A Portfolio Analysis of Industrial Structure
AbstractIndustrial sectors producing income-elastic products can grow rapidly but are highly vulnerable to fluctuations in the world economy. Policymakers need to take into account this trade-off between output and employment growth over the longer term and volatility in the short to medium term. We bring the principles of portfolio theory to bear on the issue. Our analysis is applied to Irish manufacturing employment where growth has been concentrated in foreign-owned sectors such as Office and Data Processing Equipment, Pharmaceuticals and Professional Instruments. We show that, increased volatility notwithstanding, the country’s hightech FDI-driven strategy has brought the economy’s industrial portfolio closer to the mean-variance efficiency frontier.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200309.
Length: 16 pages
Date of creation: 08 Mar 2003
Date of revision:
Industrial Structure; Portfolio Analysis;
Find related papers by JEL classification:
- O21 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
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