Utilizing the linkage between domestic demand and the ability to export to achieve sustainable growth of construction industry in developing countries

Many international trade theories are constructed on the assumption that domestic demand favors the growth of an export industry. Nevertheless, previous studies have ascribed the linkage between domestic demand and the ability to export to an internal tension in developing countries' construction industries. Sustainable growth of a construction industry necessitates utilizing the linkage in appropriate ways rather than worsening the intension. Drawn on an extensive literature review, this study raises three hypotheses about the linkage and tested the hypotheses empirically with reference to China's local construction sectors. Using a panel data approach, the study finds that the linkage is positive, the effect of the linkage unfolds gradually within a period of time, and the Chinese construction industry can therefore continue with outward development to secure sustainable growth. The research findings provide new insights into how to utilize the linkage to guarantee the sustainable growth of construction industries in developing countries.

► Three hypotheses about the linkage between domestic demand and the ability to export are tested.
► The linkage is found positive in the Chinese construction industry.
► Regions in different economic statuses have unbalanced ability to export construction.
► The effect of the linkage unfolds gradually within a period of time.