline,measuredinpercentagepoints,havebeensummedandaveragedto givea
roughmeasureoftheextentofemploymentfluctuations aboutthetrend.
intheconstructionindustry,themanu-
TableA3.27a:Averagenumberofhoursperweekperwageearner
facturingindustry,andthetotalnon-agriculturalsectorintheUnitedStatesandKorea (source:ref. 22)
Countryandindustry 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973
Koreaa
53.3 47.3
b
51.2 48.8 na
Construction
46.5 48.9 49.6 51.8 53.5 54.6
c
56.0 57.0 57.4 53.8 57.6 56.3
5 2
.
3
b 51.9 51.6 52.3
Manufacturing
50.3
c
51.7
b
51.9 50.8 51.5
58.5 57.2
55.7 57.0 57.2 56.8
Non-agricultural
sector 55.4
United
Statesd
>
U'
37.3 37.0 na
Construction
37.3 37.2 37.4 37.6 37.7 37.4 37.9 37.4
40.6 39.8 39.9 40.6 40.9
Manufacturing
40.5 40.7 41.2 41.4 40.6 40.7
37.8 37.7 37.1 37.0 37.2 37.4
Non-agriculturalsector 38.8 38.7 38.8 38.6 38.0
aBasedonhoursactuallyworkedperweekwhichincludeallhoursworkedduringnormalperiodsofwork,
In-
overtime,timespentatplaceofworkwaitingorstandingby,shortrestperiod (coffeebreaks).
cludessalariedemployees.
bNewseriesreplacingformerseries.
cSecondquarteronly.
dBasedonhourspaidforwhichinclude,inadditiontohoursactuallyworked,paidvacation,paidpub-
licholiday,paidsickleave,etc.
Table A3.27b:
Hoursworked
perweekbytheoccupied
population
of
Bogota,
Colombia,
byindustry
sector,
September
1969 (percentages
of
totalineachsector) (source: ref. 21)
Hours
worked
per
week
Industry
sector
64ormore Noinformation
0-31
32-47
48-63
0
9
46
40
5
Construction
2
4
34
50
10
Manufacturing
5
31
45
18
1
Totala
aInadditionto twosectorsintable, thisincludescommerce,transport,
services,
domestic
service,
and government
services.
A86
calculatedfromTableA2.3
Table A3.28: Compensation
a
peremployee,byindustrysector,forKoreaandtheUnitedStates (source:
andref. 56)
1971
1970
1969
1968
CompensationCompensation Compensation
CompensationCompensation
Country Compensation CompensationCompensation
peremployee of employees peremployee
peremployeeofemployees peremployeeofemployees
and ofemployees
(thousands)
(billions) (thousands) (billions) (thousands) (billions) (thousands) (billions)
industry
(nationalcurrencyunits)
Korea (won)
Construction
Manufacturing
47.8
120.2
150.79
101.78
71.6
171.1
215.02
140.02
88.8
217.8
318.28
172.86
103.6
268.5
311.11
208.62
Agriculture,hunting,
forestry, and
fishing
56.9 11.70 68.4 14.26 77.6 16.05 93.4 19.83
Totalindustry
b
401.2
43.32
545.0
58.31
689.7
72.04
841.4
86.67
UnitedStates (dollar)
Construction
Manufacturing
29.6
166.4
9.01
8.41
33.6
180.2
9.78
8.94
35.7
182.4
10.56
9.43
39.0
187.0
11.43
10.09
Agriculturehunting,
forestry, and
fishing
4.0 1.05 4.3 1.19 4.8 1.39 5.1 1.51
Totalindustry
b c
394.1
5.19 434.0
5.57 458.2
5.83 485.4
6.13
aCompensationofemployeesconsistsof (a) allwagesandsalaries,incashandinkind,paidtoemployees; (b) the contributions
madebyemployers tosocialsecurityschemesinrespectoftheiremployees; and(c)thecontributiuns,
paidorImputed,madeby
employers toprivatepensionarrangements, familyallowances,healthinsurance,lay-offandseverancepay,andothercasualty
insuranceandsimilarschemes inrespectof theiremployees.
restaurantsandhotels;
bOtherindustriesincludeminingand quarrying; electricity,gas,andwater; wholesaleand retailtrade;
transport,storage,andcommunication;
financing; insurance; realestate; andbusinessservices.
cklsoincludescommunity,social,andpersonalservices.
