A New Improvement Proposal to Estimate Regional Input–Output Structure Using the 2D-LQ Approach

Abstract

The use of location quotients for the estimation of regional input–output tables has been found to be a useful and efficient tool to estimate intraregional production coefficients and multipliers. This paper considers some regionalisation methodologies based on location quotients for the estimation of input–output tables—some of which have hitherto not been analysed at the regional level—and studies which one provides the best estimation (best goodness of fit). We focus the analysis mainly on the accuracy of Flegg’s location quotient (FLQ) and two-dimensional location quotient (2D-LQ). The analysis makes use of the multiregional input–output table for Korea for the year 2015 to evaluate the accuracy of the 2D-LQ method against FLQ. A novel proposal for the determination of the parameters corresponding to the 2D-LQ method is presented. This proposal is evaluated in Korean regions and is also applied to Spanish regions. The results obtained from the research conclude the general superiority of the 2D-LQ method, thus corroborating the results of other studies at the national level as well as the validity of our proposal.

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

“…Papers presenting the 2D-LQ approach (Pereira-López et al, 2020, 2021Martínez-Alpañez et al, 2023) Nevertheless, for the 2D-LQ to be a useful technique in the typical situation where surveybased data are unavailable, it is crucial to be able to obtain reliable estimates of 𝛼 and 𝛽. For Korea, the authors propose the following estimating equations:…”