REGIONAL INPUT-

OUTPUT MODELS
-Rini Novrianti Sutardjo Tui-
BASIC FEATURES OF A REGIONAL ECONOMY THAT INFLUENCE
THE CHARACTERISTICS OF A REGIONAL INPUT–OUTPUT STUDY
FIRST SECOND
Although the data in a national input– It is generally true that the smaller
output coefficients table are obviously the economic area, the more dependent
some kind of averages of data from that area’s economy is on trade with
individual producers located in “outside” areas – transactions that
specific regions, the structure of cross the region’s borders – both for
production in a particular region may sales of regional outputs and purchases
be identical to or it may differ of inputs needed for production.
markedly from that recorded in the
national input–output table.

Regional input–output models may deal with a single region or with two or more regions
and their interconnections. The several-region case is termed interregional input–
output analysis or multiregional input–output analysis.

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SINGLE-REGION
MODELS
Regional Input-Output
Models

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NATIONAL COEFFICIENTS

▪ Regional input–output studies attempt to quantify

the impacts on the producing sectors located in a
particular region that are caused by new final
demands for products made in the region.
▪ Early regional studies used a national table of
technical coefficients in conjunction with an
adjustment procedure.
▪ Specific coefficients tables for the particular
regions did not exist.

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REGIONAL DENOTATIONS

▪ A superscript r to designate “region r”

▪ 𝑥 𝑟 = 𝑥𝑖𝑟 denote the vector of gross outputs of sectors in
region r
▪ 𝑓 𝑟 = 𝑓𝑖𝑟 represents the vector of exogenous demands
for goods made in region r

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A MATRIX SHOWING INPUTS FROM FIRMS IN THE REGION TO
PRODUCTION IN THAT REGION
▪ 𝐴𝑟𝑟 = 𝐴𝑟𝑟
𝑖𝑗 , where 𝐴𝑟𝑟
𝑖𝑗 is the amount of input
from sector i in r per dollar’s worth of
output of sector j in r

In order to translate regional final demands

into outputs of regional firms (xr), the
national coefficients matrix must be
modified to produce Arr (locally produced
goods in local production). 6
PROPORTION OF THE TOTAL AMOUNT OF GOOD I AVAILABLE
IN REGION R THAT WAS PRODUCED IN R
▪ The regional supply proportion of good i, 𝑝𝑖𝑟 .
𝑥𝑖𝑟 −𝑒𝑖𝑟
▪ 𝑝𝑖𝑟 =
𝑥𝑖𝑟 −𝑒𝑖𝑟 +𝑚𝑖𝑟
, 𝑥𝑖𝑟 is total regional output of each
sector i, 𝑒𝑖𝑟 is exports of the product of each
sector i from region r, 𝑚𝑖𝑟 is imports of good i
into region r.
▪ The numerator is the locally produced amount of i
that is available to purchasers in r.
▪ The denominator is the total amount of i available
in r, either produced locally or imported.
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ASSUMING THAT WE CAN ESTIMATE SUCH PROPORTIONS FOR
EACH SECTOR IN THE ECONOMY
▪ Each element in the i-th row of the national
coefficients matrix could be multiplied by 𝑝𝑖𝑟 to
generate a row of locally produced direct input
coefficients of good i to each local producer.
▪ If we arrange these proportions in an n-element
column vector, pr, then the working estimate of
the regional matrix will be 𝑨𝑟𝑟 = 𝒑𝑟 A.

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FOR A TWO-SECTOR MODEL

𝑝1𝑟 0 𝑎11 𝑎12 𝑝1𝑟 𝑎11 𝑝1𝑟 𝑎12

▪ 𝑨 =𝒑 𝑨=
𝑟𝑟 𝑟
= 𝑟 .
0 𝑝2𝑟 𝑎21 𝑎22 𝑝2 𝑎21 𝑝2𝑟 𝑎22
▪ For any fr we could find then 𝒙𝑟 = 𝑰 − 𝒑𝑟 𝑨 −1 𝒇𝑟 , fr
is the projected (new) final demand in the region.

