The Economic Integration of New Sectors in Rural Areas: A Case Study of the Shetland Economy

Abstract

A temporal structural path analysis of the Shetland Islands from 1971 to 2003 is used to describe the process by which two new sectors associated with the discovery of North Sea oil became integrated into the wider Shetland economy. The results confirm that it can take considerable time for incoming sectors to become integrated within an economy and that integration may increase when a sector is in decline. It is argued that structural path analysis provides complementary insights into the process of economic integration which are complementary to those gained from more standard multiplier techniques, and that both are useful to rural development analysts charged with maximising the benefits of incoming sectors and/or minimising the adverse effects of a sector in decline.