The purpose of this paper is to propose a new simple method to classify the structure of a regional economy from the perspective of its interregional trade balance. This method is designed to assist in the preliminary analysis of a regional economy's trade.Regional scientists hypothesize that interregional exports and imports, and the resulting balance of payments are caused by internal comparative advantages or an interregional market equilibrium existing in factor prices. However, when we translate the saving-investment approach into regional terms, the interregional balance of payments may be caused by the budget deficits of local government or excess transfers from a central government to a local government.In this paper, we propose a simple specification method to determine factors which influence the interregional trade balance and then to classify regional economies to two types. That is, first we calculate three correlation coefficients for each region: between the interregional balance of payments (IBP) and Gross Prefectural Expenditure, between the IBP and interregional exports, and between the IBP and interregional imports, using Japanese prefectural data. Second, we classify prefectures in Japan into two types according to the pattern of positive and negative signs of the above three correlation coefficients; we identify a pattern of + + + as the interregional market equilibrium type and other patterns as the government expenditure dependent type.We analyze Japanese prefectural data for the 1975-1989 fiscal years obtained from the Prefectural Accounts. The main results are as follows. First, based on prefectural data describing the total economic activity taking place in the prefectural territory, twelve prefectures are of the government expenditure dependent (GED) type: twelve prefectures are Hokkaido, Aomori, Akita, Chiba, Wakayama, Kagawa, Ehime, Kochi, Nagasaki, Miyazaki, Kagosgima and Okinawa. The others are the interregional market equilibrium (IME) type. Second, five of the above twelve GED prefectures, i.e., Akita, Chiba, Wakayama, Ehime and Kagoshima are classed as the IME type when the classifications are based on prefectural income data. Third, using a sign pattern comparison of two intervals, 1975-1984 and 1980-1989 fiscal years for each prefecture, we can observe structural changes. The structural shift seems to occur when the ratio of government expenditure to Gross Prefectural Expenditure falls below 25 percent as in the prefectures of North Tohoku, San-in and South Kyushu.