decompose the national share and industrial mix effects into expected and differential components. The expected component is based on the homothetic level of the variable, and is the effect not attributed to the regional specializations. The differential component is the remaining effect, which is attributable to the regional industrial mix. Arcelus claimed that, even with the Esteban-Marquillas extension, the regional share effect is still related to the regional industry mix, and that the static model assumes all regional industries operate on a national market basis, focusing too heavily on the export markets and ignoring the local markets. In order to address these issues, Arcelus used a different method for separating the regional share effect, resulting in a regional growth effect and a regional industry mix effect. Both of these are decomposed into expected and differential components using the homothetic variable. Formula The regional change in the variable within industry between the two years and is defined as the sum of the eight shift-share effects: expected national growth effect (), differential national growth effect (), expected industry mix effect (), differential industry mix effect (), expected regional growth effect (), differential regional growth effect (), expected regional industry mix effect (), and differential regional industry mix effect (). The eight effects are related to the three traditional shift-share effects from the comparative static model. The homothetic variable is calculated the same as in the Esteban-Marquillas model. The beginning value of the regional homothetic variable within a particular industry is . It is based on the regional and national values of the economic variable across all industries, and respectively, and the industry-specific national value . Each of the eight shift-share effects is defined as a percentage of either the beginning value of the economic variable, the homothetic variable, or the difference of the two. The total percent changes in the economic variable nationally and regionally for all industries combined are and respectively, while the national and regional industry-specific percent changes are and , respectively. References Regional science