Extract

Shift-share recognizes that all regions at one level or another are embedded in, and are constituent parts of, larger regional systems. To understand a region it is necessary to decompose it into its fundamental building blocks. Some of these building blocks are functional elements such as population, labor force, gender, migration characteristic, industrial sectors or housing mix, while other elements are the spatial specific components from which the larger unit is constructed. These can be political or administrative units such as counties, districts or municipalities that make up urban regions, states or provinces that make up a country’s regions, or in fact countries that make up multi-country entities such as political, economic or cultural groups such as trading blocks; that is, countries that make up the European Union (EU) or the North American Free Trade Agreement (NAFTA). In such cases it is valuable to decompose the larger entity into its relevant functional and regional parts. Shift-share analysis is an expression of this functional and regional embeddedness and allows us to understand larger regions through a process of decomposition of their important components. Regional policies are often dominant at the regional and local level, but they are not independent of the large context in which they operate. Regional and local governments formulate policies to attract and retain sectors that contribute to their economic growth.