The construction sector in Barbados: The measurement of its contribution to the Gross Domestic Product of Barbados

The construction industry contributes to the development of the economy as a productive activity creating value added and employment, and as a catalyst for continued growth of other sectors in the economy. Construction investment depends on demand for the construction product, generated by an economic upturn or expected economic upturn. The growth in the sector overtime therefore reflects the economic health of the country and the future growth potential as given by the stock of physical infrastructures, which serves as a catalyst for the growth of the other sectors. Ascertaining the current contribution of the construction industry and its future prospects is therefore important. Presently, the methodology employed in the estimation of the real value added of the construction sector has a number of seemingly avoidable drawbacks, in the face of current data constraints. A better understanding of the magnitude of the methodological problem requires a closer examination of current practices in the estimation of real GDP. This paper reviews these practices and examines some alternatives that are more accessible given available data. This analysis follows a brief review of developments in the sector over the last twenty years.