Decomposition analysis: an extended theoretical foundation and its application to the study of regional income growth in Denmark

The paper presents an extended interregional social accounting matrix (SAM) framework, derived from a Danish interregional computable general equilibrium (CGE) model, as the basis for a decomposition of regional income growth in Denmark in the period 1980 – 98. The decomposition analysis indicates that there is some evidence for a reversal in the trend of location of economic activity in Denmark in the 1990s and provides evidence on the causes of this trend reversal.