Measuring Dynamic Patterns in the Structure of Economies

Richard McHugh, Ronald Cooper, Sheila A. Martin, Daniel M. Otto, Stanley R. Johnson
January 1990  [90-SR 41]

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McHugh, R., R. Cooper, S.A. Martin, D.M. Otto, and S.R. Johnson. 1990. "Measuring Dynamic Patterns in the Structure of Economies." Staff report 90-SR 41. Center for Agricultural and Rural Development, Iowa State University.


The objective of this study was to explore a new method of analyzing the performance of substate economies. A major limitation of conventional analyses of economic diversity and growth is the reliance on static measures of economic structure. Such measures do not capture the patterns of growth dynamics or structural change the region may be experiencing.

This paper discusses a new measure of dynamic economic diversity and explores its relationship to economic performance. The measure is a statistical index that reflects the degree to which employment in a county's industries move together over time. The more the industries' employment levels move together, the higher the value of the index. A high index indicates a high degree of regional economic integration.