Shift-Share: Shift-Share


Shift-share analysis: Shift-share analysis Shift-share analysis decomposes employment growth in a region over a given time period into three components a national growth effect (share effect), which is that part of the change in total employment in a region ascribed to the rate of growth of employment in the nation as a whole, an composition effect (industry mix effect), which is the amount of change the region would have experienced had each of its industries grown at their national rates, less the national growth effect, and a differential effect, which is the difference between the actual change in employment and the employment change to be expected if each industrial sector grew at the national rate. The sum of these three effects equals the actual change in total employment within a region over a prescribed time period.


Shift Share: Shift Share = + Proportional Differential


National and Regional Growth: National and Regional Growth


Expected employment on the basis of national growth: Expected employment on the basis of national growth = + Proportional Differential +


Total Employment Shift by industries: Total Employment Shift by industries (+) (-) = + Proportional Differential +


Expected employment on the basis of national growth of individual industries: Expected employment on the basis of national growth of individual industries = + Proportional Differential +


Differential Effect (or local-factor or competitive effect): Differential Effect (or local-factor or competitive effect) (+) (-) = + Proportional Differential +


Composition Effect (or "industry-mix" or "proportionality effect") : Composition Effect (or "industry-mix" or "proportionality effect") (+) (-) (-) (+) = + Proportional Differential +


Shift Share: Shift Share = + Proportional -80[(12)] Differential 420[(11)]


Interpretation: Interpretation Industry I is, at the state level, a slow-growth industry (below average). The county has a supposedly "unfavorably" large percentage of employment in this industry, i.e. it has an unfavorable industrial composition (from a benchmark point of view). However, the very high growth rate (unexpected from a state-level point of view) of industry I more than compensates for the overall unfavorable industrial structure of the county's economy and also for the relatively low growth rates of industries II and III.


Constant Market Share: Constant Market Share


Constant Market Share analysis: Constant Market Share analysis Constant Market Share analysis decomposes export growth of a country over a given time period into three components Market growth effect, which reflects the effects of a general increase in demand for imports in the given market, composition effect (differential effect), which is the export increase which the country would have experienced had each of its products grown at the increase rate of the given market less general increase rate, and Competitiveness effect, which is the difference between the actual change in export and the export change to be expected if each product increased at the rate of the given market. The sum of these three effects equals the actual change in total export of the country over a prescribed time period.


Shift Share: Shift Share = + Composition Competitiveness


Market Growth: Market Growth


Expected export growth on the basis of market growth: Expected export growth on the basis of market growth = + Composition Competitiveness +


Market growth by products: Composition Competitiveness Market growth by products (+) (-) = + +


Expected export on the basis of market growth of individual products: Composition Competitiveness Expected export on the basis of market growth of individual products = + +


Competitiveness Effect (differential effect): Composition Competitiveness Competitiveness Effect (differential effect) (+) (-) = + +


Composition Effect (or "industry-mix" or "proportionality effect") : Composition Competitiveness Composition Effect (or "industry-mix" or "proportionality effect") (+) (-) (-) (+) = + +


Constant Market Share: Constant Market Share = + Composition -80[(12)] Competitiveness 420[(11)]


Interpretation: Interpretation Product I is a declining product (below average) in the world market. The country has a supposedly "unfavorably" large percentage of export of this product, i.e. it has an unfavorable product composition. However, the very high growth rate of the export of product I more than compensates for the overall unfavorable export structure of the country and also for the relatively low growth rates of the exports of products II and III.


Latin America’s export performance: Latin America’s export performance In the 1990s Latin America had the most dynamic exports in the world except for the category of Asian countries that excludes East Asia and the Middle East. Average: 12.5% Median: 7% Weighted average is much higher than median because of Mexico, which achieved an export growth of 20% per year.


Dynamic countries: Dynamic countries A good number of countries in the region achieved increases much more substantial than they would have had they simply maintained their share in world markets for their export baskets. Dominican Rep., El Salvador, and Costa Rica were among the 15 most dynamic export counties in the world in the 1990s.


Composition effect: Composition effect Latin America’s basket of exports is very concentrated in goods with low dynamism. In the 1980s, more than half. In developed countries, almost 40% were dynamic goods. Have exports from the developed countries grown more rapidly than those of Latin America?


Differential effect: Differential effect Most of the differences in performance between countries are not due to trends of world demand for their goods. “Choosing winner” would not have been a good export strategy. Any effort to support specific sector was abandoned in the 1990s, and in the export area, efforts were aimed at offering financial services, compensating for tax costs, and facilitationg access to trade information.


Technology content of exports: Technology content of exports Although world trade is clearly shifting gradually from more basic goods toward new high technology goods, this trend is not a sufficient basis for “picking winners,” especially in small countries forced to focus on a few product lines in order to penetrate world markets.