If a local industry's share of local employment is 8% and its share of national employment is 4%, what does the ratio indicate?

• A. Importing
• B. Exporting
• C. Balanced
• D. Uncertain

Answer: (B)

This uses the idea of a location quotient, comparing how concentrated an industry is locally to how concentrated it is nationally. Here, the local share is 8% and the national share is 4%, so the ratio is 8% / 4% = 2.0. A ratio greater than 1 means the local area specializes in that industry more than the country as a whole. That higher local concentration usually implies the area produces more than its own local demand, pointing to exporting the surplus to other regions. So the ratio indicates exporting. It wouldn’t indicate importing, since the local area is more concentrated than the national level; a ratio around 1 would suggest a balanced situation.