Incorporating Sectoral Structure into Shift–Share Analysis

The objective of this article is to present a new way to incorporate the sectoral dimension within the components of regional growth provided by the traditional shift–share analysis. The new methodology elaborates the way that the dynamics of a specific sector in a region are influenced by the performance of other sectors, the latter decomposed between national, structural, and differential effects. To illustrate this extension of the shift–share method, an application is provided using data for the Spanish region of Extremadura for the period 1990–2004. The results highlight how these new components can shed new insights into the analysis of sectoral and regional economic growth processes.