An alternative approach to estimating regional input–output tables: the KFLQ method

This study proposes an alternative approach to constructing regional input–output models (RIOMs), which are efficient tools for establishing and evaluating regional economic policies. However, the usefulness of the RIOM does not diminish the complexity and high cost burden associated with the survey-based method, including the inordinate amount of time required to construct the model. Hence, many previous studies have actively studied nonsurvey techniques. However, the problems of overestimating regional input coefficients have been highlighted as a limitation of traditional nonsurvey methods. Therefore, this study proposes a modified Flegg’s location quotient formula (hereafter KFLQ) to address the limitations of previous nonsurvey methods and tests the validity of the KFLQ method through empirical analysis. In this regard, the empirical test focuses on how the distortion of input coefficients in the previous LQ-based formulas can be corrected. Ultimately, the results show that the KFLQ method yields more accurate results than those from previous LQ-based methods.