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A Portfolio Analysis of Industrial Structure

Author

Listed:
  • Frank Barry

    (University College Dublin)

  • Colm Kearney

    (Trinity College Dublin)

Abstract

Industrial 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.

Suggested Citation

  • Frank Barry & Colm Kearney, 2003. "A Portfolio Analysis of Industrial Structure," Working Papers 200309, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200309
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    File URL: http://www.ucd.ie/economics/research/papers/2003/WP03.09.pdf
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    References listed on IDEAS

    as
    1. Holger Görg & Eric Strobl, 2016. "Multinational companies and indigenous development: An empirical analysis," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT, chapter 17, pages 305-322, World Scientific Publishing Co. Pte. Ltd..
    2. Atish R. Ghosh & Holger C. Wolf, 1997. "Geographical and Sectoral Shocks in the U.S. Business Cycle," NBER Working Papers 6180, National Bureau of Economic Research, Inc.
    3. Jeffery W. Gunther & Kenneth J. Robinson, 1999. "Industry mix and lending environment variability: what does the average bank face," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 24-31.
    4. Goldberg, Michael A. & Levi, Maurice D., 2000. "The European Union as a country portfolio," European Journal of Political Economy, Elsevier, vol. 16(3), pages 411-427, September.
    5. Palley, Thomas I, 1992. "Sectoral Shifts and Cyclical Unemployment: A Reconsideration," Economic Inquiry, Western Economic Association International, vol. 30(1), pages 117-133, January.
    6. Holger Görg & Eric Strobl, 2016. "‘Footloose’ Multinationals?," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 6, pages 95-113, World Scientific Publishing Co. Pte. Ltd..
    7. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-793, August.
    8. Frank Barry, 2000. "Convergence is not Automatic: Lessons from Ireland for Central and Eastern Europe," The World Economy, Wiley Blackwell, vol. 23(10), pages 1379-1394, October.
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    Cited by:

    1. Frank Barry & Holger Gorg & Eric Strobl, 2005. "Foreign direct investment and wages in domestic firms in Ireland: Productivity spillovers versus labour-market crowding out," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 67-84.

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    More about this item

    Keywords

    Industrial Structure; Portfolio Analysis;

    JEL classification:

    • O21 - Economic Development, Innovation, 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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