Bun M. J. G. and El Makhloufi A. (2007) Dynamic externalities, local industrial structure and economic development: panel data evidence for Morocco, Regional Studies 41, 823–837. The impact of industrial structure on local economic development is analysed for the case of Morocco. Using annual data for six urban areas and 18 industrial sectors indicators for specialization, diversity and competition 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. The empirical evidence is robust to the measure of economic activity used in the analysis, i.e. either employment or value added. A similar analysis is conducted restricting the space to the region of Casablanca. Using data on seven districts and 18 sectors for the period 1992–1995 again significant externalities are found within this specific region.