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

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  • Anthony Flegg

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  • Timo Tohmo
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    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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    Bibliographic Info

    Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p334.

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    Date of creation: Sep 2011
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    Handle: RePEc:wiw:wiwrsa:ersa11p334

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    References

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    1. JH Ll DEWHURST, . "Regional Size, Industrial Location And Input-Output Expenditure Coefficients," Dundee Discussion Papers in Economics 074, Economic Studies, University of Dundee.
    2. 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.
    3. 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.
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    Cited by:
    1. Julia Kowalewski, 2013. "Inter-industrial Relations and Sectoral Employment Development in German Regions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(4), pages 486-504, July.
    2. Kowalewski, Julia, 2012. "Inter-industrial relations and sectoral employment development in German regions," HWWI Research Papers 127, Hamburg Institute of International Economics (HWWI).
    3. 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).
    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. Uwe Blien & Friedrich Graef, 2013. "The ADETON method," Jahrbuch für Regionalwissenschaft, Springer, vol. 33(2), pages 135-150, October.

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