The Design and Estimation of Regional Economic Accounts in Ontario

Abstract

Regional economics addresses a number of major tasks related to regional and local area development issues such as the planning of investment (private and public), the provision of public goods, urban redevelopment schemes, fiscal and financial relations among various levels of government and subsidy and area development programs. These issues are often surrounded by a sense of urgency stemming in part from the strong spirit of development in many communities and the rising awareness of regional disparity. Yet, the lack of adequate information on subnational economies has traditionally hampered efforts at analyzing many of these issues and at providing adequate choices for decision making.</p> <p>The inadequacy of statistical data at the regional level seldom means, however, a complete lack of information. The available statistical and administrative data are usually prepared by a variety of government agencies and sources for different purposes and, consequently, lack a coherent or systematic framework which relates them meaningfully to each other and to data on the total economy. There is, thus, an obvious need to integrate these data sets with each other and with information on the economy as a whole in order to enhance their usefulness for analysis and decision making at the regional level.</p> <p>It is maintained in this dissertation that a system of economic accounts provides a suitable framework for the integration and systematic treatment of available regional microdata. The application of economic accounting to various types of regional information can give rise to a complete set of regional economic accounts useful for economic analysis at the regional level. This has been demonstrated by designing a system of regional accounts - based on national (provincial) accounting concepts - to Ontario and by estimating the accounting entries for each of its 10 economic regions. The estimation of regional entries is accomplished by a disaggregation or apportionment of the Ontario Accounts totals in the year of estimate (1971) on the basis of various allocation techniques and by using the microdata sets available at the industry and regional levels as allocators.</p> <p>The systematic integration of fragmented regional data by means of an economic accounting framework produces consistency, comprehensiveness and comparability of economic data among the regions and between them and the total economy. It is hoped that economic accounting in Ontario at the regional level will increasingly become recognized as a flexible tool of analysis which can generate a useful interaction between data and method thereby improving both theory and empirical results. The principal achievement has been to highlight areas of weakness in constructing regional economic accounts. It is also hoped that it can serve as a benchmark in future research efforts.</p> <p>The set of regional accounts for Ontario derived in this study was utilized in the context of a regional macro model (based on aggregate demand and supply) for the purpose of calculating a set of regional income multipliers. The multipliers based on regional accounting data are a precise and powerful tool of analysis - especially in determining the multiplier effects of exogenous expenditure in each region - which enriches our knowledge of regional economies and appreciation of the effect of regional policies.</p>