TableA3.29a:Ratioofskilledtounskilledwagesforworkers invar-
iousdevelopinganddevelopedcountries(source: ref. 36)
Countryandyear
Africa (1960-1962)
Algeria
Congo (Brazzaville)
Congo (Kinshasa)
Ghana
IvoryCoast
Nigeria
Senegal
Tanzania
Tuniqia
LatinAmerica (1958-1962)
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Venezuela
Asia
HongKong (1962)
India(1959)
Pakistan(1962)
Philippines(1961)
UnitedKingdom(1962)
France (1962)
Ratio
2.01
2.87
2.68
2.40
1.97
1.57
2.53
2.11
1.79
1.32
1.84
2.09
1.81
2.12
1.71
1.86
1.75
1.68
1.59
1.40
1.18
1.39
A88
Table A3.29b:Ratioofwagesofskilledto unskilledworkersinconstruc-
tioninEthiopia,Kenya,Korea,Iran,andtheUnitedStates (source:ref.10,
40, 44)
Wagesof
Wagesof Ratioof
skilledworker unskilledworker
skilled
Countryandyear
to unskilled
(dollars)
(dollars)
0.40
6.00
Ethiopia
a
(perday)
2.40
0.67
1.49
Kenya
a
(perday)
1.00
b
5.00
c
2.00
2.50
Korea
(perday)
c
3.10
0.92
3.37
Iran
(perday)
UnitedStates
d
(perhour)
4.10
2.75
1.49
1961
4.40
3.15
1.40
1963
4.75
3.45
1.38
1965
1.34
5.15
3.85
1967
1.33
6.05
4.55
1969
1.31
7.95
6.05
1971
aDataarefor the early1960's (ref.40).
bAround1960 (ref.44).
CFigureisaverageofbrickormasonlayer'sdailywageandcarpenter's
dailywage.
dFiguresareaveragesof the thirty largestcitiesintheU.S.asrepor-
tedbytheU.S.Department
ofLaborandare substantially
the sameas
Therateshavebeenrounded to
listedby the Engineering
News-Record.
the nearestfivecents and includefringebenefitsbutdonotinclude
10).
insurance
ortaxes (ref.
A89
ref. 12)
TableA3.30: IndexesofwagesintheconstructionindustryforKoreaandIran(source:
1966 1967 1968 1969
Countryandtypeoflabor 1963 1964 1965
1970
Korea (1965- 100)
75 90 100 115 150 190 215 270
Ordinarylabor
80 92 100 112 160 188 212 284
Semi-skilledlabor
Irana (1959/60- 100)
136.0 140.0
na 101.G 105.8 112.5 112.4 122.3
Bricklayers
166.7 174.4
Unskilledlaborers na 107.7 108.8 92.2 119.4 139.4
114.7 146.2 151.4
Allworkers
na 103.2 106.8 106.1 128.0
1964aboveis 1964/65,etc.
aFiguresareforsplityears:
TableA3.31: Industrialdisputes
a
byindustrysectorinKenya,Korea,andtheUnicedStates (source:
ref. 22)
Country,year,andmeasure
of disiutes
Kenya
1963 Numberofdisputes
Workersinvolved
Workingdayslost
1965 Numberofdisputes
Workersinvolved
Workingdayslost
1967 Numberofdisputes
Workersinvolved
Workingdayslost
1969 Numberof disputes
Workersinvolved
Workingdayslost
1971
b
Korea
Numberofdisputes
Workersinvolved
Workingdayslost
1963 Numberofdisputes
Workersinvolved
Construction
6
664
1,555
13
12,464
69,005
11
847
1,931
12
2,003
19,834
5
344
825
2
1,552
Manufacturing
66
8,337
37,324
40
22,071
31,912
20
3,802
6,298
28
13,491
6,598
16
1,557
4,489
30
6,712
Agriculture,
forestry,
andfishing
81
23,820
62,602
59
11,814
24,164
41
9,374
27,631
38
9,479
15,080
22
4,242
6,359
1
95
Total
230
54,428
235,349
200
105,602
345,855
138
29,985
109,128
110
38,793
87,816
74
14,398
32,681
70
19,999
(continued)
(Table A3.31 continued)
Country,year,andmeasure
ofdisputes
(Korea,cont.)
1964 Numberofdisputes
Workersinvolved
1965 Numberofdisputes
Workersinvolved
1967 Numberof disputes
Workersinvolved
Workingdayslost
1969 Numberofdisputes
Workersinvolved
Workingdayslost
1971 Numberofdisputes
Workersinvolved
Workingdays lost
United
Statesc
1963Numberof disputes
Workersinvolved
Workingdayslost
1965Numberofdisputes
Workersinvolved
Workingdayslost
Construction
50
-
-
-
-
-
-
-
-
-
-
840
208,000
1,930,000
943
301,000
4,630,000
Manufacturing
93
923
6
1,168
8
1,022
4,297
6
29,772
161,547
4
177
6,707
1,684
555,000
10,400,000
2,080
913,000
14,300,000
Agriculture,
forestry,
andfishing
-
-
-
-
-
-
-
-
-
-
-
25
16,000
84,600
21
4,300
60,300
Total
1,204
12
3,852
18
2,787
10,004
7
30,499
163,353
10
832
11,323
3,362
941,000
16,100,000
3,963
1,550,000
23,300,000
(continued)
(TableA3.31 continued)
Agriculture,
Total
Construction
Manufacturing
forestry,
Country,year, andmeasure
andfishing
ofdisputes
(UnitedStates, cont.)
