Construction Sector Dynamics in Turkey: Economic Advancements and Vulnerabilities

The construction sector has strong linkages with other sectors, has enormous potential to absorb unemployment and possesses cyclical characteristics that are sensitive to macroeconomic conditions. It is also commonly regarded as a critical sector for achieving the desired economic growth and development of a country. Therefore, it is important to understand its effects on an economy to develop an appropriate economic policy. This article discussed the construction sector from a macroeconomic perspective in order to gain insight into the sector’s interaction with the economy. The central question was whether a construction-oriented economy could sustain economic growth and development in the long run. Turkey’s developing construction-oriented economy in the 2000s was used as a case study in this research. To this end, macroeconomic data obtained from official data providers were subjected to descriptive statistical analysis. The selection of macroeconomic indicators in this study, such as input costs, gross domestic product and money supply, was based on an economic theory that suggested the significance of these variables in affecting the dynamics of the construction sector. Empirical studies have consistently revealed the interdependence between these macroeconomic variables and the performance of the construction sector, thereby confirming their inclusion in this analysis. The results revealed that a disproportionate allocation of resources to the sector, coupled with misaligned support policies, could be detrimental to the long-term economic landscape.