Using Charm to Adjust for Cross-Hauling: The Case of the Province of Hubei, China

Anthony T. Flegg, Yongming Huang and Timo Tohmo

Economic Systems Research, 2015, vol. 27, issue 3, 391-413

Abstract: Data for the Chinese province of Hubei are used to assess the performance of Kronenberg's Cross-Hauling Adjusted Regionalization Method (CHARM), a method that takes explicit account of cross-hauling when constructing regional input-output tables. A key determinant of cross-hauling is held to be the heterogeneity of commodities, which is estimated using national data. However, contrary to the authors' findings for Finland, CHARM does not generate reliable estimates of Hubei's sectoral exports, imports and volume of trade, although it is more successful in estimating sectoral supply multipliers. The poor simulations of regional trade are attributed to the fact that Hubei is a relatively small region, where there is a large divergence between regional and national technology and pattern of final demand. The simulation errors are decomposed into components reflecting differences between regional and national technology, final demand and heterogeneity. The third component is found to be the least important of the three sources of error.

Date: 2015
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DOI: 10.1080/09535314.2015.1043516

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