Productivity, International Trade and Reference Area Interactions in Shift‐Share Analysis: Some Operational Notes

Mustafa Dinc and Kingsley Haynes

Growth and Change, 2005, vol. 36, issue 3, 374-394

Abstract: ABSTRACT These notes discuss and illustrate two new extensions of shift‐share analysis: the productivity and output model and the international trade model. We also review a general limitation of these and other shift‐share‐type models with respect to the interaction between reference area and the region. A possible solution to this limitation is presented. The new extensions provide better insights about the regional economy but that benefit occurs at a cost. The cost is careful consideration and compensation where relatively large regions or sectors are central to the shift‐share assessment. The extensions are important in addressing earlier problems with the shift‐share approach. Our solution to shift‐share limitation on reference area interaction is vital if the method is to be extended to these multiple environments.

Date: 2005
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