ESCoE Research Seminar

Improving the quality of regional economic indicators

Presented by Mairi Spowage

University of Strathclyde

10 December 2019

Economic Statistics Centre of ExcellenceImproving the quality of regional economic indicators

December 2019

Introduction & Context

Data

Methodological Approach

Results

Next Steps

Outline

Introduction & Context

Interregional trade estimates are integral to any comprehensive

system of regional accounts

Significant policy interest from users across the UK

Current data landscape reflects the asymmetric nature of devolution

Policy Context

Improving interregional trade flows data

Data map of existing trade related data

Paper on feasibility study of using alternative data sources for

estimation of inter-regional trade flows within the UK

Paper on estimation of Scotland-RUK and Northern Ireland –RUK

inter-regional trade flows

Paper on inter-regional trade flows for all four UK nations

ESCoE Phase 1 outline

Unpublished extra information was provided by:

• Scottish Government

• NISRA

• Welsh Economic Research Unit at Cardiff University

Support from

• ONS & Devolved Administrations

Steve Gibbons, LSE

Acknowledgements

Data

Various sources of regional rest-of-world trade information

• HMRC Regional Trade Statistics

• ONS Regional Services Exports

Trade information within the UK collected by devolved administrations:

• Global Connections Survey in Scotland

• Annual Business Inquiry in Northern Ireland

• New Welsh Trade Survey in the field

Current Data Landscape

Business surveys can be challenging:

• Business Burden

• GB Reporting Units

• Conceptual issues

Considerably more flexibility in NI

Data Challenges

The Supply and Use Framework is used by NISRA and the Scottish

Government to bring together a number of different sources to

estimate the linkages between different industries in the economy.

Key sources of information for this include ONS Regional Accounts

information and the surveys mentioned

The framework allows that which is difficult to measure directly to be

estimated in the balance: i.e. Rest of UK imports

Supply and Use Tables

Supply Table

Use Table

Methodological Approach

Existing supply and use tables taken as “true”

Provide estimates between NI & GB, and Scotland and rUK

• Complication of “onshore Scotland”

Flows were then split up using proxy information, either from the point

of view of the exporter or importer – Exports generally more reliable

Wales was more tricky….

… England treated as the residual!!

Overall approach

Requirement to produce “whole of

Scotland” estimates to reflect the

Scottish portion of extra-regio

Experimental estimates of the flows

between offshore and onshore

Scotland have been produced by the

Scottish Government

Whole of Scotland Approach

2007 Welsh Economic Research Unit (WERU) Combined Use Tables

were rebased

Transparency of the quality of these figures – not a new set of

estimates, derived to demonstrate the approach

Assumptions:

• The proportion of international exports that are Welsh has remained

the same since 2007

• The proportion of total Welsh exports that are interregional has

remained the same since 2007

Wales

Existing Supply and Use Tables

Scotland Rest of the UK

Northern Ireland Rest of the UK

Wales Rest of the UK

Existing Supply and Use Tables

Scotland Rest of the UK

Northern Ireland Rest of the UK

Wales Rest of the UK

Export Orientated Approach

Existing Supply and Use Tables - Exports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

Export Orientated Approach

Existing Supply and Use Tables - Exports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

Export Orientated Approach

Existing Supply and Use Tables - Exports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

England

Scotland

Wales

Northern Ireland

Export Orientated Approach

Existing Supply and Use Tables - Imports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

Export Orientated Approach

Existing Supply and Use Tables - Imports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

Export Orientated Approach

Existing Supply and Use Tables - Imports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

Export Orientated Approach

Existing Supply and Use Tables - Imports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

England

Scotland

Wales

Northern Ireland

Export Orientated Approach

Existing Supply and Use Tables - Imports

Scotland

Wales

Northern Ireland

England

Wales

Scotland

Northern Ireland

England

Northern Ireland

Scotland

Wales

England

England

Scotland

Wales

Northern Ireland

Export Orientated Approach

Approaches could be considered analogous

Thissen et al (2013) proposed a reconciliation which minimises the

sum of errors between the import and export orientated methods

However, export data generally much more reliable… but as we have

outlined some strange results emerged….

…so we triangulated with import orientated approaches to derive

sensible estimates

Export or import orientated?

For export-orientated methodologies, estimated probability of direct

trade exported from region i to region k, 𝑃𝑖,𝑘 with 𝑇𝑖,𝑘 being the amount

of goods or services transported in a given data source (e.g., freight

transport).

