The United States and other countries across the globe have been going through tough times as a result of the recent (2007-2010) economic crisis (United Nations 2010). Notably, this crisis affected nearly every nation across the globe. There are different reasons which have been cited as the main cause of this crisis. To begin with, Blundell-Wignall & Atkinson (2009, p.536) argues that there were two major causes of the current financial crisis namely; very poor framework for incentives of financial sector agents, conditioned by governance standards, tax systems and bad regulations, and macro liquidity policies. In other words, the failures of the financial regulations and mistakes which resulted from the monetary policies have been looked upon as the major cause of the current financial and economic crisis (Wade 2009, p.542).
The global economic crisis has had adverse effects on different industries, not only in the United States where it began but also across the globe. In reference to Nuti (2009, p.8), the crisis of mid-September 2008 triggered by the Lehman Brothers bankruptcy impacted the exchange rates and investment in the corporate sector. One of the industries which have been affected adversely by the current global economic crisis is the construction industry. To begin with, there has been a decreased investment in the construction industry in the corporate level (Gros & Alcidi, 2009, p.8). This has resulted in reduced activities in the construction industry since this industry is perceived to have low returns on investments as a result of the crisis.
In line with this, it is important to understand that the construction industry is depended on the financial environment of a particular economy. Notably, the construction industry in the United States had contracted as a result of the reluctance by financial institutions to lend money to this industry (Malik et al. 2009, p.88). Furthermore, Kaklauskas et al. (2010, p.44) argues that the traditional analysis of construction and real estate crisis is based on economic, legal/regulatory, institutional, and political aspects. In other words, the flourishing of the construction industry depends heavily on whether the above mentioned factors are flourishing or not. In addition, the collapse of the financial and economic structures in the United States as a result of the ravaging effects of the economic crisis, the construction industry was affected and this has translated to different economies across the globe. According to Martin (2010), the shift from a 'locally originate and locally-hold' model of mortgage provision to a securitized 'locally originate and globally distribute' model implied that when local subprime mortgage markets crumpled in the USA, the consequences were felt across the globe.Particularly, the current economic crisis has had devastating effects on the construction industry in the corporate world. Apart from slowing down investments in this industry, the projects which were underway have either slowed down or have completely stopped. For instance, Sinha & Ahmad (2009, p.188) argues that most projects in Dubai have been brought to a halt. As it has been argued out, whereas measuring the output of the construction industry is difficult, it is important to note that this output has declined as a result of the current economic crisis (Simkins, Smith & Brand 2010, p.34).