Input-Output Analysis of the Construction Sector

Input-output analysis provides a robust framework for understanding the intersectoral flows generated by construction activity and for quantifying its economic, environmental and social impacts. Originating from Leontief’s pioneering work, the approach employs matrices that detail the consumption of goods and services by each industry and the supply of outputs to other sectors. In the construction context, practitioners use input-output tables to derive multipliers that capture both direct and indirect effects of investment in buildings and infrastructure. Backward linkage indicators reveal the intensity of construction’s demand for materials and services, while forward linkage measures identify the extent to which construction output supports downstream industries such as manufacturing and retail. Extensions of the basic model—most notably social accounting matrices—integrate households, government and factor incomes to permit analysis of employment, income distribution and fiscal impacts. Recent advances have also seen the coupling of input-output systems with environmental accounts, enabling the quantification of carbon footprints and resource use across the construction value chain. This integration is driving policy assessments of low-carbon materials, circular economy strategies and resilience planning. International applications range from assessing the ripple effects of large infrastructure programmes in emerging economies to modelling decarbonisation pathways in advanced markets. The method’s transparency, replicability and policy relevance underpin its enduring role in both academic research and strategic decision-making by governments, financial institutions and the construction industry itself.

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Input-Output Analysis of the Construction Sector publication trend

The graph below shows the total number of articles in input-output analysis of the construction sector across all publications each year (not limited to Nature Index journals).

Technical terms

Input-output table: A matrix representing flows of goods and services exchanged among economic sectors.

Leontief inverse: A matrix capturing the total direct and indirect inputs required to produce one unit of output.

Backward linkage: A measure of a sector’s reliance on inputs from other industries.

Forward linkage: A measure of a sector’s role in supplying outputs to other industries.

Social accounting matrix: An extended input-output framework that includes transactions between households, government and factors of production.

References

1. Disaggregated effect of construction investments on the Saudi economy: a dynamic computable general equilibrium model of Saudi Arabia. Financial Innovation (2024).
2. A New Perspective on the Relationship Between the Construction Industry Performance and The Economy Outcome- A Literature Review. Jurnal Kejuruteraan (2022).
3. Input–output structures of the Australian construction industry. Construction Economics and Building (2016).