𝑃𝑖,𝑘 =𝑇𝑖,𝑘

σ𝑖 𝑇𝑖,𝑘

It is then straightforward to estimate the exports, X, from region i to k

with an optional re-exporting adjustment for flow l, 𝜆𝑙.

𝑋𝑖,𝑘 = (𝜆𝑙)𝑃𝑖,𝑘𝑋𝑖

Sectoral Approaches

Sectoral ApproachesSector Primary Data Sources Import/Export Orientated

Agriculture CSRGT-GB, CSRGT-NI, Port-to-Port Maritime Statistics, Transport Scotland Import-orientated

Other Primary CSRGT-GB, CSRGT-NI, Port-to-Port Maritime Statistics, Transport Scotland Import-orientated

Manufactured

GoodsCSRGT-GB, CSRGT-NI, Port-to-Port Maritime Statistics, Transport Scotland

Export-orientated (Import-orientated for

Northern Ireland exports)

Utilities Interconnector Data Import-orientated and Export-orientated

Construction UK, Northern Ireland, Scotland Use Tables, Re-based WERU Use Table Export-orientated

Retail Margins estimated on imports calculated from Supply Tables Import-orientated

Transport &

CommunicationsCSRGT-GB, CSRGT-NI, Port-to-Port Maritime Statistics Export-orientated

Business &

ComputingUK, Northern Ireland, Scotland Use Tables, Re-based WERU Use Table Export-orientated

Financial UK, Northern Ireland, Scotland Use Tables, Re-based WERU Use Table Export-orientated

Public UK, Northern Ireland, Scotland Use Tables, Re-based WERU Use Table Export-orientated

RecreationalNorthern Ireland Tourism Surveys, GB Tourism Survey, Transition tables from Scottish

Government/NISRAExport-orientated

Important to account for the issue of re-exporting:

• E.g. goods physically moving between Scotland and Northern

Ireland may not originate in Scotland or have a destination in NI,

which may mean they are not Scottish interregional exports

Re-exporting

Sector Transhipment Hub Re-exporting Parameter

England-Northern Ireland Scotland 79.65%

Northern Ireland-England Scotland 78.19%

Northern Ireland-Wales England 2.78%

Scotland-Wales England 4.31%

Wales-Northern Ireland England 2.78%

Wales-Scotland England 1.25%

Freight data was used to estimate re-export parameters

Results

Findings – summary (2015)

Scotland NI Wales England

Scotland 1,112 1,606 52,071

NI 1,065 147 10,053

Wales 1504 1901 42,477

England 64,432 14,553 38,534

FRO

M

TO

Scotland NI Wales England

Scotland 2,014 1,107 51,668

NI 1,881 96 9,288

Wales 1,168 1,806 42,909

England 63,953 13,746 39,086

TO

FRO

M

No re-exporting

Re-exporting

• Impact of re-exporting can

be clearly seen here –

particularly on Northern

Ireland

• Wales more exports from

Scotland than Northern

Ireland?

Destination mix for exports

• NI and Scotland have large

trade deficits with England

• Interesting effect of the

Welsh trade surplus being

exaggerated

Trade Balance

Industry Mix

NO REXPORTING REXPORTING

During the construction of the estimates, several issues were raised which

informed our recommendations and proposals for Phase 2.

This includes:

• Differing data collections and coverage inconsistencies

• Different approaches to producing trade estimates in the regional tables

• A need to ensure consistency with UK approaches following ESA 2010

Extremely high policy interest in the results - now not just from a devolution

perspective but also due to Brexit.

Findings – data issues

Next Steps

Develop a strategic approach to the collection of trade information and

estimation of trade within the UK, with different approaches for goods

and services

Develop a framework for the consistent production of Supply Use

Tables for Scotland, England, Northern Ireland & Wales

• Gross Fixed Capital Formation

• Household Final Consumption Expenditure

• Government Final Consumption Expenditure

Inter-regional trade & Supply and Use

Regional CPIH estimates – producing regional estimates of household

consumption

Glasgow City Region Supply and Use and Input-Output tables

Other relevant work

Mairi.Spowage@strath.ac.uk

Thank you for listening!

Economic Statistics Centre of ExcellenceImproving the quality of regional economic indicators

December 2019