A Dynamic Shift-Share Analysis of Economic Growth in West Virginia

Abstract

A regional economy consists of industries with a variety of economic potentials. A growth or decline in any of these sectors affects the overall growth of the economy. Analysis of economic growth by sector of a particular region helps policy makers, community leaders and researchers in better decision making and problem solving. This study analyzes the employment growth pattern and policy implications in the economic development of West Virginia using a dynamic shift share analysis. The study uses employment data for 38 years from 1970 to 2007 for the empirical analysis. Results indicate that agriculture, mining and manufacturing are no longer the backbone of the economy of West Virginia. The three sectors showed employment declined within the 38-year period. Service and financial insurance and real estate are the most robust sectors contributing 91% of employment growth from 1970 to 2007. Apart from these two sectors, the wholesale and retail and construction sectors showed positive economic growth. Identification of investment priorities within these potential sectors and implementation of a comprehensive regional development policy plan would definitely accelerate the economic growth of West Virginia. Key Words: Dynamic shift-share, employment, economic growth, West Virginia