Construction of Regional Input-Output Tables Using Nonsurvey Methods

Regional input-output tables are usually not constructed from survey data but are estimated using nonsurvey regionalization methods, which saves time and money. However, traditional regionalization methods ignore cross-hauling (the simultaneous exporting and importing of one and the same type of product). This flaw results in an underestimation of trade and an overestimation of regional output multipliers. This article presents a new approach based on an estimate of product heterogeneity, which addresses the problem of cross-hauling and is applicable to European System of Accounts tables with indirectly allocated imports. Its application is illustrated by the estimation of a regional input-output table for North Rhine—Westphalia, one of Germany's federal states. The results are compared to the traditional commodity balance approach, indicating that the new method suffers far less from the underestimation of trade and the overestimation of multipliers.