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

According to the World Trade Organization, over 60% of its member countries maintain some form of restriction on foreign participation in construction and engineering services, including licensing barriers, local content requirements, and discriminatory procurement practices. These protectionist measures are particularly prevalent in Asia and the Middle East, where domestic firms are often favored in public infrastructure projects, limiting international competition and cross-border investment.
In 2018, the Indian government imposed new regulations requiring foreign construction firms to form joint ventures with local companies to qualify for major public contracts. This policy effectively excluded several international engineering firms from bidding on large-scale infrastructure projects, notably in the Delhi-Mumbai Industrial Corridor.

Claim

Protectionism in the construction and engineering services industries is a critical issue that stifles innovation, inflates costs, and limits competition. By prioritizing domestic over global talent and resources, countries risk falling behind in technological advancements and efficiency. This insular approach not only hampers economic growth but also undermines the quality of infrastructure and services. We must advocate for open markets to foster collaboration, drive progress, and ensure that communities benefit from the best solutions available worldwide.

Counter-claim

Protectionism in the construction and engineering services industries is a non-issue that distracts from real challenges. The global market thrives on competition, driving innovation and efficiency. Shielding local industries stifles growth and limits consumer choice. Instead of focusing on outdated protectionist policies, we should embrace collaboration and open markets, which ultimately benefit economies and communities. Let’s prioritize progress over unnecessary barriers, as the future of construction and engineering lies in global cooperation, not isolation.