1967 Numberofdisputes
Workersinvolved
Workingdays lost
867
305,000
5,160,000
2,328
1,350,000
27,800,000
18
7,730
70,400
4,595
2,870,000
42,100,000
1969 Numberof disputes
Workersinvolved
Workingdayslost
973
433,000
10,400,000
2,822
1,310,000
24,100,000
16
14,600
228,000
5,700
2,480,000
42,900,000
1971 Numberofdisputes
Workersinvolved
Workingdays lost
751
451,300
6,849,600
2,391
862,700
18,484,800
7
1,500
4,200
5,138
3,279,600
47,589,100
Nodifferentiationbetweenstrikesandlock-
aIndustrialdisputeswhichresultedinastoppageofwork.
Dis-
outshasbeenpossible,sinceinmostcasesthedistinction
isnotobservedinthecompilations.
putesofsmallimportance
andpoliticalstrikesarefrequently
notincludedinthestatistics.
bExcludesworkersindirectlyaffected.
cExcludesdisputesinvolvingless thansixworkersandthoselastingless thanafulldayorshift.
Table A3.32a:
Distribution
ofcostofmaterials
andequipment
perthou-
sanddollars
ofcontract
costfornewfederally
aidedhighway
construc-
tionintheU.S. (dollars
per$1000of contract
cost)(source:
ref.1,58)
Material
1958
1961
1964
1967
a
1970a
1971ab
Total
626 643 624
478
450
451
Steel
122 147
125
'07
95
92
Structural
steel
56
68 49
na
na
na
Reinforcing
steel
39
47
45
na
na
na
Miscellaneous
steel
18
24
23
na
na
na
Culvert
pipe
9
8
8
na
na
na
Petroleum
products
107
85
82
97
92
97.
Premixed
bituminous
paving
material
45
33
29
na
na
na
Fuelsand lubricating
oils
35
33
39
na
na
na
Bituminous
material
27
19
14
na
na
na
Cement
and concrete
105
106
106
109
100
91
Cement
49
46
44
na
na
na
Ready-mix
concrete
41
48
46
na
na
na
Culvert
pipe
15
12
15
na
na
na
Aggregates
purchased
Lumber
and timber
piling
71
11
68
10
93
10
95
7
83
7
83
6
Explosives
Guardrail
andbridgerail
5
C
6
c
8
c
14
14
9
18
5
17
Construction
equipment
120
117
iI
na
na
na
Other
85 104
c
89
c
34
46
60
Note:
Detail
maynotaddto totals
duetorounding.
aFiguresdonotincludeconstructionequipment.
bpreliminary.
CGuardrailandbridgerailincludedwithother.
A94
Table
A3.32b:
Distribution
of cost
of materials
andequipment
forcon-
1962and 1969
struction
ofnewprivate
single-family
houses
intheU.S.,
(source:
ref. 59)
Costofmaterial
Costofmaterial
(dollars)
per $1000
(dollars)
perI00
of construction
cost
Material
smare
feet
196F
-1969
1969
1962
442.90
482.40
707.00
567.40
Allmaterials
179.60
193.20
286.30
227.20
Lumber
andwood
products
101.60
.
50
a 162.00
110.10
129
Rough
anddressed
lumber
38.10
51.30
60.70
60.30
Millwork
40.00
31.80
63.60
37.40
Allother
lumber
products
95.30
116.60
153.40
137.10
Stone,
clay,
andglass
products
54.50
76.70
87.00
90.20
Cement,
concrete,
and gypsum
22.00
19.70
35.00
23.20
Structural
clay
products
Other
stone,
clay
and
glass
20.20
18.90
31.40
23.80
productsc
Metal
products
(except
heating
66.60
55.00
41.80
64.70
andplumbing)
31.20
36.40
49.80
42.80
Fabricated
metal
products
10.60
18.60
16.80
21.90
Other
metal
products
30.60
26.80
48.70
31.50
Plumbing
products
Heating,
ventilating,
andair
18.50
18.40
29.20
conditioning
equipment
21.80
17.40
Electrical
equipment,
fixtures,
27.80
17.60
20.70
(except
heating)
andwires
Built-in
major
appliances
(re-
frigerators,
dishwashers,
13.70
11.20
17.80
dryers,
ranges,
etc.)
