Flegg Location Quotients and estimation of regional economic flows: the Italian case

The Flegg’s Location Quotient (FLQ) is an indirect method for estimating absorption coefficients in regional input-output matrices. While effective, it requires careful control of its delta parameter. This study proposes a method to avoid arbitrary parameter assignments when regional output is unknown but value added is known, as in Italy. The approach refines FLQ ranges without altering variables like GDP, allowing for more accurate input-output table estimation by aligning with official statistics. The approach enables the consistent estimation of regional economic flows with statistical data and accounting identities on both supply and demand sides.