Abstract
The purpose of this study is to contribute to the ongoing debate about the performance of several location quotients (LQs), including Flegg’s location quotient (FLQ) and the industry-specific FLQ (SFLQ), which was newly developed by Kowalewski (Reg Stud, 240–250, 2015). Unlike FLQ, which has one unique \(\delta \)-value for all industries in a region, SFLQ allows for a variation in the exponential parameter value of \(\delta \) for each industrial sector in order to capture specialization and to reduce the tendency for overestimation or underestimation of each of the industries in a given region. Since the national and regional survey data are available for South Korea, this study evaluates and compares the results for SFLQ against those of other non-survey techniques. The findings prove that SFLQ is superior to other LQs, including FLQ and augmented FLQ. In addition, empirical evidence shows that the optimal values for the exponential parameters vary drastically among industries. SFLQ provides more detailed information on regional industries with individual \(\delta \) values, which is definitely helpful when analyzing regional specialization and shifts in industrial structure. Furthermore, to determine the optimal exponential \(\delta ({\delta _j })\) value in FLQ and SFLQ in advance, Flegg’s and Kowalewski’s regression models are tested with the use of Korean data. The statistics indicate that the regression equations are debatable and still need major improvement.
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Notes
The previous papers (Flegg and Webber 1997; Gunnar 2010, etc.) highly suggested that the domestic trade coefficients should be applied in the process of regionalization rather than the national technological coefficients table due to the fact that the regional multipliers will be overestimated if a national technological coefficients table is used as a target to be adjusted. The purpose of this study is to compare the relative performance of several LQs to figure out which one is best for deducing regional IO tables. The conclusion stands no matter which kind of national tables is applied.
Myers and Well (2003, p. 508).
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Zhao, X., Choi, SG. On the regionalization of input–output tables with an industry-specific location quotient. Ann Reg Sci 54, 901–926 (2015). https://doi.org/10.1007/s00168-015-0693-x
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DOI: https://doi.org/10.1007/s00168-015-0693-x