Extending the FLQ formula: a location quotient-based interregional input–output framework

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Extending the FLQ formula: a location quotient-based interregional input–output framework. Regional Studies. The regionalization of national input–output tables is a major issue in regional science as corresponding regional data are often unavailable. In this paper, a framework is developed to estimate intra- and interregional input–output tables. The intraregional estimates are based on the well-known FLQ method. The interregional estimates are constructed using gravity modelling to account for factors like geographic distance between regions. The derived (initial) estimates are embedded in an interregional accounting framework that ensures consistency of regional values with the national aggregates. The framework is applied to the German economy of 2010. The relationship between the FLQ formula and the estimated amount of interregional trade in intermediates, the amount of interregional cross-hauling, and the regional distribution of output multipliers is highlighted.