IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i9p5012-d546346.html
   My bibliography  Save this article

Construction Sector Contribution to Economic Stability: Malaysian GDP Distribution

Author

Listed:
  • Wesam Salah Alaloul

    (Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Perak, Malaysia)

  • Muhammad Ali Musarat

    (Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Perak, Malaysia)

  • Muhammad Babar Ali Rabbani

    (Department of Civil Engineering, Sarhad University of Science & Information Technology, Peshawar 25000, Pakistan)

  • Qaiser Iqbal

    (Department of Civil Engineering, Sarhad University of Science & Information Technology, Peshawar 25000, Pakistan)

  • Ahsen Maqsoom

    (Department of Civil Engineering, COMSATS University Islamabad Wah Campus, Wah Cantt 47040, Pakistan)

  • Waqas Farooq

    (Department of Electrical Engineering, Sarhad University of Science & Information Technology, Peshawar 25000, Pakistan)

Abstract

The construction sector exerts an exceptional impact on economic development all over the world. Adequate buildings and infrastructures made by the construction sector ensure that a country reaches certain targets like social development, industrialization, freight transportation, sustainable development, and urbanization. This study aims to determine the construction sector’s connectivity with other sectors through complex linkages that contribute immensely to the economy and gross domestic product (GDP). The data were collected from the Department of Statistics Malaysia and the World Bank from the year 1970 to 2019, and the Pearson correlation test, the cointegration test, and the Granger causality test were conducted. The vector error correction model (VECM) was created for short-term and long-term equilibrium analysis and impulse response function (IRF) was performed to study construction industry behavior. Afterwards, the forecasting was done for the year 2020 to 2050 of the Malaysian economy and GDP for the required sectors. It was revealed that some sectors, such as agriculture and services, have forward linkages while other sectors, such as manufacturing and mining, are independent of construction sector causality, which signifies the behavior of the contributing sectors when a recession occurs, hence generating significant revenue. The Malaysian economy is moving towards sustainable production with more emphasis on the construction sector. The outcome can be used as a benchmark by other countries to achieve sustainable development. The significance of this study is its usefulness for experts all over the world in terms of allocating resources to make the construction sector a sustainable sector after receiving a shock. A sustainable conceptual framework has been suggested for global application that shows the factors involved in the growth of the construction industry to ensure its sustainable development with time.