8.00
16.10
11.10
12.70
13.10
Petroleum
products
8.00
10.30
12.80
12.10
Paints
andother
chemicals
8.60
Construction
equipment
(rental
13.70
9.80
11.50
cost
orequivalent)
23.90
9.80
38.10
11.60
Allother
Detail
maynotaddto totals
duetorounding.
Note:
aIncludes
dataforprefabricated
orpackaged
housesnotbrokendowninto
separate
wood
components.
blncludes
woodkitchen
andbathroom
cabinets
andvanities.
CIncludessand,gravel,anddirtfill.
A95
TableA3.33: Pricesof constructionmaterialsinKoreaandIranaround
1960 (U.S.dollars) (source: ref. 44)
Material
Brickorblocks (perthousand)
Sand (percubicmeter)
Cement (perton)
Lime (perton)
Stonechips (percubicmeter)
Hardwood (percubicmeter)
Softwood (percubicmeter)
Mildsteel(perton)
Iran
Korea
34.6 6.2
3.6 1.5
64.0 26.4
40.0 5.3
5.0
120.0(mahogany>
-
54.0 46.2
260.0 204.5
aThepricesofbricksorblockswereconvertedto theequivalentof
onethousandpieces9"x4"x3' involume.
A96
I,,
FigureA3.1: Comparisonbetweenunitpricesofconstructionmaterials
inLatinAmericaandtheUnitedStates, 1962 (source:ref.45)
METAL STRUCTURES FOR BUILDINGS CONSTRUCTION STEEL
Dcllors perkg.
Dollarsper 1/4 kg
O.0-
0.40
Q40
I] o
0.20020
0.10 j
0 1 2 3 4 5 6 7 8 9 I 234 5 6 7 9
0.10
CEMENT
CORRUGATED GALVANIZED SHEETS
2
Dollars per m
Dollars per kg.
2.4C
0.06
2.60
2. 004
0.01 !
I.0
O- 2 3 4 5 6 7 8 9 0 3 4 5 6 7 1 9
PAINTS
2
Dollars per gallon
Dollarsper m
FLAT GLASS
23 56 6
1235"691
I 2 3 4 5 6 7 0 9 O 1 2 3 4 5 6 7 9
Note: Unitpricecodeis as follows:
Estimatedparityexchangerate
-Free exchangerate
Country code is as follows:
1-Argentina
5-Peru
9-UnitedStates
2-Brazil
6-Venezuela
3-Colombia
7-Guatemala
4-Chile
8-Mexico
A97
'1
IndexesofbuildingmaterialcostsforKorea,Iran,andEthiopia,1962-1970(source: ref..12)
Table A3.34:
1968 1969 1970
1965 1966 1967
1962 1963 1964
Countryandindex
Korea (1965= 100)
Constructionmaterialsand
159.1
63.2 84.5 100.0 112.8 114.9 125.4 130.7
na
equipment
Irana (1959/60 100) 1
94.5 95.0 108.9 107.3
na 91.4 91.8 90.2
Allbuildingmaterials
na
97.3 96.7 104.0 101.2 145.0 141.2
98.5
na na
Metals
92.7 95.6 94.9
na na 88.7 89.7 90.6 91.0
Non-metaP
Ethiopia (1964=100)
117.6 114.2 117.3
100.0 102.1 101.3 107.6
Buildingmaterials
106.3 106.1
1964aboveis1964/65, etc.
aFiguresareforsplityears:
ref. 37)
TableA3.35:Consumption
ofbasicbuildingmaterials,intheworldand inAfricaand itssubregions (source:
West Central East Southern Africa World
North
Africa
Africa
Africa
Africa
Africa
a
Average
annual
percapita
consumption
Cement (kg.)
Crudesteel (kg.)
Sawnwood (m
3
/1000 inhabitants)
Plywood (m
3
/lOOGinhabitants)
Boardproducts(kg.)
68
16
18
1.2
0.40
23
6
7
0.3
0.13
19
5
10
0.4
0.02
17
6
6
0.3
0.10
146
135
42
0.6
2.37
39
17
12
0.6
0.30
110
116
110
5.6
2.3
Averagecompoundedannual growthrates
ofpercapitaconsumptionb(perce
n
tage)
Cement
Crudesteel
Sawnwood
Plywood
Boardproducts
4.1(4.1)
3.9(6.9)
1.2(5.6)
10.0(11.2)
14.8(20.1)
6.7(7.5)
7.2(8.0)
13.1(14.9)
11.6(18.9)
12.5(15.9)
-(1.1)
_(-)
-(2.9)
-(7.2)
-(28.3)
0.6(7.5)
- (1.5)
- (5.9)
7.2(25.9)
- (7.4)
4.2(3.6)
2.2(4.1)
2.5(11.0)
11.6(14.9)
12.2(13.4)
2.8(3.3)
2.7(5.7)
2.9(5.4)
7.2(17.7)
0.5(16.5)
5.6(6.1)
3.2(3.9)
2.7(3.8)
7.2(7.2)
9.6(9.6)
Averagecompoundedannualgrowth rates
ofconsumptionc
(percentage)
7
8
-
3
5
6
na
Cement
Crudesteel
6
4
9
14
-
1
3
3
5
5
5
5
na
na
Sawnwood
Plywood
Boardproducts
12
22
16
13
-
-
12
15
8
3
na
na
n
a
aFiguresarefor theearly1960's.
