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Coefficients of Localization (or Dispersion)
and Specialization (or Diversification)

(http://faculty.washington.edu/krumme/systems/localiz.html)
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Concentration Terminology

D I S T R I B U T I O N
RELATIVELY EVEN RELATIVELY UNEVEN
(= Concentration)
SPATIAL
DISTRIBUTION		 "Dispersion" "Localization"
"Concentration"
INDUSTRIAL
DISTRIBUTION		 "Diversification" "Specialization"

.
Concentration Coefficient = 1/2
N
S
i=1
 |Xi-Yi|


100


Table #1

Localization of an Industry

REGIONS PERCENT OF NATIONAL TOTAL EMPLOYMENT OF FOCAL INDUSTRY IN REGION (A-D) PERCENT OF TOTAL U.S. MANUFACTURING EMPLOYMENT IN REGION (A-D) DIFFERENCE IN RELATIVE REGIONAL EMPLOYMENT IN FOCAL INDUSTRY & ALL MANUFACTURING ACTIVITIES LOCATION QUOTIENT OF FOCAL INDUSTRY IN RESPECTIVE REGIONS
A 15 35 -20 .43
B 35 30 +5 1.17
C 30 20 +10 1.5
D 20 15 +5 1.33
Sum 100% 100% -20
+20		 (1.0)

The focal industry has a coefficient of localization of .2. The higher the coefficient, the greater the localization (spatial concentration) of the industry. We could also calculate a coefficient of dispersion by deducting .2 from 1.0 = .8


Table #2

Specialization of a Region

INDUSTRIES PERCENT OF TOTAL (REGIONAL) EMPLOYMENT IN FOCAL REGION IN INDUSTRIES (A-D) PERCENT OF TOTAL U.S. MANUFACTURING EMPLOYMENT IN INDUSTRIES (A-D) DIFFERENCE BETWEEN REGIONAL & NATIONAL EMPLOYMENT IN 4 INDUSTRIES LOCATION QUOTIENTS OF THE INDUSTRIES IN FOCAL REGION
A 15 35 -20 .43
B 35 30 +5 1.17
C 30 20 +10 1.5
D 20 15 +5 1.33
Sum 100% 100% -20
+20		 (1.0)

The focal region has a coefficient of specialization of .2. The higher the coefficient, the greater the regional specialization. We could also calculate a coefficient of diversication by deducting .2 from 1.0 = .8
See also: Hoover, Introduction to Regional Economics, 1985, Table 9.4

Internet Sites: 

Clippings:

Literature:

  • Diversification of the Utah Economy [1994]

  • Hayter, Roger. Dynamics of Industrial Location, Wiley, 1997, pp.435-7.

  • Hoover, Edgar M. and Frank Giarratani, An Introduction to Regional Economics [Full online text of 3rd, 1985 edition of the classic!] Ch.9 Section 4.2 on "Regional Specialization

  • Isard, Walter et al., Methods of Interregional and Regional Analysis, Ashgate, 1998, Ch.2, pp.7ff.. [HT391.M48 1998 OUGL Stacks]

  • Isard, Walter. Methods of Regional Analysis. MIT, 1960, pp.249ff.

  • Knox, Paul. Diversification : strategies for military-dependent communities, businesses and workers in Washington state [Olympia? Wash. : Dept. of Community Development?, 1991?] [Suzzallo/Allen Stacks HC79.D4 D59 1991]

  • Krugman, P. 1991b. Geography and Trade. MIT Press: Cambridge, Mass. Ch.2: "Localization"
    pp.55ff. use of Gini coefficient
    Appendix D (pp.129ff.) Locational Gini Coefficients

  • Regional Participation in Higher Education and the Distribution of Higher Education Resources across Regions [Occasional Paper Series; Higher Education Division Department of Education, Training and Youth Affairs May 1999 / Commonwealth of Australia 1999]

  • Siegel, Paul B., Thomas G. Johnson, and Jeffrey Alwang, REGIONAL ECONOMIC DIVERSITY AND DIVERSIFICATION: SEEKING A FRAMEWORK FOR ANALYSIS Growth and Change 26(2) 1995: 261-284.

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