Suggested Citation

  • Wesam Salah Alaloul & Muhammad Ali Musarat & Muhammad Babar Ali Rabbani & Qaiser Iqbal & Ahsen Maqsoom & Waqas Farooq, 2021. "Construction Sector Contribution to Economic Stability: Malaysian GDP Distribution," Sustainability, MDPI, vol. 13(9), pages 1-26, April.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:9:p:5012-:d:546346
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/9/5012/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/9/5012/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cashin, Paul & Cespedes, Luis F. & Sahay, Ratna, 2004. "Commodity currencies and the real exchange rate," Journal of Development Economics, Elsevier, vol. 75(1), pages 239-268, October.
    2. Heng Jiang & Chunlu Liu, 2014. "A panel vector error correction approach to forecasting demand in regional construction markets," Construction Management and Economics, Taylor & Francis Journals, vol. 32(12), pages 1205-1221, December.
    3. Olumuyiwa O. Olamade & Timothy O. Oyebisi & Samuel. O. Olabode, 2014. "Strategic ICT-Use Intensity of Manufacturing Companies in Nigeria," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 4(1), pages 1-17, January.
    4. Wang, Yihan & Wen, Zongguo & Yao, Jianguo & Doh Dinga, Christian, 2020. "Multi-objective optimization of synergic energy conservation and CO2 emission reduction in China's iron and steel industry under uncertainty," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    5. James Wong & S. Thomas Ng, 2010. "Forecasting construction tender price index in Hong Kong using vector error correction model," Construction Management and Economics, Taylor & Francis Journals, vol. 28(12), pages 1255-1268.
    6. Antonio Estache, 2006. "PPI divorces vs. PPI partnerships in Infrastructure," ULB Institutional Repository 2013/43914, ULB -- Universite Libre de Bruxelles.
    7. Kenny, Charles, 2007. "Construction, corruption, and developing countries," Policy Research Working Paper Series 4271, The World Bank.
    8. Patricia M. Hillebrandt, 1985. "Economic Theory and the Construction Industry," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-17934-3, October.
    9. Zhu Liu & Philippe Ciais & Zhu Deng & Steven J. Davis & Bo Zheng & Yilong Wang & Duo Cui & Biqing Zhu & Xinyu Dou & Piyu Ke & Taochun Sun & Rui Guo & Olivier Boucher & Francois-Marie Breon & Chenxi Lu, 2020. "Carbon Monitor: a near-real-time daily dataset of global CO2 emission from fossil fuel and cement production," Papers 2006.07690, arXiv.org.
    10. Wesam Salah Alaloul & Muhammad Altaf & Muhammad Ali Musarat & Muhammad Faisal Javed & Amir Mosavi, 2021. "Systematic Review of Life Cycle Assessment and Life Cycle Cost Analysis for Pavement and a Case Study," Sustainability, MDPI, vol. 13(8), pages 1-38, April.
    11. Antonio Estache, 2006. "PPI Partnerships vs. PPI Divorces in LDCs," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 29(1), pages 3-26, September.
    12. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    13. Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
    14. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    15. Olumuyiwa O Olamade & Timothy O Oyebisi & Samuel O Olabode, 2014. "Strategic ICT-Use Intensity of Manufacturing Companies in Nigeria," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 4(1), pages 1-17.
    16. Harris, R. I. D., 1992. "Testing for unit roots using the augmented Dickey-Fuller test : Some issues relating to the size, power and the lag structure of the test," Economics Letters, Elsevier, vol. 38(4), pages 381-386, April.
    17. Chan Swee Lean, 2001. "Empirical tests to discern linkages between construction and other economic sectors in Singapore," Construction Management and Economics, Taylor & Francis Journals, vol. 19(4), pages 355-363.
    18. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    19. Rob Aalbers, 2013. "Optimal Discount Rates for Investments in Mitigation and Adaptation," CPB Discussion Paper 257, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Waqas Rafiq & Muhammad Ali Musarat & Muhammad Altaf & Madzlan Napiah & Muslich Hartadi Sutanto & Wesam Salah Alaloul & Muhammad Faisal Javed & Amir Mosavi, 2021. "Life Cycle Cost Analysis Comparison of Hot Mix Asphalt and Reclaimed Asphalt Pavement: A Case Study," Sustainability, MDPI, vol. 13(8), pages 1-14, April.
    21. Rob Aalbers, 2013. "Optimal Discount Rates for Investments in Mitigation and Adaptation," CPB Discussion Paper 257.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    22. Wesam Salah Alaloul & Muhammad Ali Musarat, 2020. "Impact of Zero Energy Building: Sustainability Perspective," Chapters, in: Basak Kilic Taseli (ed.), Sustainable Sewage Sludge Management and Resource Efficiency, IntechOpen.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rui Feng & Zhuqing Zhang & Zonghao Li & Ge Meng & Jian Liu, 2024. "Building a Sustainable Future: Enhancing Construction Safety through Macro-Level Analysis," Sustainability, MDPI, vol. 16(17), pages 1-27, September.
