Demand and Supply Trends and Construction Industry Development: A Case Study in the Sri Lankan Construction Industry

The construction sectors in the developing countries (DCs) have recently demonstratednumerous trends towards globalisation, raising considerable concern in the field.However, the nature of the effect of demand on supply characteristics of the domesticindustry has not been sufficiently discussed with respect to what development measuresare needed in the context of constraints that originate locally to accommodate the globaltrends in DCs. This paper therefore analyses reasons for these trends and attempts toidentify the necessary industry developments to benefit from them locally. For thispurpose, the Sri Lankan construction industry has been taken as a case study and ademand and supply framework is being used to analyse the case. The analysis revealsthat while government policies contribute intrusively in stimulating demand side trends,the role of the contracting firms together with project delivery process and projectprocurement process are also subject to change as a result of these demanddeterminants. In this context, the main focus is concentrated on corporatedevelopments, while wider industry development is also necessary to support them. Asa consequence, both institutional reforms and capacity building are required to enhancefirms’ technological and managerial capacity. The necessity for these developmentmeasures reflects in partly the underdeveloped framework of the construction industry inDCs. Nevertheless, they could still foster indigenous construction capacity within thecontext of global trends.9