Regional inequality and the role of potentially transformative sectors using the location quotient analyses

Uneven regional development develops as the competetivenes of the less developed region is not able to match the more developed region. This study looks into the phenomenon of uneven regional development in Malaysia to identify which industrial sector offer comparative benefits to the region or state under study. To achieve the aims, we applied the location quotient (LQ) technique. The index involved two different periods and two different variables. For the first period, 1970 - 1990, production data on agricultural , mining and quarry, manufacturing and services were used to calculate the LQ coefficient. For the second period, 2003 - 2006, the variable of workforce in the same five sectors was applied. Six regions, namely the Central Region, the Northern Region, the Eastern Region, the Southern Region, Sabah and Sarawak, were adopted in the calculation of the LQ index. In the same vein, the calculation of LQ index was conducted for two more developed states of Selangor and Melaka and two less developed states of Terengganu and Pahang. The LQ analyses suggested that the during the period of 1970 - 1990 dan 2003 - 2006, the economic activities in the less developed states of Sabah and Sarawak were mainly in agriculture. By contrast, the economic activities in the more developed regions, as in the Central Region, Selangor and Melaka foccussed on manufacturing and services. Thus to empower the less developed states to equal the achievement of the more developed states, the LQ analyses point to the imperative of expanding the industrial and construction sectors in those less developed states.