location_quotient {EconGeo}

Compute location quotients from regions - industries matrices

Description

This function computes location quotients from (incidence) regions - industries matrices. The numerator is the share of a given industry in a given region. The denominator is the share of a this industry in a larger economy (overall country for instance). This index is also refered to as the index of Revealed Comparative Advantage (RCA) following Ballasa (1965), or the Hoover-Balassa index.

Usage

location_quotient(mat, binary = FALSE)

Arguments

mat

An incidence matrix with regions in rows and industries in columns

binary

Logical; shall the returned output be a dichotomized version (0/1) of the location quotient? Defaults to FALSE (the full values of the location quotient will be returned), but can be set to TRUE (location quotient values above 1 will be set to 1 & location quotient values below 1 will be set to 0)

Value

A matrix of location quotients computed from the regions - industries matrix. If the 'binary' parameter is set to TRUE, the returned matrix will contain binary values (0/1) representing the location quotient. If 'binary' is set to FALSE, the full values of the location quotient will be returned.

Author(s)

Pierre-Alexandre Balland [e-mail]

References

Balassa, B. (1965) Trade Liberalization and Revealed Comparative Advantage, The Manchester School 33: 99-123.

See Also

rca

Examples

## generate a region - industry matrix
mat <- matrix(
  c(
    100, 0, 0, 0, 0,
    0, 15, 5, 70, 10,
    0, 20, 10, 20, 50,
    0, 25, 30, 5, 40,
    0, 40, 55, 5, 0
  ),
  ncol = 5, byrow = TRUE
)
rownames(mat) <- c("R1", "R2", "R3", "R4", "R5")
colnames(mat) <- c("I1", "I2", "I3", "I4", "I5")

## run the function
location_quotient(mat)
location_quotient(mat, binary = TRUE)