Total Factor Productivity in the Building Construction Industry in Sri Lanka

This research study uses the Tornqvist Index method to estimate the Total Factor Productivity Growth (TFPG) of the Sri Lanka building construction industry from 1995 n 2001. The original objective of looking at the entire construction industry (building, water, roads, etc.) had to be abandoned due to limited availability of data and incompleteness of the available data. The results of the study indicate that TFPG has a positive trend from 1995 to 1997 and recorded the maximum TFPG in 1997. However, there is a drastic drop in TFPG (from +0.803 to n 0.682) in the building construction in 1998 and 1999 due to very high labour and capital input compared to 1997. Since year 2000 TFPG in the building construction industry had been revolving around zero. Study also concludes that there has to be significant improvement in national data collection in order to have more reliable indicators of TFPG trends in the building industry and the overall construction industry.