What drives your city's economy?

A Location Quotient (LQ) measures how concentrated a local area is in a given industry relative to the national average. An LQ greater than 1.0 identifies an "export" industry — one that produces more than the local population needs. The surplus is effectively exported to the rest of the world, bringing outside money into the region.

That income circulates through the local economy as workers spend on housing, restaurants, childcare, and other services, creating additional jobs. This is the multiplier effect — each export job typically supports two to four total jobs — the export job itself plus the local jobs its spending creates — and two and a half to nine residents. The higher the LQ, the more concentrated — and more dependent — the local economy is on that industry.

Why it matters: High-LQ sectors drive a metro's employment, population growth, and income. What the location quotient shows you is how much of a metro's export base sits in one sector, and which one. Two metros can be equally concentrated and behave nothing alike; what a metro is concentrated in matters more than how concentrated it is. A metro's economic base is the starting point for anyone sizing up a regional economy — siting a business, evaluating a market, shaping policy, or deciding where to build a career.