bFiguresinbracketsarethebestcompoundedratesofgrowthsustainedoveraperiodofnotlessthanfiveyearsduringthe
period, 1953-1963;
otherfiguresareaveragecompoundedratesfor thewholeperiod,1953-1963.
CFiguresarefor theperiod,1953-1963.
0
Percapita
consumption
ofcement
versus
percapita
na-
Figure
A3.2:
tional
income
(source:
ref. 29)
x
46X
42xj
0) xli
"
47
O
3e
4 4 x
,5
(0
L P Capit a Iom
,
.
.
'1.2
.
I40%
30
3-
1 26 S o 2 e l
2 - d
36-Taiwan,-
33-Pargay,
34-Pertug,
5-eenl,
N0ireaua,
32-Pan,
A1001
(FigureA3.2continued)
37-'India, 38-Malaysia, 39-Pakistan, 40-Philippines, 41-Thailand,
42-Japan,43-Indonesia,44-Ceylon,45-EastAfricanFederation,46-
Taganyika, 47-Tunisa,48-Morocco,49-WestAfricanFederation,50-Cam-
eroon.
aNo dategiven,originalsourceis 1963.
A101
--
Magnitudesofapparentconsutaptionofbuildingmaterialsandstructureof supply,for
TableA3.36:
Africaanditssubregions (source: ref. 37)
North West East Central Southern
Material
andyear
Africa
A B
Africa
A B
Africa
A B
Africa
A B
Africa
A B
Africa
A B
Sawnwood(millionsofcubic
meters) 1953 2.2 49 0.9 96 0.2 0 0.3 0 0.4 15 0.4 92
1963 3.5 32 1.3 94 0.6 0 0.3 0 0.5 0 0.8 41
Plywood (millionsofcubic
meters) 1953 0.071 5 0.03 82 0.006 0 0.026 0 0.006 87 0.003 83
1963 0.161 0 0.093 44 0.027 0 0.017 0 0.012 0 0.012 5
Particleboard (thousandsof
tons) 1953 47 23 4 100 3 100 1 100 Q 100 30 0
1963 61 0 30 71 10 100 1 100 8 100 12 0
Cement(millionsoftons)
1953 7.4 28 2.8 12 0.9 93 0.7 62 1.0 50 2.0 0
1963 12.1 20 5.3 12 2.0 65 0.6 23 1.3 0 2.9 0
Crudesteel(millionsof
tons) 1953 3.1 52 0.6 85 0.2 100 0.2 100 0.4 49 1.7 24
1963 5.0 38 1.1 75 0.5 100 0.2 100 0.5 87 2.7 0
Note: A=Apparentconsumption.
B=Percentimported.
TableA3.37: Apparentconsumption,
production,andimportsofsteel
indevelopingcountries,1950,1960,and1965 (crude-steel
equivalent)
(source: ref. 26)
Apparentconsumption
(thousandtons)
Localproduction
(thousandtons)
Imports (thousandtons)
Localproductionaspercentageof
apparentconsumption
1950 1960 1965
9,715 20,770 31,708
2,836
9,282 16,977
6,879 11,488 14,729
29.5
44.5
54
A103
'A A,.
TableA3.38a:Analysisoflocalconsumptionofsteelin1965 indevel-
opingcountrieswithandwithoutalocalsteelindustrya (source:
ref. 26)
Africa Asia LatinAmerica Total
Steel-producingcountries:
Numberofcountries 8 12 8 28
Consumption (thousandtons ) 2,034 13,006 11,320 26,360
Production(thousandtons ) 299 8,473 8,205 16,977
Productionas apercentage
of consumption 15 65 71 64
Otherdevelopingcountries:
Numberofcountries 30 14 13 57
Consumption (thousandtons ) 1,257 3,267 824 5,348
aThisisananalysisof thedatainTableA3.37, accordingto coun-
trieswithandwithoutalocal steelindustry.
bCrudesteelorcrude-steelequivalent.
A104
TableA3.38b:Totalandpercapitaconsumptionofsteelinsteel-
producingcountriesofLatinAmerica,1961 (source: ref. 29)
Totalconsumption
Percapitaconsumption
(tons)
(pounds)
Country
Brazil
2,701,000
82
Mexico
1,840,000
111
Argentinaa
2,379,000
248
Chile
506,000
143
62
Colombia
405,000
aTheArgentineautomobileindustryaccountsforalargepartofthis
country'sconsumption.
