Measuring the housing sector’s contribution to GDP in emerging market countries
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 16 August 2021
Issue publication date: 1 December 2022
Abstract
Purpose
This paper aims to document the economic importance of the housing sector, as measured by its contribution to gross domestic product (GDP), which is not fully recognized. In response to the joint economic and health crises caused by the COVID-19 pandemic, there is an opportunity for emerging market countries to develop and implement inclusive housing strategies that stimulate the economy and improve community health outcomes. However, so far housing does not feature prominently in the recovery plans of many emerging market countries.
Design/methodology/approach
This paper uses national account data and informal housing estimates for 11 emerging market economies to estimate the contribution of housing investments and housing services to the GDP of these countries.
Findings
This paper finds that the combined contribution of housing investments and housing services represents between 6.9% and 18.5% of GDP, averaging 13.1% in the countries with information about both. This puts the housing sector roughly on par with other key sectors such as manufacturing. In addition, if the informal housing sector is undercounted in the official national account figures used in this analysis by 50% or 100%, for example, then the true averages of housing investments and housing services’ contribution to GDP would increase to 14.3% or 16.1% of GDP, respectively.
Research limitations/implications
Further efforts to improve data collection about housing investments and consumption, particularly imputed rent for owner occupiers and informal activity require national government to conduct regular household and housing surveys. Researcher can help make these surveys more robust and leverage new data sources such as scraped housing price and rent data to complement traditional surveys. Better data are needed in order to capture housing contribution to the economy.
Practical implications
The size of the housing sector and its impact in terms of employment and community resilience indicate the potential of inclusive housing investments to both serve short-term economic stimulus and increase long-term community resilience.
Originality/value
The role of housing in the economy is often limited to housing investment, despite the importance of housing services and well-documented methodologies to include them. This analysis highlights the importance of housing to the economy of emerging market countries (in addition to all the non-GDP related impact of housing on welfare) and indicate data limitation that need to be addressed to further strengthen the case for focusing on housing as part of economic recovery plans.
Keywords
Acknowledgements
The authors thank Richard Reed, editor of the International Journal of Housing Markets and Analysis and two anonymous reviewers for helpful comments on earlier drafts of the paper. The authors also gratefully acknowledge Habitat for Humanity's Terwilliger Center for Innovation in Shelter (TCIS) for financial and intellectual support. In particular, we want to thank Malaika Cheney‐Coker, Monica Rashkin, Patrick Kelley, Jessan Catre, Jane Otima and Gema Stratico from TCIS along with Brian Feagans and Anne Myers of Habitat for Humanity International, for providing valuable insights and comments. Any remaining errors are our own.
Citation
Acolin, A., Hoek-Smit, M. and Green, R.K. (2022), "Measuring the housing sector’s contribution to GDP in emerging market countries", International Journal of Housing Markets and Analysis, Vol. 15 No. 5, pp. 977-994. https://doi.org/10.1108/IJHMA-04-2021-0042
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited