China has huge differences among its regions in terms of socio-economic development, industrial structure, natural resource endowments, and technological advancement. These differences have created complicated linkages between regions in China. In this study, building upon gravity model and location quotient techniques, we develop a sector-specific model to estimate inter-provincial trade flows, which is the base for making a multi-regional input-output table. In the model, we distinguish sectors with less intra-sector input from those with larger intra-sector input, and assume that the former sectors tend to compete among regions while the latter tend to cooperate among regions. Then we apply this new method of inter-regional trade estimation to three sectors: food and tobacco, metal smelting and processing, and electrical equipment. The results show that selection of bandwidth has a significant impact on the assessment of inter-regional trade. Trade flows are more scattered with the increase of bandwidths. As a result, bandwidth reflects the spatial concentration of geographical activities, which should be distinguishable for different industries. We conclude that the sector-specific spatial model can increase the credibility of estimates of inter-regional trade flows.
This is a preview of subscription content, log in to check access.
Buy single article
Instant access to the full article PDF.
Price includes VAT for USA
Bergstrand J, 1985. The gravity equation in international trade: Some microeconomic foundations and empirical evidence. The Review of Economcis and Statistics, 67: 474–481.
Brunsdon C, Fotheringham A S, Charlton M E, 1996. Geographically Weighted Regression: A method for exploring spatial nonstationarity. Geographical Analysis, 28: 281–298.
Casetti E, 1972. Generating models by the expansion method: Applications to geographical research. Geographical Analysis, 4: 81–91.
Charlton M E, Fotheringham A S, 2009. Geographically Weighted Regression: Whilte Paper. National Centre for Geocomputation, National University of Ireland Maynooth.
Chenery H B, 1953. Regional analysis. In: Chenery H B, Clark P G, Pinna V C (eds.). The Structure and Growth of the Italian Economy. Rome: U.S. Mutual Security Agency.
Fan C C, 1997. Uneven development and beyond: Regional development theory in post-Mao China. International Journal of Urban and Regional Research, 21: 620–639.
Foster S A, Gorr W L, 1986. An adaptive filter for estimating spatially-varying parameters: Application to modeling police hours spent in response to calls for service. Management Science, 32: 878–889.
Guan D, Hubacek K, 2007. Assessment of regional trade and virtual water flows in China. Ecological Economics, 61: 159–170.
Hayami H, Nakamura M, 2007. Greenhouse gas emissions in Canada and Japan: Sector-specific estimates and managerial and economic implications. Journal of Environmental Management, 85: 371–392.
He L, Duchin F, 2009. Regional development in China: interregional transportation infrastructure and regional comparative advantage. Economic Systems Research, 21: 3–22.
Idaha T, 2005. How to utilize interregional input-output analysis in China. In: Okamoto N, Idaha T (eds.). Spatial Structure and Regional Development in China. New York: Palgrave Macmillan.
Krugman P, Maurice O, 1997. International Economics Theory and Policy. 4th ed. Reading: Mass Addison-Wesley.
Lenzen M, Pade L L, Munksgaard J, 2004. CO2 multipliers in multi-region input output models. Economic Systems Research, 16: 391–412.
LeSage J P, 1999. The theory and practice of spatial econometrics. Department of Economics, University of Toledo.
LeSage J P, Pace R K, 2008. Spatial econometric modeling of origin-destination flows. Journal of Regional Science, 48: 941–967.
Liang Q M, Fan Y, Wei Y M, 2007. Multi-regional input-output model for regional energy requirements and CO2 emissions in China. Energy Policy, 35: 1685–1700.
McGregor P G, Swales J K, Turner K, 2008. The CO2 'trade balance' between Scotland and the rest of the UK: Performing a multi-region environmental input-output analysis with limited data. Ecological Economics, 66: 662–673.
Miller R E, Blair P D, 2009. Input-Output Analysis: Foundations and Extensions. New York, Cambridge University Press.
Minx J, Baiocchi G, Wiedmann T et al., 2009. Understanding changes in UK CO2 emissions 1992–2004: A structural decomposition analysis. UK: Stockholm Environment Institute.
Moses L N, 1955. The stability of interregional trading patterns and input-output analysis. The American Economic Review, 45: 803–822.
