ON NATIONAL INCOME ACCOUNTS: A LETTER TO THE ECONOMIST (December 29, 2007)
It is good to read that the cement industry is now coming to grips with its carbon footprint (“Concrete Proposals Needed,” December 22, 2007), gargantuan as it is, but it is disappointing to discover that you consider it a part of the construction industry. This is a common mistake. National income accounts make a sharp and useful distinction between the construction sector, which installs construction materials and components on site, from the manufacturing sector, where these materials and components are produced. The cement industry is squarely in the manufacturing sector. Although it is true that cement is used only by the construction sector, the distinction still holds. It is most useful when it comes to steel, an essential ingredient of reinforced concrete, as steel is used not only by the construction sector. You make a similar mistake in another part of your article about cement, where you go as far as to consider architecture and city planning as parts of the construction industry “as a whole.” They produce design and related services that inform construction activity, but they are parts of the service sector. It is true that better design would reduce the cement industry’s carbon footprint, but this has nothing to do with the construction sector as such. Once again, national income accounts should be heeded when sectoral divisions are concerned.