Dundee Discussion Papers in Economics 142: An empirical investigation of the relationship between regional growth and structural change

It is well recognized that changes in the economic performance of regions would normally be associated with a degree of structural change. In any region it is extremely improbably that all industrial sectors are growing or declining at the same rate. This paper seeks to examine the nature of the interrelationship between economic growth and the extent of structural change that takes place in a region. Using data for Great Britain the paper seeks to establish whether there is any identifiable association in the short-run between regional growth rates and the extent of structural change in the region, whether that relationship is symmetric with respect to growth and decline and finally whether the relationship is linear or non-linear. There appears to be a reasonable association between regional economic growth and structural change in the region. However the relationship varies across regions; in some regions less structural change is observed at any level of growth than in other regions. Further the relationship between growth and structural change appears to be non- linear suggesting that increasingly faster growth rates are associated with more than proportional increases in structural change, at least in the short-run.