Regionalization of Input–Output Matrices with Limited Information: Application to the State of Rio Grande do Sul, Brazil

The regionalization of input–output tables enables a granular understanding of economic systems, allowing for interregional and interindustry analysis for goods and services in a local economy. This paper details the construction of an intermunicipal IO matrix for the state of Rio Grande do Sul (Brazil), a region marked by both economic diversification and significant territorial disparities. Using the 16-sector state IO matrix (base year 2019) provided by the state-level treasury (SEFAZ-RS) as a starting point, we adapt the Interregional Input–Output Adjustment System (IIOAS), integrating gravity-based trade modelling and RAS balancing, to produce a disaggregated structure for 497 municipalities. The regionalization follows three main steps: (i) generation of an initial matrix assuming proportional municipal shares in sectoral supply and demand; (ii) iterative RAS-based adjustments to align with municipal and state-level constraints; and (iii) incorporation of complementary municipal data—including employment, GDP, household consumption, and exports—to refine final demand and value-added allocations. The results demonstrate the feasibility of deriving spatially intermunicipal IO structures from limited data. The results show that, while industrial and service activities are concentrated around the Porto Alegre metropolitan area, rural subregions remain specialized in low value-added primary sectors.