AQUA BOOK 2015 - Page 34

DIVERSIFICATION VS. SPECIALIZATION HOW SPECIALIZED IS SOUTH TEXAS? 32 W hile diversification is a way for a region to maintain economic stability over time, rapid economic development relative to other regions is largely driven by its comparative advantages. A regional economy’s comparative advantages are reflected by the relative sizes of its industries. A local industry is considered to process a comparative advantage in a particular area if its employment or output size is high relative to other areas. As an indicator of specialization, a Location Quotient (LQ) measures an industry’s concentration within a region relative to a benchmark, such as the nation. An industry’s LQ is the ratio of an industry’s share o