Working Paper
Identification of Regional Fundamental Economic Structure (FES) of India

This study provides an understanding of the Indian regional economy utilizing the fundamental economic structure (FES) approach. The FES construct implies that selected characteristics of an economy will vary predictably with region size, as measured by net state domestic product, population, and total gross output. The big question addressed in this study is if identifiable patterns of relations between various macro aggregates and economic transactions can be revealed via regional input-output tables. Jensen et al. (1988) discuss the tiered, partitioned, and temporal approaches to the identification of FES using input-output tables. This research addresses the following four questions: (1) Does a regional FES exist for the Indian economy during the period 1965? (2) What proportions of the cells are predictable? (3) Can the 1965 regional FES predict 1983-84 table for Punjab economy? (4) Does regional FES manifest an enhanced understanding of the Indian regional structure? Regression analyses are used to identify the FES and non-FES cells for the Indian regional economy. The regional input-output tables for 21 States and Union Territories provide data for the analysis. Analysis reveals regional FES includes primary and secondary sectors as components of FES. This research has extended the notion of FES to include: weak, moderate and strong FES cells.