1. Space and Economics
Chapter 6: Regional disparities
Author
Wim Heijman (Wageningen, the Netherlands)
August 10, 2009

2. 6. Regional disparities
6.1 Principles
6.2 The regional economic structure
6.3 Evaluation of the three regions
6.4 Shift and share analysis
6.5 Regional economic implications
6.6 A disparity measure: the gini coefficient
6.7 Allocation of structural funds and changing
regional income distribution
6.8 Application: regional disparities in Romania
6.9 Application: shift share analysis of China
6.10 Clusters and shift share analysis

3. Figure 6.1: Income distribution (GDP per inhabitant, NUTS 2 level, 2003).

4. 6.1 Principles
Figure 6.2: Deviation of income concepts in terms of percentage from the Dutch average (per capita) in 1997.

5. 6.1 Principles
1
0.9
0.8
0.7
0.6
HDI
0.5
0.4
0.3
0.2
0.1
0
0 10000 20000 30000 40000 50000 60000 70000
GDP
Figure 6.3: GDP and HDI of the 27 EU countries in 2005

6. 6.1 Principles
Table 6.1: Employment (number of jobs) in three regions in 1992 and 2002.
x1000
1992 2002 index 2002 (1992=100)
Greece 3807 3914 103
The Netherlands 6986 8340 119
Ireland 1155 1765 153
EU15 157991 170550 108
Source: European Commission (2004).

7. 6.2 The regional economic structure
Table 6.2: Economic structure of the EU15-countries.
Number of jobs x1000
Index 2002
sector 1992 2002 (1992=100)
Services 103116 121056 117
Industry 45794 42638 93
Agriculture 8843 6822 77
Total 157911 170550 108
Source: European Commission (2004).

8. 6.2 The regional economic structure
EU15 Greece
agriculture
6% agriculture
24%
industry
29% services
51%
services
65% industry
25%
Figure 6.4: Regional economic structure (employment) of Greece compared to the structure of EU15 in
1992.

9. 6.2 The regional economic structure
EU15 The Netherlands
agriculture Agriculture
6% 4%
Industry
industry 24%
29%
services
65% Services
72%
Figure 6.5: Regional economic structure (employment) of The Netherlands compared to the structure of
EU15 in 1992.

10. 6.2 The regional economic structure
EU15 Ireland
agriculture
agriculture
6%
14%
industry
29%
industry
services
services 28%
58%
65%
Figure 6.6: Regional economic structure (employment) of Ireland compared to the structure of EU15 in
1992.

11. 6.3 Evaluation of the three regions
Table 6.3: Evaluation of the expected economic growth of the three regions.
Greece The Netherlands Ireland
Economic structure — + —
Specific regional circumstances — — ++
Total — +/— +

12. 6.4 Shift and share analysis
Table 6.4: Example shift and share analysis.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
i Wij0 Wijt Wi0 Wit Wijt (2)- (7) n (7)-(9) Wij 0 Wi 0
Wit Wit ∑Wit
Wij 0 n n
Wij 0 Wi 0 Wi 0 i =1
n
Wij 0 ∑W ij 0 ∑W i0
∑W
i =1
i0
i =1 i =1
1 6 6 7654 6956 1.00 0.91 5.45 0.55 6.26 -0.81 0.01 0.05
2 205 182 45148 45387 0.89 1.01 206.09 -24.09 214.03 -7.95 0.35 0.31
3 105 93 36909 38580 0.89 1.05 109.75 -16.75 109.63 0.13 0.18 0.25
4 193 228 15571 18202 1.18 1.17 225.61 2.39 201.50 24.11 0.33 0.11
5 78 68 41536 44162 0.87 1.06 82.93 -14.93 81.44 1.49 0.13 0.28
Σ 587 577 146818 153287 629.83 -52.83 612.86 16.97 1.00 1.00
Wij0: Employment in sector i in region j in year 0 (starting year).
Wijt: Employment in sector i in region j in year t (final year).
Sector 1: Agriculture, hunting, forestry and fishing; Sector 2: Industry; Sector 3: Commercial Services;
Sector 4: Financial intermediation, real estate, renting and business activities; Sector 5: Public Services.

