Construction without real estate development
Construction is an important industry which although despite only accounting for 3% of the GDP directly in the economy through its linkages with other important industries holds great significance. Given the strategic importance of the construction industry, it is often used by governments and policymakers to spur investment in the economy and revive growth through a cascading effect in times of economic downturn. In the wake of the economic downturn that has afflicted Pakistan’s economy due to the coronavirus pandemic, the incumbent government has introduced special reforms and concessions to investors in the construction sector in the shape of a ‘Construction’. The ultimate aim of the government is to revive growth in the economy by incentivizing private investment along with the public investment in the construction sector, this in turn through construction industry’s linkages with other important industries will generate economic activity, create jobs and lead to a revival of the economy. In a recent PIDE working paper, the authors argued that although there are concrete examples that can be cited from around the world where governments have used investment in construction sector to spur economic growth, any such growth can only happen if the right conditions in the economy exist. For particular emphasis is the need for well-established and functioning real estate markets that go hand in hand with the construction activity.