A Modification of the Cross-Industry Location Quotient for Projecting Sub-Territorial Input-Output Tables

Abstract

Economic accounts at sub-territorial level are projected primarily through Location Quotients (LQ). The degrees of sectoral specialisation at this level will therefore be key in spatial projections. This article advocates rectified use of the Cross-Industry Location Quotient (CILQ). Indirectly, the aim is to check to what extent CILQs are well exploited, given that they are the fundamental reference in other techniques. The input-output (IO) tables for the Euro 19 Area for 2010 and 2015 are taken as a reference for analysis purposes. A statistic is used to measure the degree of similarity between the accounting frameworks of ten countries in the Euro Area and their projections using CILQ, Flegg's formula, its augmented version, and the CILQ variant.

A reformulation of the FLQ approach to computing regional input-output coefficients

“…We start by considering a transformation of the CILQ formula using a sigmoidal function (cf. Sánchez-Chóez et al, 2022). Thus, we account for supply/demand relative sizes.…”