    2. Muhd Shafiq Johari & Syamsul Hendra Mahmud & Sarajul Fikri Mohamed & Mohd Saidin Misnan & Tantish Kamarudin & Mohd Azwarie Mat Dzahir, 2024. "A SWOT Analysis of Digitalization in the Construction Firm: Challenges and Barriers to Managers Level in Malaysia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 1520-1540, March.
    3. Muhammad Ali Musarat & Wesam Salah Alaloul & Lau Siew Cher & Abdul Hannan Qureshi & Aawag Mohsen Alawag & Abdullah O. Baarimah, 2023. "Applications of Building Information Modelling in the Operation and Maintenance Phase of Construction Projects: A Framework for the Malaysian Construction Industry," Sustainability, MDPI, vol. 15(6), pages 1-28, March.
    4. Fauzan Choon bin Abdullah, 2024. "The Impact of Moderation Analysis Between Effective Project Governance and Project Performance Management in Malaysia's Construction Industry ," GATR Journals gjbssr652, Global Academy of Training and Research (GATR) Enterprise.
    5. Muhammad Ali Musarat & Alishba Sadiq & Wesam Salah Alaloul & Mohamed Mubarak Abdul Wahab, 2022. "A Systematic Review on Enhancement in Quality of Life through Digitalization in the Construction Industry," Sustainability, MDPI, vol. 15(1), pages 1-20, December.
    6. Héctor Hernández & Felipe Ossio & Michael Silva, 2023. "Assessment of Sustainability and Efficiency Metrics in Modern Methods of Construction: A Case Study Using a Life Cycle Assessment Approach," Sustainability, MDPI, vol. 15(7), pages 1-25, April.
    7. Prabhu, R. Srinivas & Anuradha, R. & Belin Jude, A., 2022. "Understanding the mining waste as resources in self-compacting concrete: A numerical study on sustainable construction," Resources Policy, Elsevier, vol. 78(C).
    8. Muhammad Ali Musarat & Wesam Salah Alaloul & Nasir Hameed & Dhinaharan R & Abdul Hannan Qureshi & Mohamed Mubarak Abdul Wahab, 2022. "Efficient Construction Waste Management: A Solution through Industrial Revolution (IR) 4.0 Evaluated by AHP," Sustainability, MDPI, vol. 15(1), pages 1-16, December.
    9. Mario Paguay & Juan Diego Febres & Eduardo Valarezo, 2023. "Occupational Accidents in Ecuador: An Approach from the Construction and Manufacturing Industries," Sustainability, MDPI, vol. 15(16), pages 1-14, August.
    10. M. R. Ibrahim & D. U. Muhammad & B. Muhammad & J. O. Alaezi & J. Agidani, 2023. "The Key to Organizational and construction Excellence: A Study of Total Quality Management," Papers 2305.13104, arXiv.org.
    11. Mari-Isabella Stan & Dragos-Florian Vintila, 2021. "An Investigation of the Structure of Fixed Assets of Construction Companies in the Context of Coastal Area Development," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 171-178, August.
    12. Muhammad Ali Musarat & Wesam Salah Alaloul & Muhammad Irfan & Pravin Sreenivasan & Muhammad Babar Ali Rabbani, 2022. "Health and Safety Improvement through Industrial Revolution 4.0: Malaysian Construction Industry Case," Sustainability, MDPI, vol. 15(1), pages 1-26, December.
    13. Wesam Salah Alaloul & Muhammad Ali Musarat & Muhammad Babar Ali Rabbani & Muhammad Altaf & Khalid Mhmoud Alzubi & Marsail Al Salaheen, 2022. "Assessment of Economic Sustainability in the Construction Sector: Evidence from Three Developed Countries (the USA, China, and the UK)," Sustainability, MDPI, vol. 14(10), pages 1-36, May.
    14. Sławomir Biruk & Piotr Jaśkowski & Magdalena Maciaszczyk, 2022. "Conceptual Framework of a Simulation-Based Manpower Planning Method for Construction Enterprises," Sustainability, MDPI, vol. 14(9), pages 1-13, April.
    15. Carsten Juergens & Fabian M. Meyer-Heß & Marcus Goebel & Torsten Schmidt, 2021. "Remote Sensing for Short-Term Economic Forecasts," Sustainability, MDPI, vol. 13(17), pages 1-23, August.
    16. Aawag Mohsen Alawag & Wesam Salah Alaloul & M. S. Liew & Abdullah O. Baarimah & Muhammad Ali Musarat & Al-Baraa Abdulrahman Al-Mekhlafi, 2023. "The Role of the Total-Quality-Management (TQM) Drivers in Overcoming the Challenges of Implementing TQM in Industrialized-Building-System (IBS) Projects in Malaysia: Experts’ Perspectives," Sustainability, MDPI, vol. 15(8), pages 1-21, April.
    17. Mari-Isabella Stan & Dragos-Florian Vintila, 2021. "Can the Degree of Indebtedness of the Economic Agents Operating in the Construction Sector in Constanta County Influence the Development of the Coastal Area ?," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 163-170, August.
