Spatial accounting methods and the construction of spatial social accounting matrices

The paper examines modifications to Regional Accounts used to construct regional and interregional Social Accounting Matrices (SAMs). It is argued that as the size of the basic areal unit used in studies declines, more traditional accounting approaches are no longer satisfactory. A three-dimensional spatial approach (termed two-by-two-by-two) to the identification of fundamental dimensions (commodity and factor market; geographical; and social accounts) has been developed in contrast to the more traditional non-spatial approach (termed two-by-two). This involves a novel approach using the geographical concepts of place of production for production activities, place of residence for institutions, marketplace for commodities and marketplace for factors. The use of these concepts permits accounting balances to be calculated at the spatial level. The theoretical basis of the spatial regional accounting model is presented and an example of the construction of a Danish Interregional SAM (SAM-K) is examined. Particular attention is given to data requirements, showing that these are much more modest than generally assumed.