Strategy of import substituting industrialization
Discuss whether the construction segment of any CARICOM economy represents the natural candidate for a strategy of import substituting industrialization. Introduction This paper will examine the construction sector in Trinidad and Tobago during the period 1966-2002 in the context of Import Substitution Industrialization (I.S.I.) and will seek to determine whether the country is a natural candidate for the implementation of I.S.I.. Firstly, construction will be defined and the local sector outlined in terms of Gross Domestic Product, Gross Capital Formation, Mortgage rates, Employment in the sector, Imports, Exports and the cost of raw materials final products.
Thereafter, the concept of Import Substitution Industrialization will be defined, and its history examined by exploring the theories proposed by economists Raul Prebisch, Hans Singer, Arthur Lewis. To conclude we will provide data and analysis to show why Trinidad and Tobago’s construction sector is a natural candidate for I.S.I. In this regard, we will examine how industrialization in the construction sector impacts on: i) Employment generation ii) Gross Domestic Product iii) Factor inputs – Value vs. weight.
The construction sector in Trinidad and Tobago is one of the most critically important areas of economic activity in the country. This sector encompasses a wide spectrum of activities, for example, the building, repair and maintenance
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There is an increasing tendency to subcontract large parts of the construction process, from specialized services to the supply of labour. Building materials and components, plant and equipment, are generally purchased or hired from other enterprises. Design and engineering services are also generally supplied by quite separate ‘professional’ entities. Drawing the boundaries of the construction industry is therefore not easy.
Narrowly defined, the industry comprises only those enterprises ‘adding value’ through production or assembly operations on the construction site. A broader definition would include firms and individuals involved in planning, design, the supply of building materials, plant, equipment, transport and other services. Some definitions also include the client, particularly the professional client or ‘property developer’. The recent increase in the number of contractor-financed infrastructure projects might make it sensible to include the financial services sectors as well.
In the specific context of Trinidad and Tobago, construction covers a wide range of general and special trade activities including: altering, repairing and demolishing, buildings, factories and plants, as well as highways, streets, bridges, sewers, water reservoirs, etc., gas and electricity mains, communication systems, drainage and reclamation systems (public sector). Construction businesses primarily engage in performing mining and quarrying services, such as the construction and maintenance of petroleum and natural gas mining installations on a contract or fee basis. The materials produced by the construction sector include: cement, bricks, wood, iron, steel, gravel, sand amongst others.
Gross Domestic Product Gross Domestic Product can be defined as the total value of goods and services produced within a country’s geographical boundaries by both local and foreign firms. For the purpose of this essay, GDP will be examined by the looking at the average over six year periods between 1966-2002.