A Flexible Modeling Framework to Estimate Interregional Trade Patterns and Input-Output Accounts

32 Pages Posted: 20 Apr 2016

See all articles by Patrick Canning

Patrick Canning

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Zhi Wang

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS); World Bank - World Bank Institute (WBI); City University of Hong Kong

Date Written: July 6, 2004

Abstract

There are tremendous disparities in economic development across regions in large developing countries such as Brazil, China, India, and Indonesia. Globalization may have different impacts on urban and coastal areas compared with less developed rural and inland regions. A major obstacle in conducting policy analysis for regional economic development under globalization is the lack of consistent, reliable regional data, especially data on interregional trade and interindustry transactions.

This study implements and tests a mathematical programing model to estimate interregional, interindustry transaction flows in a national system of economic regions based on an interregional accounting framework and initial information on interregional shipments. A complete national input-output table plus regional sectoral data on gross output, value-added, exports, imports, and final demand are used as inputs to generate an interregional input-output system that reconciles regional market data and interregional transactions. The model is tested on a four-region 10-sector example against data aggregated from a multi-regional global input-output database, and test results from seven experiments are evaluated against eight mean absolute percentage error indexes. The model has capacity to discover the true interregional trade pattern from highly distorted initial estimates. The paper also discusses some general guidelines for implementing the model for a large-dimension multi-regional account based on real national and regional data.

This paper is a product of the Trade Team, Development Research Group.

Suggested Citation

Canning, Patrick and Wang, Zhi, A Flexible Modeling Framework to Estimate Interregional Trade Patterns and Input-Output Accounts (July 6, 2004). Available at SSRN: https://ssrn.com/abstract=610402

Patrick Canning (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

Zhi Wang

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5242 (Phone)
202-694-5793 (Fax)

World Bank - World Bank Institute (WBI)

1818 H Street, N.W.
Washington, DC 20433
United States

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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