13. 6.4 Shift and share analysis
Table 6.5 Results of shift share analysis
Actual Shift Differential Shift Proportionality Shift
n
Wt n n
 Wit  n
W W 
S a = ∑Wijt − ∑Wij 0 S d = ∑ Wijt −
 Wij 0  = −52.83 S p = ∑  it Wij 0 − t Wij 0  = 16.97
  
W0 i =1 i =1  Wi 0  i =1  Wi 0 W0 
i =1
= 577 −
153287
× 587 = − 35.86 S p = Sa − Sd
146818
= —35.86 — (—52.83) = 16.97
Relative Actual shift: Relative Differential shift: Relative Proportionality Shift:
− 35.86 − 52.83 16.97
RS a = = −0.06 RS d = = −0.09 RS p = = 0.03
587 587 587

14. Figure 6.7: Selected NUTS 2 area’s in the EU15

15. 6.4 Shift and share analysis
Figure 6.8: Results

16. 6.5 Regional economic implications
Figure 6.9: left: areas with a high density of logistics and transport; right: areas with more
than 200 inhabitants /km2

17. 6.5 Regional economic implications
Table 6.6: Boudeville classification.
Type 1: RS p > 0, RS d > 0, RS p > RS d . So: RS a > 0.
Type 2 RS p > 0, RS d > 0, RS p < RS d . So: RS a > 0.
Type 3 RS p < 0, RS d > 0, RS p < RS d . So: RS a > 0.
Type 4 RS p > 0, RS d < 0, RS p > RS d . So: RSa > 0.
Type 5 RS p > 0, RS d < 0, RS p < RS d . So: RSa < 0.
Type 6 RS p < 0, RS d > 0, RS p > RS d . So: RSa < 0.
Type 7 RS p < 0, RS d < 0, RS p < RS d . So: RS a < 0.
Type 8 RS p < 0, RS d < 0, RS p > RS d . So: RS a < 0.
Source: Boudeville, 1966.

18. 6.6 A disparity measure: the gini coefficient
Table 6.7: Distribution of income.
(1) (2) (3) (4) (5) (6) (7)
income number of total % % % %
class people income people people acc. income income acc.
0-10 2 10 20 20 5.0 5.0
10-20 3 45 30 50 22.5 27.5
20-30 3 75 30 80 37.5 65.0
30-40 2 70 20 100 35.0 100.0
Total 10 200 100 100.0

19. 6.6 A disparity measure: the gini coefficient
y 100 D
C
65
50
B
27.5
A
5
O E
0 10 20 30 40 50 60 70 80 90 100
x
Figure 6.10: Lorenz curve.

20. 6.6 A disparity measure: the gini coefficient
The Brown Formula:
OABCD OED - OEDCBA
g= = =
OED OED
m
( ) m
( )( )
0.5 × 100 × 100 − ∑ xi − xi −1 yi −1 − 0.5 ∑ xi − xi −1 yi − yi −1
= i =1 i =1 =
0.5 × 100 × 100
m
=1− ∑ x − x(i i −1 i
)(
y +y
i −1
. )
i =1

21. 6.6 A disparity measure: the gini coefficient
0.5 × 100 × 100 − 0.5 × 20 × 50 − 5 × 30 − 0.5 × 22.5 × 30 − 30 × 27.5 − 0.5 × 37.5 × 30 − 20 × 65 − 0.5 × 35 × 20
g = =
0.5 × 100 × 100
5000 - 3575
= = 0.285.
5000
Approximat ion : g = x − y.

22. 6.7 Allocation of Structural Funds and changing regional income distribution
β γ
Fi = αPi I i ,
LnFi = Lnα + βLnPi + γLnI i .
LnFi = − 0.42158 + 1.43129 LnPi − 0.33426 LnI i . R 2 = 0.87
( −2.64 ) ( 7.19 ) ( −2.05 )

23. Share in Structural Funds (%)
0
5
10
15
20
Austria 25
Belgium
Denmark
Finland
France
Germany
Great Britain
Greece
Ireland
Italy
Luxembourg
Real allocation
Netherlands
Portugal
Spain
Sweden
Cyprus
Czech Republic
Predicted allocation
Estonia
Hungary
Latvia
Lithuania
Malta
Poland
Slovakia
Slovenia
6.7 Allocation of structural funds and changing regional income distribution

24. Figure 6.12: GDP growth in the EU 1995 2004

25. 6.7: Allocation of structural funds and changing regional income distribution
GDPi 2005 = αYi join + β ,
g 2005
i = γYi join
+δ,
GDPi 2005 = − 398.057 Yi join + 815,566.7, R 2 = 0.556.
( −5.367 ) ( 5.540 )
g i2005 = 0.075735Yi join − 146.558, R 2 = 0.353.
( 3.619 ) ( −3.528 )

26. 6.8: Application: regional disparities in Romania
population-GDP disparity, 1998 population-GDP disparity, 2002
100% 100%
80% 80%
cumulative income (%)
cumulative area (%)
60% 60%
40% 40%
20% 20%
0% 0%
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
cumulative population (%) cumulative population (%)
Figure 6.13: Income distribution for Romania 1998 (g = 0.156) and 2002 (g = 0.205).

