The construction sector in developing countries has propelled economic growth in the most recent period, yet analysis of growth performance has failed to take this into account. This article is a comparative analysis of the relationship between the construction sector and aggregate output for a panel of sub-Saharan African countries using a panel generalized methods of moments (GMM). After accounting for the effects of institutional set up, cross sectional heterogeneity and non-linearity, our results revealed that the construction sector affects growth positively and most importantly, developing the right institutions could further enhance this impact. The intrinsically non-linear relationship between the construction and output growth is very mute in our sample, suggesting that, sub-Saharan African countries have not yet reached the stage of development where construction growth becomes trivial. We further show that East Africa experienced a robust impact of construction on economic growth compared to West and Southern Africa.

Keywords : Construction; Output growth; Institutions; Endogeneity.