The shape of the firm size distribution (FSD) looks similar in all market economies but its approximation by a parametric distribution, a necessary information to build a general model of firm dynamics, remains much debated. In this paper, we use an exclusive comprehensive database on Belgian firms. We show that the lognormal distribution is a better approximation of the empirical FSD than the power law distribution. This result holds true at the aggregate, sectoral and regional levels.
Shift-share analysis is a decomposition technique widely used in regional studies to quantify an industry-mix eﬀect and a competitive eﬀect on the growth of regional employment (or any other relevant variable) relative to the national average. This technique has always been subject to criticism for its lack of theoretical basis. This paper presents a critical assessment of the methods suggested by Dunn (1960) and by Esteban-Marquillas (1972) and proposes a new shift-share method, which separates out the two eﬀects unambiguously. By way of illustration, we provide an application to manufacturing employment in the Belgian provinces between 1995 and 2007.
This paper aims at analysing the importance of local determinants to foreign direct investment (FDI) in three European regional case studies. The originality of the approach lies in the use of disaggregated data by sector and by region. The results are threefold. First, regional demand and productivity are fundamental FDI determinants, confirming most studies with national data. Second, regional FDI inflows are more dependent on regional than national determinants. Finally, the effect of market potential measured with absolute GDP on regional FDI diminishes linearly with distance and does not when measured with GDP per capita.
In a two-region model, we formalize Kindlebergerrsquos idea that wealth breeds first more wealth, and then decline: when one region leads, its inhabitants develop consumption habits incompatible with the necessary investment in knowledge to remain the leader. This gives the other region a window of opportunity to gain economic primacy. The theory suggests that differences across regions that have similar characteristics may persist even if physical capital flows from rich to poor regions. We study patterns of overtaking, alternating primacy, irreversible decline, and monotonic convergence, according to the initial dispersion of knowledge and the strength of consumption habits. Even though exogenous factors may matter on some occasions, we show that they are not necessary to reverse economic leadership.