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Input-Output Modelling of the Urban and Regional Economy: The Importance of External Trade

Listed author(s):
  • Richard Harris
  • Aying Liu

HARRIS R. I. D. and LIU A. (1998) Input-output modelling of the urban and regional economy: the importance of external trade, Reg. Studies 32 , 851-862. The modelling of regional and local economies, especially through using the input-output (IO) approach, is a standard practice for many economic consultants and yet quite often this is based on little if any primary data on (interregional) exports and imports. This paper argues that the relative size of the trade sector in final demand, and its importance in the literature on regional growth, is such that current models are at best misspecified and are at worst likely to provide biased and possibly misleading results, especially with regard to planning and policy at the local level. On a more practical level, this paper shows that with certain minimum information, especially with regard to exports and imports, a hybrid local IO table can be constructed that provides reasonable accuracy in terms of estimates of IO multipliers vis-a-vis a complete survey table (which is almost prohibitively expensive to construct). This is in contrast to the results obtained from the more usual LQ approach which, primarily because it underestimates trade, are seriously biased. HARRIS R. I. D. et LIU A. (1998), Modelisation du type 'entrees/sorties' de l'economie urbaine et regionale: l'importance du commerce 'externe', Reg. Studies 32 , 851-862. La modelisation des economies locales et regionales, particulierement a l'aide de l'approche 'entree/sorties' [input/output], est une pratique commune pour de nombreux conseillers economiques. Pourtant, bien souvent, cette pratique n'est fondee que sur peu de donnees primaires touchant aux exportations et aux importations interregionales. Cet article montre que le poids relatif du secteur commercial dans la demande finale et l'importance qui lui est accordee dans la litterature sur la croissance regionale, sont tels que les modeles actuels sont, au mieux, mal specifies et, au pire, ont de fortes chances de fournir des resultats biaises et eventuellement trompeurs, particulierement en ce qui concerne la planification et les politiques au niveau local. D'un point de vue plus pratique, cet article montre qu'avec une certaine information minimale, plus specialement au sujet des exportations et des importations, un tableau hybride des entrees/sorties, au niveau local, peut etre construit qui fournit des resultats d'une precision satisfaisante en termes de l'estimation des multiplicateurs input/output, a l'oppose d'un tableau d'etude complet (dont le cout rend la realisation pratiquement impossible). Cela contraste avec les resultats obtenus a partir de l'approche plus classique en termes de 'quotient de localisation, resultats qui, principalement parce que cette approche sousestime le role du commerce, sont serieusement biaises. HARRIS R. I. D. und LIU A. (1998) Aufwand-Ertragsmodel der stadtischen und regionalen Wirtschaft; die Bedeutung des Aussenhandels, Reg. Studies 32 , 851-862, Die Modellierung regionaler und ortlicher Wirtschaften, besonders mittels eines Aufwand-Ertragsansatzes (input-output=IO), ist fur viele Wirtschaftsberater das ubliche Verfahren, beruht jedoch oft auf wenigen, wenn uberhaupt irgendwelchen Angaben uber (inter-regionale) Einfuhren und Ausfuhren. Dieser Aufsatz vertritt die Ansicht, dass der relative Umfang des Handelssektors in der Endnachfrage, und seine Bedeutung in der Literatur bezuglich Regionalwachstum derartig ist, dass derzeitige Modelle bestenfalls falsche Angaben, und schlimmstenfalls wahrscheinlich voreingenommene, wenn nicht gar irrefuhrende Ergebnisse bringen, besonders in Hinsicht auf Planung und Politik auf Lokalebene. Auf angewandtem Gebiet zeigt er auf, dass mit gewissen Mininuminformationen besonders im Hinblick auf Import und Export eine gemischte, verglichen mit vollstandigen Ubersichtstabellen (deren Aufstellung mit fast untragbar hohen Kosten verbunden ist) einigermassen akkurate ortliche IO Tabelle konstruiert werden kann. Dies ist im Gegensatz zu Ergebnissen, die mit Hilfe des ublichen IO Ansatzes erreicht wurden, und schwerwiegende Voreingenommenheiten enthalt, weil sie vorallem den Umfang des Handels unterschatzt.

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Article provided by Taylor & Francis Journals in its journal Regional Studies.

Volume (Year): 32 (1998)
Issue (Month): 9 ()
Pages: 851-862

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Handle: RePEc:taf:regstd:v:32:y:1998:i:9:p:851-862
DOI: 10.1080/00343409850118004
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  1. Blake, Neil, 1995. "The Regional Implications of Macroeconomic Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 11(2), pages 145-164, Summer.
  2. A. P. Thirlwall, 2007. "Regional Problems are "Balance-of-Payments" Problems," Regional Studies, Taylor & Francis Journals, vol. 41(sup1), pages 89-95.
  3. Dixon, R & Thirlwall, A P, 1975. "A Model of Regional Growth-Rate Differences on Kaldorian Lines," Oxford Economic Papers, Oxford University Press, vol. 27(2), pages 201-214, July.
  4. J H Ll DEWHURST & G LESLIE, "undated". "Using The Ras Technique As A Test Of Hybrid. Methods Of Regional Input-Output Table Updating," Dundee Discussion Papers in Economics 016, Economic Studies, University of Dundee.
  5. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-348, November.
  6. Mayer, Wolfgang & Pleeter, Saul, 1975. "A theoretical justification for the use of location quotients," Regional Science and Urban Economics, Elsevier, vol. 5(3), pages 343-355, August.
  7. Round, J. I., 1978. "On estimating trade flows in interregional input output models," Regional Science and Urban Economics, Elsevier, vol. 8(3), pages 289-302, September.
  8. Smith, Tim R., 1990. "Regional export growth: Lessons from State-level foreign trade data," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 20(1).
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