Gross Domestic Product

According to the World Bank (2004), the gross domestic product (GDP) is defined as value of final goods and services produced in country in one year. GDP can be measured by adding up all of an economy’s incomes- wages, interest, profits, and rents or expenditures- consumption, investment, government purchases, and net exports (exports minus imports). The difference of GDP and GNP (Gross National Product) is the GNP includes some more figures like income that residents have received from abroad, minus income claimed by nonresidents

According to the Hillebrandt (1985, cited Weddikkara and Devapriya, 2005) construction output can be selected as an important indicator of the level of demand for construction. Further Raftery (1991, cited Weddikkara and Devapriya, 2005) stated that the demand for construction originates from different sub- sector such as public housing, public sector non housing, owner occupied housing and private sector industrial and commercial, rehabilitation, improvements, repair and maintenance. According to the Central Bank statistics, in Sri Lanka, a considerable contribution for GDP has been reported from the construction industry where as it ranks as the 7th most contributing sector among the other major sectors in Sri Lankan economy during the past decade. Therefore it implicit that construction industry is one of the significant contributors to the GDP in Sri Lanka. The Leng (2010) stated that the boom in the construction industry in Sri Lanka during recent past years is as a result of government’s strong commitment to post-war reconstruction. Also Weddikkara and Devapriya (2005) have stated the reasons for construction demand in Sri Lanka during past three decades is as a result of drastically development in industrial, housing, commercial, irrigation and power.