Dynamic externalities, local industrial structure and economic development: panel data evidence for Morocco

Abstract

The impact of industrial structure on local economic development is analyzed for the case of Morocco. Using annual data for 6 urban areas and 18 industrial sectors indicators for specialization, diversity and competiton of firms within a particular region are constructed for the years 1985-1995. The effects of these and other explanatory variables on local economic activity are estimated using a dynamic panel data model with both individual and time specific effects. The estimation results suggest significant positive specialization and diversity effects and significant negative competition effects asserting the importance of industrial structure for local economic development.