50th Congress of the European Regional Science Association: "Sustainable Regional Growth and Development in the Creative Knowledge Economy", 19-23 August 2010, Jönköping, Sweden
International markets for food products have shown a strong growth in recent years. Trade flows between countries are increasing and can be seen as a reflection of a higher degree of competition in both domestic and international markets. At the same time, consumers show a growing interest in product attributes associated with the geographical origin of the product and/or specific production methods. This paper studies the region specialization in food industries and uses a shift share analysis to identify regions with comparative advantages in food production in Sweden. The Swedish food sector is of significant size in the domestic economy, and is the fourth largest industry in the Swedish manufacturing sector. The food sector hosts both small and large firms, and is represented in all (geographical) parts of the country. As in many European countries, the food sector is important with respect to employment in rural areas and therefore an obvious target for rural policies. Recent studies of food industries indicate that differences in regional characteristics, such as concentration of firms in the industry (clusters) and concentration of food exporters partly explain the export behavior of firms in the Swedish food industry and food processing firms in France. These findings indicate that location specific factors impact on firms’ competitiveness in international markets. This paper explores this issue further in an empirical analysis of regional comparative advantages in food processing. The purpose of this study is to analyze what type of regional characteristics that stimulate regional specialization in food industries. Of particular interest is the importance of unique regional food specialties, smallscale manufacturing, size of the local market and accessibility to foreign customers in shaping regional comparative advantages in food manufacturing.