Measuring a State Economic Outlook for a Corporate Site Location Decision

A critical factor impacting a company’s corporate site location is the economic success of the state in which they are considering locating.  State governments play a large role in the success of a region. Companies will conduct a review of the state’s economic performance through a review of the state’s economy involves understanding the state’s industry size and make up, its income performance, unemployment rate, demographic strengths and weaknesses.

As an example, Ohio has the seventh largest economy among the fifty states with a $608.1 B GDP as measured in 2015.   Pennsylvania ranked 6th in GDP of states and New Jersey as 8th.[i]   If it were a country, Ohio’s economy would be the 21st largest in the world—just below Saudi Arabia.[ii]  On a per capita basis, Ohio’s GDP of $52,363 ranked 26th largest in the nation in 2015.[iii] Among its neighboring states, only Pennsylvania ranked higher than Ohio, with per capita GDP of $53,831 (23rd).[iv]  Over the last decade, average annual economic growth in most of Ohio’s neighboring states was faster than in Ohio, including West Virginia where GDP growth averaged 3.3% per year, Pennsylvania (3.2%), Indiana (3.1%), and Kentucky (3.0%).[v][vi] Michigan was the only neighboring state with slower GDP growth than that of Ohio, at an average of 1.6% per year.[vii] Ohio’s economy when reviewed by industry illustrates an economy not nearly as dominated by the manufacturing industry as had existed in the past.

Source: US Bureau of Labor Statistics

As measured by the Bureau of Labor Statistics, trade, transportation and utilities, education and health care, government and professional service jobs all have more jobs in Ohio than the manufacturing sector.  State and Regional economies grow through the retention, expansion, and attraction of like, growing industries already located in a region.  This is measured by a review of the industry cluster and location quotient for the success of these clusters.  An industry cluster comprises of a geographic concentration of firms within a particular industry.[viii]  It includes core firms and other organizations who can contribute to the industry’s competitive success.

A location quotient is an indicator of the economic concentration of a certain industry in a state, region, county or city compared to a base economy, such as a state or nation.  A location quotient greater than 1 indicates a concentration of that industry in the area. A location quotient greater than 1 typically indicates an industry that is export oriented.  An industry with a location quotient of 1 with a high number of jobs present is likely a big exporter and is bringing economic value to the community feeding the retail trade and food services sectors.  The location quotient is an indicator of past success but is also a harbinger of future success.

Source: US Bureau of Labor Statistics

As illustrated in the chart above, Ohio leads states in trade, transportation and utilities, manufacturing and goods producing industries but does not keep pace with neighboring Indiana or Michigan and is far behind Florida in professional and business services and financial activities.  North Carolina is a clear leader in technology with the highest location quotient in information technology, and Florida leads in technology and leisure activities.


[ii] Ibid.

[iii] Ibid.

[iv] Ibid.

[vi] Ibid.

[vii] Ibid.

[viii] See