A New Improvement Proposal to Estimate Regional Input–Output Structure Using the 2D-LQ Approach

The use of location quotients for the estimation of regional input–output tables has been
found to be a useful and efficient tool to estimate intraregional production coefficients and multipliers.
This paper considers some regionalisation methodologies based on location quotients for the
estimation of input–output tables—some of which have hitherto not been analysed at the regional
level—and studies which one provides the best estimation (best goodness of fit). We focus the analysis
mainly on the accuracy of Flegg’s location quotient (FLQ) and two-dimensional location quotient
(2D-LQ). The analysis makes use of the multiregional input–output table for Korea for the year 2015
to evaluate the accuracy of the 2D-LQ method against FLQ. A novel proposal for the determination
of the parameters corresponding to the 2D-LQ method is presented. This proposal is evaluated
in Korean regions and is also applied to Spanish regions. The results obtained from the research
conclude the general superiority of the 2D-LQ method, thus corroborating the results of other studies
at the national level as well as the validity of our proposal.