Comparison of gravity model, survey and location quotient-based local area tables and multipliers

Regional economic impact assessment requires relevant local area multipliers. The best approach is to establish a local input-output table, which is a time-consuming, data-exhaustive process. Some authors have instead used national tables or national tables modified to reflect regional specializations. The apparent limitations of these approaches led to the development of a gravity model-based method for estimating local trade and input-output tables. A description of this model is the main focus of the first part of this paper. Whilst this approach appeared to produce reasonable results, it was unclear how significantly the outcomes differed from tables produced by survey or utilizing national and location quotient-based tables. A comparison of these for the Moray, Badenoch and Strathspey Enterprise Area in Scotland is the main subject of the second half of the paper. The results confirm earlier findings that the national or location quotient approaches may produce misleading results. The gravity model-based approach, on the other hand, produces similar results to the survey and has the added advantage of being comprehensive and compatible with the other 40 plus tables produced for other areas of Scotland. It is suggested, therefore, that this approach be utilized and extended.