H
DIVERSITY AND SPECIALIZATION
ow diversified is our economy? Diversification is a popular economic development objective.
Other things being equal, a more diverse economy tends to be more stable over time because
it is less dependent on the performance of individual industries or businesses. Decline in
one particular local industry can be offset by growth in others. However, diversity typically does not
translate into rapid economic growth.
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The opposite of economic diversity is
specialization. According to standard economic
theory, specialization raises labor productivity
and thus a higher standard of living among
households. In the short run, an economy can
grow more rapidly if it relies more heavily on a
particular industry that is also thriving. However,
such dependence is also a source of vulnerability
to an overall economic downturn when that
industry suffers a downfall. In the Coastal Bend,
the closure of Naval Station Ingleside in 2011,
which previously made up more than onetenth of San Patricio County’s workforce, has
generated a tremendous adverse impact on its
local economy.
Coastal Bend Employment by Industry, 2014
Two Economic Pies
The accompanying pie charts provide two
alternative representations regarding the
concentration of our regional industries. The
first chart shows the distribution of employment
across industries, and the second chart shows
the distribution of business sales instead of
employment across industries. In terms of the
number of jobs, health care and social services,
accommodation and food services, and retail
trade are major employers, each accounting for
more than 10 percent of the regional workforce.
Source: EMSI Analyst Online
Coastal Bend Business Sales by Industry ($ mil), 2013
In terms of the sales volume, however,
the distribution of economic activity across
industries differs drastically from the patterns
by employment. Manufacturing, which generates
only 5 percent of total employment regionally,
contributes nearly 60 percent of all sales in
the Coastal Bend. The health care and social
assistance sector, on the contrary, comprises 15
percent of the regional workforce, but generates
less than 1 percent of the region’s total sales
volume.
Different industries in the Coastal
Bend have experienced vastly
different growth patterns over time
in their numbers of self-employed.
Source: Texas Comptroller of Public Accounts
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Review of South Texas Business Conditions