The characteristics of the production structure and the nature of technological progress in Hong Kong's construction industry

Abstract

There has been continuing effort in the construction industry to substitute other types of construction resources for labour due to the high construction labour cost in Hong Kong. The two major types of labour saving technology are mechanization (substitution of capital for labour) and industrialization in the form of use of prefabricated components (substitution of materials for labour). Empirical data from Hong Kong suggests that mechanization is more effective than industrialization. We also found that technological progress in Hong Kong's construction industry is not Hicks-neutral. In addition, there has been a noticeable decline in technological progress in recent years, which is consistent with the catching-up hypothesis. Finally, we found significant economies of scale. Increasing return toscale has been the major source of productivity growth in recent years.