27. 6.8: Application: regional disparities in Romania
population-GDP disparity, 1998
population-GDP disparity, 2002
100%
100%
80%
cumulative income (%)
80%
cumulative area (%)
60%
60%
40%
40%
20%
20%
0%
0%
0% 20% 40% 60% 80% 100%
0% 20% 40% 60% 80% 100%
cumulative population (%)
cumulative population (%)
Figure 6.14: Distribution of population in Romania for 1998 (g = 0.246) and
2002 (g = 0.253).

28. 6.8: Application: regional disparities in Romania
GDP-area disparity, 1998 GDP-area disparity, 2002
100%
100%
80%
cumulative income (%)
80%
cumulative income (%)
60%
60%
40%
40%
20%
20%
0%
0%
0% 20% 40% 60% 80% 100%
0% 20% 40% 60% 80% 100%
cumulative area (%)
cumulative area (%)
Figure 6.15: Spatial distribution of production in Romania for 1998 (g = 0.288) and 2002
(g = 0.314). .

29. 6.8: Application: regional disparities in Romania
Romania 2002 / Euro per inhabitant
1105 - 1837
1837 - 2568
RO016
2568 - 3300 RO041 RO034
RO043
3300 - 4032
RO015 RO033
4032 - 4763 RO014 RO040
RO037
RO023
RO036 RO030
RO013 RO048
RO011
RO010
RO042 RO018 RO025
RO046 RO031 RO050 RO044
RO020 RO047
RO039 RO017
RO022 RO049
RO029 RO012
RO026
RO032
RO019
RO035
RO038 RO021 RO024
RO027
RO045 RO028
0 300 Kilometers
N
Figure 6.16: Romania: regional income distribution (in Euro’s) in 2002.

30. 6.8: Application: regional disparities in Romania
Romania 2002 / Income per km2
51 - 78
78 - 125
RO016
125 - 197 RO041 RO034
RO043
197 - 368
RO015 RO033
368 - 38707 RO014 RO040
RO037
RO023
RO036 RO030
RO013 RO048
RO011
RO010
RO042 RO018 RO025
RO046 RO031 RO050 RO044
RO020 RO047
RO039 RO017
RO022 RO049
RO029 RO012
RO026
RO032
RO019
RO035
RO038 RO021 RO024
RO027
RO045 RO028
0 300 Kilometers
N
Figure 6.17: Romania: Territorial income distribution (in Euro’s) in 2002. .

31. 6.9: Application: Shift share analysis of China
Figure 6.18: Population density in China 2004

32. 6.9: Application: Shift share analysis of China
Table 6.8: Gini-coefficients for China
Gini-coefficient 1996 2004 increase
Population density 0.6404 0.6440 0.56%
GDP 0.2401 0.2696 12.28%
Territorial density of GDP 0.7175 0.7322 2.05%
Source: Jingjing (2007).

33. 6.9: Application: Shift share analysis of China
Figure 6.19: GDP per capita 2004.

34. 6.9: Application: Shift share analysis of China
Figure 6.20: Territorial GDP distribution 2004

35. 6.9: Application: Shift share analysis of China
Figure 6.21: Relative actual shift

36. 6.9: Application: Shift share analysis of China
Figure 6.22: Relative differential shift

37. 6.9: Application: Shift share analysis of China
Figure 6.23: Relative proportionality shift

38. 6.10: Application: clusters and shift share analysis
100,00 100,00
80,00 80,00
Hugginsrank
60,00
Hugginsrank
60,00
4 0,00
4 0,00
20,00
20,00
0,00
0,00
-0,04 -0 ,03 -0,0 2 -0,01 0,0 0 0,01 0,02 0,03 0,04
-0,10 0,00 0,10 0,20
relative proportionality shift
relati ve differential shift
Figure 6.24: Figure 6.24: Scatter diagram of Huggins rank and relative differential shift (left panel), and
relative proportionality shift (right panel) for European regions (NUTS 2).