    18. Mari-Isabella Stan, 2021. "Issues concerning the dynamics of labor productivity at the level of the companies in Constanta County operating in the "Construction" sector before and after the COVID-19 pandemic," Technium Social Sciences Journal, Technium Science, vol. 25(1), pages 225-241, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Ali Musarat & Wesam Salah Alaloul & M. S. Liew & Ahsen Maqsoom & Abdul Hannan Qureshi, 2021. "The Effect of Inflation Rate on CO 2 Emission: A Framework for Malaysian Construction Industry," Sustainability, MDPI, vol. 13(3), pages 1-16, February.
    2. Gao Lu Zou & Kwong Wing Chau, 2015. "Determinants and Sustainability of House Prices: The Case of Shanghai, China," Sustainability, MDPI, vol. 7(4), pages 1-25, April.
    3. Costantini, Valeria & Martini, Chiara, 2010. "The causality between energy consumption and economic growth: A multi-sectoral analysis using non-stationary cointegrated panel data," Energy Economics, Elsevier, vol. 32(3), pages 591-603, May.
    4. N. Vijayamohanan Pillai, 2010. "Electricity Demand Analysis and Forecasting- The Tradition is Questioned," Working Papers id:2966, eSocialSciences.
    5. Wesam Salah Alaloul & Muhammad Ali Musarat & Muhammad Babar Ali Rabbani & Muhammad Altaf & Khalid Mhmoud Alzubi & Marsail Al Salaheen, 2022. "Assessment of Economic Sustainability in the Construction Sector: Evidence from Three Developed Countries (the USA, China, and the UK)," Sustainability, MDPI, vol. 14(10), pages 1-36, May.
    6. Rodríguez-Caballero, Carlos Vladimir & Ventosa-Santaulària, Daniel, 2017. "Energy-growth long-term relationship under structural breaks. Evidence from Canada, 17 Latin American economies and the USA," Energy Economics, Elsevier, vol. 61(C), pages 121-134.
    7. Camgöz, Mevlüt & Topal, Mehmet Hanefi, 2022. "Identifying the asymmetric price dynamics of Islamic equities: Implications for international investors," Research in International Business and Finance, Elsevier, vol. 60(C).
    8. Muntasir Murshed & Seemran Rashid, 2020. "An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease Phenomenon in South Asia," The Economics and Finance Letters, Conscientia Beam, vol. 7(1), pages 23-46.
    9. Muhammad Shahbaz & Syed Jawad Hussain Shahzad & Mantu Kumar Mahalik & Perry Sadorsky, 2018. "How strong is the causal relationship between globalization and energy consumption in developed economies? A country-specific time-series and panel analysis," Applied Economics, Taylor & Francis Journals, vol. 50(13), pages 1479-1494, March.
    10. Chakraborty, Debashis & Mukherjee, Jaydeep & Lee, Jaewook, 2016. "Do FDI Inflows influence Merchandise Exports? Causality Analysis on India over 1991-2016," MPRA Paper 74851, University Library of Munich, Germany.
    11. Gregory, Allan W. & Hansen, Bruce E., 1996. "Residual-based tests for cointegration in models with regime shifts," Journal of Econometrics, Elsevier, vol. 70(1), pages 99-126, January.
    12. Nour Wehbe & Bassam Assaf & Salem Darwich, 2018. "Étude de causalité entre la consommation d’électricité et la croissance économique au Liban," Post-Print hal-01944291, HAL.
    13. David F. Hendry & Grayham E. Mizon, 2016. "Improving the teaching of econometrics," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1170096-117, December.
    14. Claude Diebolt & Cédric Doliger, 2005. "Becker vs. Easterlin. Education, Fertility and Growth in France after World War II," Working Papers 05-03, Association Française de Cliométrie (AFC).
    15. Yanhua Chen & Rosario N Mantegna & Athanasios A Pantelous & Konstantin M Zuev, 2018. "A dynamic analysis of S&P 500, FTSE 100 and EURO STOXX 50 indices under different exchange rates," PLOS ONE, Public Library of Science, vol. 13(3), pages 1-40, March.
    16. Muñoz, M. Pilar & Dickey, David A., 2009. "Are electricity prices affected by the US dollar to Euro exchange rate? The Spanish case," Energy Economics, Elsevier, vol. 31(6), pages 857-866, November.
    17. Jeng-Bau Lin & Chin-Chia Liang & Wei Tsai, 2019. "Nonlinear Relationships between Oil Prices and Implied Volatilities: Providing More Valuable Information," Sustainability, MDPI, vol. 11(14), pages 1-15, July.
    18. David Greasley & Les Oxley, 2010. "Cliometrics And Time Series Econometrics: Some Theory And Applications," Journal of Economic Surveys, Wiley Blackwell, vol. 24(5), pages 970-1042, December.
    19. Alexander Schätz, 2010. "Macroeconomic Effects on Emerging Market Sector Indices," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 9(2), pages 131-169, August.
    20. Lütkepohl,Helmut & Krätzig,Markus (ed.), 2004. "Applied Time Series Econometrics," Cambridge Books, Cambridge University Press, number 9780521547871, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:9:p:5012-:d:546346. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.