Protectionism in the construction and engineering services industries

Nature

Governments, particularly in developing countries, increasingly require some form of cooperation with local enterprises by foreign firms providing construction and engineering services. Thus, foreign firms may have to engage in joint ventures with local enterprises or conduct their transactions through local subsidiaries or affiliates, which act as their representatives in the host countries.

Incidence

Protectionism in the construction and engineering services industries is a persistent issue affecting both developed and developing economies. Many countries impose restrictive regulations, local content requirements, and discriminatory procurement practices that limit foreign firms’ market access. This widespread protectionism distorts competition, inflates project costs, and impedes the transfer of technical expertise, with significant implications for global infrastructure development and cross-border investment.
In 2022, the European Union raised concerns over India’s public procurement policies, which favored domestic construction and engineering firms for major infrastructure projects. These measures reportedly excluded foreign bidders, prompting formal complaints at the World Trade Organization.