An analysis of location types and spatial patterns in the Korean food manufacturing industry

Abstract

Because the food manufacturing sector, as a fundamental and regionally specialized enterprise, has a substantial impact on the rural economy, an empirical analysis of the food manufacturing industry’s expansion is required. However, regarding the evidence and means of ensuring vitality in agricultural and rural areas, academic theories and empirical studies still lack depth among the existing scholarship. As such, this study conducted a spatial pattern analysis to determine whether small food manufacturers in Korea were more concentrated than other manufacturing industries by using cluster analysis methods. The data used for the analysis are business basic survey statistics (2010), taken from a comprehensive survey that discloses the number of businesses, number of employees, organizational type, employee size, and occupational status of all businesses nationwide every year, even at the 5-digit level of municipalities. Data from 2000 and 2010 were used to analyze the employment growth of the food manufacturing industry. In 2010, 230 cities (Si), counties (Gun), and boroughs (Gu) were targeted to analyze employment patterns in the food manufacturing industry. The analysis results indicated that there were differences in potential cluster regions according to regional characteristics. Through the results of the study of spatial patterns, several implications were found for Korea’s food manufacturing industry promotion policy. In addition, this study provides basic information for analyzing the external effects of the food manufacturing industry through agglomeration by industry and region and the impact on productivity through related industries.

Keywords:

• demand location
• food manufacturing industry
• free location
• Getis-Ord Gi*
• spatial pattern
• supply location

PUBLIC INTEREST STATEMENT

This study confirmed that the food manufacturing industry is specialized and clustered like other manufacturing industries. Through the results of the spatial patterns identified in this study, policy implications can be found for Korea’s national food cluster project and the sixth industry promotion strategy. First, it is reasonable for a linkage strategy to implement the National Food Cluster project in various regions beyond the administrative district. Second, considering that the potential cluster regions differ for each industry, it would be inefficient to attract all food industries to the national food cluster region, which would not be ideal for a market economy. Third, the spatial patterns of the food manufacturing industry should be considered. For example, since the promotion area includes rural and fishing villages, it is necessary to select the type of business in which the supply site is located and to make good use of the accumulated profits of the specific area.

Disclosure statement

This paper is based on a part of the author’s unpublished PhD dissertation, ‘Regional economic effect of food manufacturers: spatial concentration, employment growth, value-added (2015)’.

Notes

1. In response to the global economic downturn, national efforts have been made to create jobs worldwide. In Korea, the employment inducement coefficient of the food manufacturing industry was 17.8 per 1 billion won—the highest among manufacturing industries and higher than the average of 12.9 in all industries (Bank of Korea, 2012). In addition, the food manufacturing industry is classified as a market-type senior job business among the job projects for the elderly and is considered an elderly-friendly industry (Korea Labor Force Development Institute for the aged, 2012). In addition, the food manufacturing industry has low price elasticity of demand and low income elasticity, so it can be seen as a small- and medium-sized business-friendly industry that is not suitable for mass production. Further, in terms of the total output of agriculture, forestry, fisheries, and food manufacturing, the difference between 2002 and 2012 was 46% to 74% (Bank of Korea, 2012).

2. The LQ threshold for specialization is 1, but there are many cases where the value was not set to 1 in previous studies using LQ. 1.25 (Miller et al., 2001), 2. (Y.S. Kim et al., 2013), and 3. (Isaken, 1996; Malmberg and Maskell, 2002) are examples (Guillain & Le Gallo, 2010).

3. The redistribution of food manufacturing locations has been affected by raw material, market, technological, and financial factors. However, we found that these factors did not affect the concentration and position of the food manufacturing industry in an equal manner. By examining the cost structure of the food manufacturing industry, we found that the geographical location of the establishment of the food manufacturing industry was related to the company’s cost structure and suggested the location type (J. R. Henderson & McNamara, 2000; J. V. Henderson, 1997).

Additional information

Notes on contributors

Yong Sik Roh

Yong-sik Roh, Special Fellow, National Research Council for Economics, Humanities, and Social Sciences, South Korea Research Interests: Spatial econometric analysis, regional balance policy

Kwon-Sik Kim

Kwon-Sik Kim, Research Fellow, Korea SMEs & Startups Institute, South Korea Research Interests: Regulation, Finance and Government Accounting, Public Policy

Kwang-Hoon Lee

Kwang-Hoon Lee obtained his PhD degree from the Swiss Graduate School of Public Administration (IDHEAP), University of Lausanne, Switzerland.