A105
p
TableA3.38c:Percapitasteelconsumptionindevelopingcountries
whichdonotproducesteel,1965 (pounds)(source: ref. 29)
Country
Ceylon
China (mainland)
Congo
EastAfrica
Ghana
Indonesia
Malawi
Morocco
Nigeria
Syria
Percapita
consumption
15
30
7
13
29
7
2
28
13
34
A106
C
A3.39a:Production,trade,andconsumptionofsawnwoodforAfrica'ssubregions, 1959-1961
a
(thou-
Table
sandsofcubicmeters) (source: ref. 40)
Exports
Consumption
b
Imports
Production
c c
Subregion 1959 1960 1961 1959 1960 1961 1959 1960 1961
c
Total Permillion
inhabitants
1090 2 2 2 1205 18.3
NorthAfrica 107 110 (85) 803 902
WestAfrica 548 829 963 34 31 27 301 329 347 704 8.3
5 6 7 113 94 70 322 13.7
CentralAfrica 433 355 376
EastAfrica 317 334 297 161 173 126 52 58 61 580 9.4
- - 50 9.3
Madagascar 41 47 45 2 2 -
468 483 481 2861 11.8
Total 1447 1675 1766 1007 1114 1251
aDataonproduction,imports,andexportsarefromspecializedpublicationsoftheFAO,completed,where
possible,withinformationfromthesecretariat. ConsumptionfiguresarefromacurrentFAOstudyon
timbertrendsinAfrica.
bFiguresareforaround1960.
cThecoverageof1961figuresisoftenincomplete.
TableA3.39b:Production,trade,andconsumptionofplywoodandveneers
forAfrica'ssubregions,
1959
-
196 1
a(thousandsofcubicmeters)(source;
ref. 40)
Production Imports Exports Consumptionb
Subregion Average Average Average Total Permillionc
1959-61 1959-61 1959-61 inhabitants
NorthAfrica 8 41 - (90) 1.37
22 21 0.25
WestAfrica 30 14
8 0.32
CentralAfrica 65 1 57
3 8 1 16 0.26
EastAfrica
- 1 - 1 0.20
Madagascar
107 65 80 136 0.56
Total
aSeefootnotea,TableA3.39a.
bFiguresarefor around 1960.
Comparablefiguresonconsumptionincubicmetersperthousand
inhabitantsare6.6forEurope,5.9fortheUSSR,andnearly30
forNorthAmerica.
A108
'q
TableA3.40:Removalsofconiferousandbroadleavedwoodandproduction
ofsawnwoodforAfrica'ssubregions, 1960 (millionsof cubicmeters)
(source: ref. 40)
Sawnwoodasapercen-
Subregions Removals
industrial wood
Production
of sawnwood
tage oftotalremovals
ofindustrialwood
NorthAfrica
0.73
0.11
15
WestAfrica
5.73
0.84
15
CentralAfrica 3.96
0.35
9
EastAfrica
2.68
0.32
12
Madagascar
0.45
0.05
11
Total
13.55
1.67
12.3
A109
7L
TableA3.41: Transportation
dataforEthiopia,
Kenya,Korea, Iran,Colombia,
andtheU.S., 1969 (source:
ref. 15)
Ethiopia
Kenya
Korea
Iran
Colombia
U.S.
Mid-1969
population(millions)
24.8
10.9
31.1
28.5
20.6
203.2
Area(km2
1,031,647
582,601
98,423 1,647,872
1,179,227
9,374,826
Roadnetworklength (km)
7,304 41,660
37,170
35,800
44,200
5,928,794
Pavedroadlength (km)
1,957
2,489
3,120
10,200
5,300 2,533,374
Totalnumberofvehicles
51,200
125,300
120,324
273,000
264,300
99,958,000
Numberlightvehicles
39,000
115,000
56,254
200,000
141,100
82,821,000
Numberheavyvehicles
12,200
10,300
64,070
73,000
123,200
17,137,000
Roaddensity(km/km
2
)
0.007
0.072
0.378
0.022
0.037
0.632
Pavedroaddensity(km/km)
0.002
0.005 0.032
0.006
0.004
0.270
Vehiclesperthousandpopulation
2.1
11.5
3.9
9.6
12.8
491.9
Lightvehicles
1.6
10.6
1.8
7.0
6.8
407.6
Heavyvehicles
0.5
0.9
2.1
2.6
6.0
84.3
TableA3.42:Typesofconstructionrecommendedbyvariousgovernments
forlow-costhousingprogramsa(source: ref. 29)
Suggested Totalfloor Total
Type of housing building area per space per
Region proposed materials unit (ft
2
) person(ft
2
)
Pakistan 1story with permanent 275 125
central courty'-rd
1-story brick 250 to 135to
India semidetached
480 190
India village house mud, thatch 500 250
Hong Kong 5-6 story concrete 120 36
tenement
HongKong 11-story flats concrete 413 58
semi-urban timber,thatch 530 400
Singapore smalldwelling
Kenya 2-story permanent 960 132
200
to
1-story
semipermanent
1000
400
Tanganyika
1-story semipernent
1000 280 to
Uganda detached
560
660
190 to
semipermanent
Zanzibar
1-story
house
380
SouthAfrica detachedhouse permanent
650 530
1-story timber 500 150 to
WestIndies detachedhouse 300
388 to
LatinAmerica
I-story
rural
684
465
detachedhouse
aoriginal source is dated 1959.