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REGIONAL
COEFFICIENTS
Regional Input-Output
Models

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IN ASKING FIRMS IN SECTOR J IN A PARTICULAR REGION
ABOUT THEIR USE OF VARIOUS INPUTS
First Second
How much sector i product How much sector i product
did you buy last year in did you buy last year from
making your output? firms located in the
region?
This could produce a truly
regional technical This could produce regional
coefficients table. input coefficients.

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A SET OF REGIONAL INPUT COEFFICIENTS COULD BE
DERIVED AS:
𝑟𝑟
𝑧𝑖𝑗
▪ 𝑟𝑟
𝑎𝑖𝑗 =
𝑥𝑗𝑟
𝑟𝑟
, 𝑧𝑖𝑗 is the dollar flow of goods from
sector i in region r to sector j in region r, 𝑥𝑗𝑟
is gross outputs of each sector in the region.
▪ Let 𝒁𝑟𝑟𝑛×𝑛 = 𝑧𝑖𝑗𝑟𝑟 and 𝒙𝑟𝑛×1 = 𝑥𝑗𝑟
▪ The regional input coefficients matrix
𝑨𝑟𝑟 = 𝒁𝑟𝑟 𝒙𝑟 −1
▪ The impacts on regional production of a final-
demand change in region r would be found as
𝒙𝑟 = 𝑰 − 𝑨𝑟𝑟 −1 𝒇𝑟
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TWO-REGIONS
MODELS
Regional Input-Output
Models

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BASIC STRUCTURE OF TWO-REGION INTERREGIONAL INPUT–
OUTPUT MODELS
▪ Using r and s, as before, for the two
regions, let there be three producing
sectors (1, 2, 3) in region r and two (1,
2) in region s.
𝑟𝑟
▪ For region r, 𝑧𝑖𝑗 is intra-regional flows,
𝑠𝑟
𝑧𝑖𝑗 is inter-regional flows.

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COMPLETE TABLE OF INTRAREGIONAL AND INTERREGIONAL
DATA
𝒁𝑟𝑟 𝒁𝑟𝑠
▪ 𝒁 = 𝑠𝑟
𝒁 𝒁𝑠𝑠
▪ Zrs has dimensions 3×2 and Zsr is a 2×3 matrix
▪ The on-diagonal matrices are always square; for this
example, Zrr and Zss are 3×3 and 2×2, respectively.
▪ The elements in Zrs represent “exports” from region r
and simultaneously “imports” to region s.
▪ It is usual in regional input–output work to refer to
these as interregional trade (or simply trade) flows and
to use the terms export and import when dealing with
foreign trade that crosses national, not just regional,
boundaries. 15
FOR TWO-REGION EXAMPLE, THE OUTPUT OF SECTOR 1 IN
REGION R WOULD BE EXPRESSED AS
▪ 𝑥1𝑟 = 𝑧11
𝑟𝑟 𝑟𝑟
+ 𝑧12 𝑟𝑟
+ 𝑧13 𝑟𝑠
+ 𝑧11 𝑟𝑠
+ 𝑧12 + 𝑓1𝑟
Sector 1 intraregional, Sector 1 interregional, Sector 1 intraregional
interindustry sales interindustry sales sales to final demand

▪ Zrs has dimensions 3×2 and Zsr is a 2×3 matrix

▪ The on-diagonal matrices are always square; for this
example, Zrr and Zss are 3×3 and 2×2, respectively.
▪ The elements in Zrs represent “exports” from region r
and simultaneously “imports” to region s.
▪ It is usual in regional input–output work to refer to
these as interregional trade (or simply trade) flows and
to use the terms export and import when dealing with
foreign trade that crosses national, not just regional,
boundaries. 16
INTERREGIONAL TRADE COEFFICIENTS

𝑟𝑠 𝑠𝑟
𝑧𝑖𝑗 𝑧𝑖𝑗
▪ 𝑟𝑠
𝑎𝑖𝑗 =
𝑥𝑗𝑠
and 𝑠𝑟
𝑎𝑖𝑗 =
𝑥𝑗𝑟

▪ The denominators are gross outputs of sectors in the

receiving region

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Mineral Economics
THANK YOU

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