Economic growth and restructuring in Canada's heartland and hinterland: From shift‐share to multifactor partitioning

Abstract

The geography of the Canadian economy has long been dominated by heartland‐hinterland contrasts, with manufacturing identified as the dominant function of most heartland cities in analyses of the 1961 and 1971 census data. However, the proportion of employment in manufacturing has been declining in the heartland provinces of Ontario and Quebec over the past fifty years and some geographers argue that the heartland‐hinterland dimension of the regional economy is being overridden by city‐regions that are integrated into global networks of production and trade. The heartland‐hinterland trends are examined using multifactor partitioning (MFP), an advanced shift‐share methodology, for the period of 2001–2006. This is the first intercensal period in which Canadian business has faced the full impact of the removal of North American tariff protection and the increased globalization of the Canadian economy. The data covers employment by eighteen industry sectors for the seventy‐three economic regions defined by Statistics Canada. MFP measures the region and industry‐mix effects, which are interpreted as in the traditional shift‐share model (though they are derived more accurately) and, in addition, an interaction effect. The results demonstrate that the broad heartland‐hinterland differences in the distribution of population and employment growth are increasing not decreasing and that the hinterland is in fact falling further behind the heartland in employment growth. However the Calgary‐Edmonton corridor and the Lower Mainland of British Columbia are emerging as a western heartland. The population size of cities does affect their rates of employment growth, but so too does their location: the growth of heartland cities is outpacing those in the hinterland. The Appendix provides the equations for two‐variable multifactor partitioning.

Regional Growth Dynamics in the Service Sector: The Determinants of Employment Change in UK Regions, 1971–2005

“…While this technique has been widely discussed and utilised (see Ray, Lamarche, and Beaudin for a discussion), it has been criticised for the static nature of the analysis produced (Gardiner et al ), as well as for what has been described as a “fundamental flaw” in terms of a bias introduced by using different industry weightings for each region rather than a standardised national weighting (Ray, Lamarche, and Beaudin ). Thus, regional effects are not measured correctly, introducing a single regional effect into the model whereas in reality this may vary according to the industry (Ray, Lamarche, and Beaudin :300). The multi‐factor partitioning technique was developed in response to these criticisms, using standardised national weightings to decompose regional growth into its component parts.…”

“…Second, the “regional interactions effect highlights relative regional changes in employment net of regional or industry effects, reflecting the existence of specific advantages for a particular industry in a particular location” (Ray, Lamarche, and Beaudin :298). Accordingly, this can be seen to be analogous to region‐specific advantages, offering an effective proxy for examining regional specialisation and the accompanying agglomeration economies this generates.…”

Restoring the “Regional” to Regional Policy: A Regional Typology of Western Canada

“…This geographical analysis of Western Canada's employment growth is based on census data at the ER level which is aggregated from constituent census divisions (Ray, Lamarche, and Beaudin 2012). Employment growth has been a neglected aspect of regional economic development in Western Canada especially since job creation is not tracked by WD (Canadian Taxpayers Federation 2009, 19).…”

“…This study uses MFP, a corrected reformulation of shift-share (Ray 1990;Lamarche, Srinath, and Ray 2003;Ray, Lamarche, and Beaudin 2012;Gardiner, Martin, and Tyler 2012). As in shift-share, the main components of regional employment growth Figure 1 Employment Growth in Western Canada: 2001Canada: -2006 Source: Raw data from Statistics Canada, 2001 and2006, Census of Population. in MFP are the industry-mix and region effects.…”

Employment Growth by Firm Size During the Recent Crisis in Italy: A Multifactor Partitioning Analysis

“…To answer the above research questions, taking into account industrial and regional disparities, this paper proposes the use of the Ray‐Srinath multifactor partitioning (MFP) model and introduces the decomposition of some key components computed by the method to study the relationship between size and growth. This approach was first introduced by Ray () and recently discussed by Lamarche, Srinath, and Ray () and Ray, Lamarche, and Beaudin (). MFP is essentially an extension of shift‐share analysis (Biffignandi ).…”