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Regional Input-Output Tables and the FLQ Formula: A Case Study of Finland

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  • Anthony Flegg
  • Timo Tohmo

Abstract

This paper examines the use of location quotients (LQs) in constructing regional input-output tables. Its focus is on the modified FLQ formula proposed by Flegg and Webber (1997). Using data for 20 Finnish regions, ranging in size from very small to very large, we determine appropriate values for the unknown parameter delta in this formula. We also develop a regression model that can be used to select an appropriate value for delta. We find that the FLQ yields results far superior to those from standard LQ-based formulae. Our findings should be very helpful to any regional analyst who is contemplating making use of the FLQ formula to generate an initial set of regional input-output coefficients. These coefficients could be used either as part of the RAS procedure or as the non-survey foundations of a hybrid model. We consider possible improvements to the FLQ formula but find that including a regional specialization term in this formula only marginally enhances its performance. On balance, we would recommend using the original FLQ formula.

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  • Anthony Flegg & Timo Tohmo, 2011. "Regional Input-Output Tables and the FLQ Formula: A Case Study of Finland," ERSA conference papers ersa11p334, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa11p334
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    References listed on IDEAS

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    1. Tobias Kronenberg, 2009. "Construction of Regional Input-Output Tables Using Nonsurvey Methods," International Regional Science Review, , vol. 32(1), pages 40-64, January.
    2. Andrea Bonfiglio, 2009. "On The Parameterization Of Techniques For Representing Regional Economic Structures," Economic Systems Research, Taylor & Francis Journals, vol. 21(2), pages 115-127.
    3. Timo Tohmo, 2004. "New Developments in the Use of Location Quotients to Estimate Regional Input-Output Coefficients and Multipliers," Regional Studies, Taylor & Francis Journals, vol. 38(1), pages 43-54.
    4. Richard Harris & Aying Liu, 1998. "Input-Output Modelling of the Urban and Regional Economy: The Importance of External Trade," Regional Studies, Taylor & Francis Journals, vol. 32(9), pages 851-862.
    5. A. T. Flegg & C. D. Webber, 1997. "On the Appropriate Use of Location Quotients in Generating Regional Input-Output Tables: Reply," Regional Studies, Taylor & Francis Journals, vol. 31(8), pages 795-805.
    6. F J Harrigan & J W McGilvray & I H McNicoll, 1980. "Simulating the Structure of a Regional Economy," Environment and Planning A, , vol. 12(8), pages 927-936, August.
    7. Philip Mccann & John H. LL. Dewhurst, 1998. "Regional Size, Industrial Location and Input-Output Expenditure Coefficients," Regional Studies, Taylor & Francis Journals, vol. 32(5), pages 435-444.
    8. A. T. Flegg & C. D. Webber, 2000. "Regional Size, Regional Specialization and the FLQ Formula," Regional Studies, Taylor & Francis Journals, vol. 34(6), pages 563-569.
    9. Geoff Riddington & Hervey Gibson & John Anderson, 2006. "Comparison of Gravity Model, Survey and Location Quotient-based Local Area Tables and Multipliers," Regional Studies, Taylor & Francis Journals, vol. 40(9), pages 1069-1081.
    10. Andrea Bonfiglio & Francesco Chelli, 2008. "Assessing the Behaviour of Non-Survey Methods for Constructing Regional Input-Output Tables through a Monte Carlo Simulation," Economic Systems Research, Taylor & Francis Journals, vol. 20(3), pages 243-258.
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    Cited by:

    1. Anthony T. Flegg & Timo Tohmo, 2013. "A Comment on Tobias Kronenberg’s “Construction of Regional Input-Output Tables Using Nonsurvey Methods: The Role of Cross-Haulingâ€," International Regional Science Review, , vol. 36(2), pages 235-257, April.
    2. Kowalewski, Julia, 2012. "Regionalization of national input-output tables: Empirical evidence on the use of the FLQ formula," HWWI Research Papers 126, Hamburg Institute of International Economics (HWWI).
    3. Tobias Kronenberg, 2012. "Regional input-output models and the treatment of imports in the European System of Accounts (ESA)," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 32(2), pages 175-191, September.
    4. Anthony T. Flegg & Timo Tohmo, 2011. "A comment on Tobias Kronenberg's "Construction of regional input-output tables using nonsurvey methods: the role of cross-hauling"," Working Papers 20111111, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    5. Kronenberg, Tobias & Többen, Johannes, 2011. "Regional input-output modelling in Germany: The case of North Rhine-Westphalia," MPRA Paper 35494, University Library of Munich, Germany.
    6. Uwe Blien & Friedrich Graef, 2013. "The ADETON method," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 33(2), pages 135-150, October.
    7. Georgios Lampiris & Christos Karelakis & Efstratios Loizou, 2020. "Comparison of non-survey techniques for constructing regional input–output tables," Annals of Operations Research, Springer, vol. 294(1), pages 225-266, November.
    8. Kowalewski, Julia, 2012. "Inter-industrial relations and sectoral employment development in German regions," HWWI Research Papers 127, Hamburg Institute of International Economics (HWWI).
    9. Anthony T. Flegg & Timo Tohmo, 2013. "Estimating regional input coefficients and multipliers: The Use of the FLQ is not a Gamble," Working Papers 20131302, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    10. Jeroen Klijs & Meghann Ormond & Tomas Mainil & Jack Peerlings & Wim Heijman, 2016. "A state-level analysis of the economic impacts of medical tourism in Malaysia," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 30(1), pages 3-29, May.
    11. Satoshi Nakano & Kazuhiko Nishimura, 2013. "A nonsurvey multiregional input–output estimation allowing cross-hauling: partitioning two regions into three or more parts," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 935-951, June.
    12. Kowalewski Julia, 2013. "Inter-industrial Relations and Sectoral Employment Development in German Regions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 233(4), pages 486-504, August.
    13. Kristinn Hermannsson, 2016. "Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input–Output Tables," Spatial Economic Analysis, Taylor & Francis Journals, vol. 11(3), pages 315-339, July.
    14. Jahn, Malte, 2015. "A location quotient-based interregional input-output (IRIOLQ) framework," HWWI Research Papers 161, Hamburg Institute of International Economics (HWWI).
    15. Karyn Morrissey, 2016. "A location quotient approach to producing regional production multipliers for the Irish economy," Papers in Regional Science, Wiley Blackwell, vol. 95(3), pages 491-506, August.

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