Innovation and the construction industry: A value-chain based definition of the sector

The paper proposes a NACE-based definition of the construction sector aimed at encompassing the whole value chain of the industry. It does so by adding to Section F of the classification, i.e. the official construction section, class-codes of activities that depend upon or are functional to core construction activities but that are classified outside the sector. These classes relate to: "pre-production" activities, intended as the provision of intermediate inputs, whether manufacturing or services activities; "support" activities; and "post production" functions, intended mainly as maintenance and management services. Using data from Finland and the Community Innovation Survey 4 (CIS4) the paper characterises core and non-core construction activities, and shows how the sector's composition, structure, value added, skills, and R&D-input and output indicators change when including non-core activities. It finally points out some policy implications of using the "wide" definition proposed.