All
Table A3.43: The balance of labor and machinery in road maintenance
a
(source: ref. 33)
Maintenance operation
Labor
Labor-intensive
Equipment Materials Total Labor
Machinery-intensive
Equipment Materials Total Labor
Balanced
Equipment Total
Cutting,clearingbrush
and grass
(dollars/hectare)
11.37 1.43 - 12.80 2.16 3.65 - 5.81
Surfaceupkeepofdirt
road?
(dollars/km)
Sealing paved highwayd
(dollars/kin)
59.70
308.00
16.55
181.OC
-
672.80
76
.
25
c
1161.80
4.87
23.83
16.19
71.17
-
672.80
21.06
767.80
26.18
-
15.43
-
41.61
-
Reshaping ditches and
shoulders
(dollars/km) 87.30 4:j.13 -
130
.
43
c 18.14 23.71 - 41.85 36.45 18.87 55.32
aoriginalsourceis dated 1972.
b5 meterwideroad.
CAdjustedtoreflectanapplication frequency2.5times thatofamechanizedoperation.
d
6
.
5
meterwideroad.
Table A4.1: Averyroughestimateofthesizeof theconstruction
market indevelopingmarketeconomiesservedbymulti-nationalfirms
around1967.
1.GDPinpurchasers'values for1967 fordevelopingmarketeconomies:
295.1 billion dollars (Table 2.2).
2.Valueaddedinconstructionas ashareofGDPfor developing
marketeconomiesaveragedover 1966-1968: 4percent (Table 2.2).
3.Valueaddedinconstructionindevelopingmarketeconomies in
1967: 11.8billiondollars.
4.Ratio ofvalueaddedinconstructiontoGDCFinconstructionfor
countrieswithapercapitaGNPoflessthan 700dollarsin 1965:
about 0.50 (Table 2.1).
5.ApproximateGDCFinconstructionindevelopingmarketeconomies
in 1967: about23.6billiondollars.
6.Share ofconstructioninthedevelopingcountriesaround 1965
whichaccordingtoaUNIDOreport (11) falls into theinterna-
tional-moderncategoryandwashandledlargelybyexpatriate
firms (mostofthe restofthe constructionwashandledby
indigenousfirms): 20%ofallconstruction, 25%ofmonetary
sectorconstruction (thelatterwillbeusedsincenonmonetary
sectorconstructionis oftennotreported).
7.EstimateofGDCFinconstructionindevelopingmarketeconomies
in1967 performedbymulti-nationalfirms: about5.9billion
dollars.
Alternativemeasure:
1.- 3. Sameas above.
4.Valueaddedas ashareofconstructionoutput inatypicaldevel-
opingcountry inthe earlysixties: 45% (Table 2.6).
5.Approximateconstructionoutputindevelopingmarketeconomies in
1967: about 26.2billiondollars.
6.Same as above.
7.Estimateofconstructionoutputindevelopingmarketeconomies
in 1967,performedbymulti-nationalfirms: about6.5billion
dollars.
Al13
APPENDIX B
References Cited for Chapters 1 through 4
B.i ReferencesCitedfor Chapter1
1. Turnham,David,The EmploymentProbleminLessDevelopedCountries--
AReviewofEvidence,Employment SeriesNo.1,DevelopmentCentre
Studies,OrganisationforEconomicCo-OperationandDevelopment,
Paris, 1971.
2. U.N.IndustrialDevelopmentOrganization,ConstructionIndustry,
MonographNo. 2,UNIDOMonographson Industrializationof De-
velopingCountries, Basedon theproceedingsof theInternational
SymposiumonIndustrialDevelopment (Athens,November-December
1967), U.N., NewYork,1969, ID/40/2.
3. U.N.StatisticalOffice,StatisticalYearbook,DepartmentofEco-
nomicandSocialAffairs,U.N., NewYork,variousyears.
