Oklahoma location quotient

              Business Development Series:
C e n t e r f o r E c o n o m i c & B u s i n e s s D e v e l o p m e n t
What Is It?
Location quotient (LQ) is used to assess industry concentration by dividing the employment shares of an industry in a particular region to employment
shares of the same industry based on a larger reference region such as a state or nation. However, it is important to bear in mind that this analysis
does not take into consideration any disparities between productivity, technology, output, demand, etc. Table 1 consists of location quotient figures (by
region) for the state of Oklahoma.
How Are They Interpreted?
A location quotient is a statistical measure of concentration that suggests whether a local business is an exporting industry or an importing industry.
Exporting industries usually produce more than enough goods and services to satisfy a local demand. Any additional amount produced will then be
exported to the non-local regions. Whereas, importing industries usually do not produce sufficient goods or services to meet a local demand, thus
additional goods and services need to be imported into its region to meet the local market demand.
This report presents location quotient for sixteen major industries in 4-digits NAICS code as shown in the table below:
Oklahoma Location Quotient
By: Fui Ting Phang July 2009
D r . M a r v i n H a n k i n s , D i r e c t o r
1 0 0 C a m p u s D r i v e
W e a t h e r f o r d , O K 7 3 0 9 6
A location quotient greater than 1.00 indicates that a region is more specialized in a particular industry than the state, thus, more goods and services
are produced to meet demand in the local region, and the non-local regions. It is essential to note that location quotient greater than 1.25 usually
suggests that an industry has met local demands and implying some export activities. For example, a Magnetic and Optical Media Manufacturing (NAICS
3346) in northwest region of Oklahoma has a location quotient of 12.61, which suggests that the Magnetic and Optical Media Manufacturing business
is strong in the northwest region. It further suggests that this industry has met local demand and is able to export its additional goods and services
produced to serve demand in non-local regions. However, in some cases, location quotient figures may not always suggest export activities with a LQ
value higher than usual when compared to the state’s or national’s LQ value. For instance, other factors such as low productivity or technology deficiency
in local region may in turns be reflected in high LQ value, where the local labor force is less productive compared to the state or national level on
average. Yet, a location quotient may suggest there are some export activities.
A location quotient equal to 1.00 signifies that both the region and the state of Oklahoma have the same proportion of employment concentrated in a
particular industry. For example, on average, there are equal 0.10 percent shares of employment in Consumer Goods Rental (NAICS 5322) for both the
NAICS Industry NAICS Industry
2361- 2389 Construction 5411- 5419 Professional, Scientific & Technical Service
3111- 3399 Manufacturing 5511- 5511 Management of Companies & Enterprises
4231- 4251 Wholesale Trade 5611- 5629 Administration, Support, Waste Management & Remediation Services
4411- 4543 Retail Trade 6111- 6117 Education Services
4811- 4931 Transportation & Warehousing 6211- 6244 Health Care & Social Assistance
5111- 5191 Information 7111- 7139 Arts, Entertainment & Recreation
5221- 5251 Finance & Insurance 7211- 7224 Accommodation & Food Services
5311- 5331 Real Estate, Rental & Leasing 8111- 8141 Other Services (except Public Administration)