The multi-factor partitioning model and a suggestion for its modification

Abstract

The multi-factor partitioning model (MFP) is one of the shift-share analysis models and constitutes an essential contribution to the effort of describing and understanding a region’s growth. The purpose of the present paper is: 1) To present, the multi-factor partitioning model and its connection to traditional and homothetic one; 2) To explain why the use of standardized relative changes in the use of the MFP model ignores two effects: the distribution effect and the structure effect; 3) To propose a modification of multi-factor partitioning model to take into account the previous mentioned effects; 4) To apply the multi-factor partitioning and the proposed modified multi-factor partitioning model in order to identify growth regional patterns in thirteen Greek regions, and show that the use of multi-factor partitioning model instead the proposed modified model, misleads us to the results.