Non-farm businesses local economic integration level: the case of six Portuguese small and medium-sized Markettowns• - a sector approach

Local Integrations Indicator (LII) is a simple descriptive measure which indicates the
proportion of a particular activity (input purchases, output sales etc) of a particular group of
economic entities (all businesses, large businesses, manufacturing businesses etc) allocated to
the local economy. For example, the businesses (b) located within town X my derive 25% of
their inputs (by value) (i) form other businesses within the locality, a further 50% form
elsewhere in the country, 5% from elsewhere in E U and 20% form conutris outside the E U.
In this case the LII bi of this town is 0,25 (where the subscript “bi”shows that the indicator is
referring to purchases of inputs by businesses within the town). They may sell only 10% of
their outputs (o) to businesses in the locality, in which case the LIIbo of the town is 0.1.
Businesses in the town may derive only 40% of their employment (measured in full time
equivalents) from households of the locality. In this case LIIbe of the town will be 0,4. Taken
together, ande measured for a particular town, these indicators give an immediate measure of
the extent to which it is integrated into its immediate locality rather than national, European or
global economy.

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