REVIVING THE CONSTRUCTION SECTOR IN THE OECS About one year ago I did a Consultancy for the World Bank looking at how the Construction Sector can be developed within the OECS. Having worked in that sector for the last 30 years as a civil engineer, I am convinced that a strong construction sector equates a strong economy. Over the next posts, I will be extracting components of the research done over a six month period, with the hope that you may be edified by the process. May the readings be a blessing to you. =============================================== EXECUTIVE SUMMARY The construction sector has made important contributions, both directly and indirectly, to economic growth and job creation in the OECS. The positive economic impacts of the sector were clearly demonstrated during the earlier part of the last decade as various Member States experienced a surge in construction activity related to the expansion of tourism accommodations and the building and expansion of sports stadiums required for the Caribbean’s hosting of the Cricket World Cup 2007 event. The OECS region experienced Foreign Direct Investment inflows of $ 3.3 Billion in the period 2003 – 2007, this figure dropped to $ 1.7 billion in the period 2008 to 2012 ( Kevin Woods – ECCB – OECS Consultation Works on Construction Sector Strategy Dec 5th 2012). This falloff of approximate 50% has significantly affected the economies in the OECS, and simultaneously the construction sector, which was the major beneficiary of the FDI inflows. In the wake of the global economic and financial crisis of the late 2000s which triggered this significant drop in FDI inflows, it was recognized that the Construction sector had a vital role to play in leading the region’s economic recovery effort. In that regard, it was felt that there were ideas and lessons to be shared among Member States on how construction could be better enabled to make a greater contribution to economic activity across the OECS Economic Union. Construction activity exerts positive short term growth and employment thus generating effects within and outside of the sector, which can be significantly enhanced by increasing the speed and efficiency of the construction process itself. This is particularly important during an economic downturn. The sector also has positive long term growth impacts, by virtue of enhancing the supply capacity of the economy and the competitiveness of productive sectors that utilize the infrastructure or physical capital that is created by construction activity. Construction has therefore been identified as one of the key sectors in the elaboration of the OECS Growth and Development Strategy. In a World Bank Publication entitled Natural Disaster Hot Spots – Global Risk Analysis – Maxx Autor Dilley ( 2005), Table 7:2 shows four OECS States ( Antigua, Dominica, St. Kitts, St Vincent) being in the top 60 of countries at high economic risk from multiple hazards, with Antigua and Barbuda showing 80.4% of GDP in areas at risk. This metric heightens the need for the implementation and enforcement of Building Codes and land use planning. The Construction Sector Strategy Report presents a series of recommendations which were segmented into those for immediate implementation and those for implementation in the Medium Term, this being described as within the next five years. The uniqueness of the OECS as a grouping of small island states must be recognized. The geography (proximity to 5 of the G20 countries) and historical linkages (two G20 countries – France and the UK) create a distinction from other small island states, and thus the development of the construction sector strategy has incorporated these factors. The role of Government as a large purchaser of goods and services and as an Influential Enabler was also considered in the development of the strategy. A Vision and Mission for the OECS Construction Sector was also proposed. There were two extraneous recommendations presented in the report, firstly for the Eastern Caribbean Central Bank to investigate the causal relationship between construction flow and GDP as this relationship will inform macroeconomic policy for the OECS Region. The second extraneous recommendation was for the World Bank to review the methodology used in the determination of the ranking for the dealing with construction permits. In that regard a view was expressed that the present methodology used may create skewed results and place some OECS countries in a false comfort of the adequacy of their procedures. The Construction Sector Strategy recommendations are to be viewed as representative of the region and not individual states and thus some of the recommendations will not be applicable to certain States. The Report concludes that OECS Secretariat has to play an important role and such a role cannot be fulfilled within the existing structures of the organization. It is proposed that a Construction Sector Sub-unit be created at the OECS Secretariat with a mandate to oversee the implementation of the Immediate Recommendations and to structure the implementation of the Medium Term recommendations.
Posted on: Thu, 26 Sep 2013 08:47:03 +0000
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