Principal Component Analysis of Constraints to the Development of Local Content Law for the Ghanaian Construction Industry: Stakeholders’ Perspective

ABSTRACT Though Local content laws (LCLs) remain an essential tool in developing local capacities, ensuring skills transfers, community participation, enhancing linkages between the construction sector and other sectors of the economy amid competition in both the developed and developing economies, Ghana’s construction industry has been without a Local content law. This study determined the principal and sub constraints to the development of a Local content law for the Ghanaian construction industry, using principal component analysis (PCA). The use of PCA, varimax rotation in data analysis aided in reducing the large set of constraints to four principal components. Using a questionnaire survey, 667 indigenous practitioners validated 21 constraints, conceptualized from literature and structured interview, based on their knowledge and/or experience. Correlations between the 21 variables showed that four principal components explained the constraints to the development of a Local content law for the Ghanaian construction industry: political and economic, capacity, external supports, and belief constraints. It was also revealed that 4 out of the 21 constraints were peculiar to Ghana only. Findings and recommendations of this study may be useful for industry stakeholders who are seeking innovative ways to develop indigenous construction firms’ competitiveness and capacity and LCL related decisions.