B1
/bQ1
B.2 ReferencesCitedforChapter2
1. Ball,Robert,"LaborandMaterialsRequiredforHighwayConstruc-
tion," Monthly LaborReview,Vol.96, No. 6,June1973,pp.40-
45,
2. Berger,Louis, "TheConstructionSceneinSoutheastAsia: Who's
GettingtheBusiness?",WorldwideProjectsand Installations,
Vol.8,No.1,January/February1974, pp.10-15.
3. Bowley,Marian,TheBritishBuilding Industry--Four StudiesinRes-
ponseandResistancetoChange,CambridgeUniversityPress,New
York,1966.
4. Cassimatis, PeterJ., Economics oftheConstructionIndustry,The
NationalIndustrialConferenceBoard, StudiesinBusinessEco-
nomicsNo.111, NewYork,1969.
5. Cockburn,Charles,ConstructioninOverseasDevelopment (ASearch
forAppropriateAidandTradeMeasuresforthe 1970's), Overseas
DevelopmentInstituteLtd., London,1970.
6. Cox,Reavis,CharlesS.Goodman,andFranklinR.Root,TheSupply-
SupportRequirementsofNonresidentialConstruction--AStudyof
the Relationship Between' Operations and Supply-Support Require-
ents, The Producers' Council, Inc., Washington, D.C., September
1965.
7. Economist IntelligenceUnit,QuarterlyEconomicReview--Colombia,
E~uador,Annual Supplementsfor1973,1972, 1969, 1968.
8. ImperialEthiopianGovernment,Reportonthe CurrentEconomicSi-
tuation,Departmentof EconomicAnalysis,PlanningCommission
Office,AddisAbaba,June1972.
9. International Bank for Reconstruction and Development, A Framework
forthePromotionofConstructionIndustries inthe Developing
Countries, BankStaffWorkingPaperNo.168, Studypreparedfor
theBankbyJohnC.deWilde andAssociates,November1973.
10. , WorldTables,EconomicProgramDepartment,Socio-Eco-
nomicDataDivision,IBRD,Washington,D.C., January1971.
11. InternationalLabourOffice,ConstructionSkills,CIRFMonograph
No.4,CIRFPublications, ILO,Geneva,1969.
12. , YearbookofLabour Statistics, ILO,Geneva,various
years.
13. Moavenzadeh,Fred,"TheRoleofthe ConstructionIndustryinthe
DevelopmentProcess," PublicPolicy, Vol.22,No.2,Spring1974,
pp. 219-241.
B2
14. ,andRonaldA.Sanchez,BuildingMaterialsinDeveloping
Countries, RsearchReportNo.R72-64,DepartmentofCivilEn-
gineering,Massachusetts Instituteof Technology,Cambridge,
Massachusetts,August1972.
15. Murray,RonaldV., "LaborRequirementsforFederalOfficeBuilding
Construction,"MonthlyLaborReview,Vol.85,No.8,August1962,
pp.889-893.
16. Puglisi, EnzoA., andWilliamR.Loftus, "Profileof theContract
ConstructionIndustries," ConstructionReview,Vol.14, No.1,
January1968,pp. 4-15.
17.Republicof Kenya,StatisticalAbstract,StatisticsDivision,Minis-
try of EconomicPlanningandDevelopment,1969.
18. Strassmann,W.Paul,"ConstructionProductivityandEmploymentin
DevelopingCountries," Essays onEmployment, Selectedandintro-
ducedbyWalterGalenson,ILO,Geneva, 1971.
19. UnitedNations, IndustrialDevelopmentinAfrica,Selecteddocu-
mentspresentedto the SymposiumonIndustrialDevelopmentin
Africa (Cairo,January- February,1966), U.N., NewYork,1967.
20. U.N.EconomicCommissionforAfrica,HousinginAfrica,U.N., New
York,September1965,E/CN.14/HOU/7/REV.
21.U.N.EconomicCommissionforLatinAmerica,TheProcessof Indus-
trialDevelopmentinLatinAmerica,U.N., NewYork,1966,E/
CN.12/716/REV.1.
22. U.N.IndustrialDevelopmentOrganization,BuildingMaterials Indus-
try,MonographNo.3,UNIDOMonographs onIndustrializationof
DevelopingCountries,Basedon the proceedingsof theInterna-
tionalSymposiumonIndustrialDevelopment (Athens,November-
December1967), U.N., NewYork,1969, ID/40/3.
23. , ConstructionIndustry,MonographNo.2,UNIDOMpnographs
on IndustrializationofDevelopingCountries,Basedonthepro-
ceedings of the InternationalSymposiumonIndustrialDevelopment
(Athens,November- December1967), U.N., NewYork,1969,ID/40/2.
24. , Developmentof the ConstructionIndustryinEurope:
UnitedKingdomExperience,PreparedbyD.W.J.Miles,Interme-
diateTechmologyGroup, Ltd., London,forTechnicalMeetingon
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