Measuring Economic Growth in Rural Communities: The Shift-Share Approach

Abstract

Communities interested in economic growth and development need to be concerned with understanding at least three aspects of the development process. The first deals with identifying existing and historical composition of industry in the community, including an explanation of how changes in the study area differ from changes in other areas, and an identification of industries in which the community has had a comparative advantage. The second aspect deals with the many considerations involved in increasing desired economic activity in the community. This includes business and industrial development. The third aspect is addressed to estimating impacts of growth and development on the local community. Knowledge of expected consequences of alternative growth and development possibilities improves residents' ability to select preferred types of community growth. All three aspects must necessarily be considered as a community strives to expand and improve economic opportunity for its residents.