DIVERSIFICATION VS. SPECIALIZATION
HOW SPECIALIZED IS SOUTH TEXAS?
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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