A new proposal to model regional input–output structures using location quotients. An application to Korean and Spanish regions

Abstract

This paper is based on the use of Flegg's location quotients (FLQ) and proposes a novel procedure for the estimation of the unknown parameter δ in regions with and without input–output frame availability. Applied to data for the Korean regions for the year 2015, firstly the determination of the optimal δ is addressed by solving a general optimization problem and, secondly, a regression equation is proposed to estimate the value of δ from the explanatory variables of interregional road freight transport (IRFT) and imports from the rest of the world (IROW). The results obtained show a lower bias in regard to the true values of the regional inputs coefficients in relation to other methods based on location quotients.

Eficiencia en la estimación de coeficientes técnicos y multiplicadores interregionales: la metodología Jahn versus las metodologías GRAS y GravityRAS

“…Since no such table is available, neither the optimal value of the parameters 𝛿, in the case of FLQ, nor 𝛽 and 𝛽, in the case of 2D-LQ, that minimise the reference statistic can be determined. Buendía et al (2022) propose an estimation equation for the parameter 𝛿 in the case of FLQ that offers the best estimate of this parameter, understood as the one that minimises the value of the WAPE statistic obtained in the estimation on the reference matrix. In the case of the Spanish regions, the regional d values are estimated from the following regression equation:…”