The globalisation of the construction industry—a review

Abstract

The recent advances in transport and communication coupled with the protocols of the World Trade Organisation (WTO) have given access to markets that were previously insulated. The process that has come to be known as “globalisation” and is conceptualised as a situation where political borders become increasingly more irrelevant, economic interdependencies are heightened, and national differences are accentuated due to dissimilarities in societal cultures and central issues of business, is not new though. As railways and steamships lowered transport costs and Europe moved towards free trade during the late 19th Century, a dramatic convergence in commodity prices took place. Labour flows were considerably higher than usual, and millions of immigrants made their way from the old to the new world. These immigrants took with them their knowledge of construction that they employed in their new settlements, either as a hybrid with the local construction knowledge or supplanting the latter altogether. In this sense, the globalisation of construction had begun albeit unintentionally. Over the years, however, the construction industry has become well organised in similar ways to any other industry and WTO protocols have enabled firms to participate in cross-border markets unhindered. In principle, the unhindered access to international markets makes economic sense, but the reality is that only a few firms, particularly those based in advanced industrialised countries (AICs) can take full advantage of the open market. However, as globalisation is now an inescapable fact, firms based in both the newly industrialised countries (NICs) and least developed countries (LDCs) should adopt strategies that could enable them benefit from the open market. To enable comprehensive exploration of possible strategies that small firms in developing countries could adopt to benefit from the open construction market, this paper reviews the history of the globalisation of the construction industry and its current status. It concludes by pointing out the avenues that could be pursued by firms based in LCDs to benefit from the open construction market.