Munksgaard J, Pedersen K A, 2001. CO2 accounts for open economies: Producer or consumer responsibility? Energy Policy, 29: 327–334.
Munksgaard J, Pedersen K A, Wien M, 2000. Impact of household consumption on CO2 emissions. Energy Economics, 22: 423–440.
National Bureau of Statistics (NBS), 2011. Chinese Regional Input-Output Tables. Beijing: China Statistics Press.
National Bureau of Statistics (NBS), 2012. China Statistical Yearbook. Beijing: China Statistics Press.
Norman J, Charpentier A D, MacLean H L, 2007. Economic input-output life-cycle assessment of trade between Canada and the United States. Environmental Science & Technology, 41: 1523–1532.
Pan J, Phillips J, Chen Y, 2008. China's balance of emissions embodied in trade: Approaches to measurement and allocating international responsibility. Oxford Review of Economic Policy, 24: 354–376.
Peters G P, Hertwich E G, 2006. Pollution embodied in trade: The Norwegian case. Global Environmental Change, 16: 379–387.
Polenske K R, 1980. The U.S. Multiregional Input-output Accounts and Model. Lexington, MA, Lexington Books.
Sargento A L M, 2007. Empirical examination of the gravity model in two different contexts: Estimation and explanation. Jahrbuch für Regionalwissenschaft, 27: 103–127.
Sargento A L M, Ramos P N, Hewings G J D, 2012. Inter-regional trade flow estimation through non-survey models: An empirical assessment. Economic Systems Research, 24: 173–193.
Shimoda T, Watanabe T, Ye Z et al., 2008. An empirical study on interdependency of environmental load and international IO structure in the Asia-Pacific region. In: International Input-Output Meeting on Managing the Environment. Seville, Spain.
Shui B, Harriss R C, 2006. The role of CO2 embodiment in US-China trade. Energy Policy, 34: 4063–4068.
Tobler W R. 1970. A computer movie simulating urban growth in the detroit region. Economic Geography, 46: 234–240.
Turner K, Lenzen M, Wiedmann T et al., 2007. Examining the global environmental impact of regional consumption activities (Part 1): A technical note on combining input-output and ecological footprint analysis. Ecological Economics, 62: 37–44.
Walter I, 1973. The pollution content of American trade. Western Economic Journal, XI: 61–70.
Wang J, Li L, Ge Y, 2000. A theoretic framework for spatial analysis. Acta Geographica Sinica, 55: 92–103.
Weber C L, 2008. Uncertainties in constructing environmental multiregional input-output models. In: International Input-Output Meeting on Managing the Environment. Seville, Spain.
Weber C L, Peters G P, Guan D et al., 2008. The contribution of Chinese exports to climate change. Energy Policy, 36: 3572–3577.
Wiedmann T, 2009. A review of recent multi-region input-output models used for consumption-based emission and resource accounting. Ecological Economics, 69: 211–222.
Wiedmann T, Lenzen M, Turner K et al., 2007. Examining the global environmental impact of regional consumption activities (Part 2): Review of input-output models for the assessment of environmental impacts embodied in trade. Ecological Economics, 61: 15–26.
Wiedmann T, Wood R, Minx J et al., 2008. Emissions embedded in UK trade - UK-MRIO Model results and error estimate. In: International Input-Output Meeting on Managing the Environment. Seville, Spain.
Wyckoff A W, Roop J M, 1994. The embodiment of carbon in imports of manufactured products: Implications for international agreements on greenhouse gas emissions. Energy Policy, 22: 187–194.
Yang Z, Cai J, 2010. Progress of spatial statistics and its application in economic geography. Progress in Geography, 29: 757–768.
Foundation: National Science Foundation for Distinguished Young Scholars of China, No.41125005
Author: Liu Weidong (1967–), PhD and Professor, specialized in economic geography and regional development.
About this article
Cite this article
Liu, W., Li, X., Liu, H. et al. Estimating inter-regional trade flows in China: A sector-specific statistical model. J. Geogr. Sci. 25, 1247–1263 (2015). https://doi.org/10.1007/s11442-015-1231-6
- multi-regional input-output analysis
- trade flows
- sector-specific statistical model