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.