Implications of Agglomeration Economies and Market Access for Firm Growth in Food Manufacturing



With the persistent changes in technology and increased competition in food manufacturing, it is important to reassess the effects of agglomeration economies and market access on the performance of firms. Using survey data from New York food processors, an ordered logit analysis reveals that firm growth is related to important upstream and downstream market condiations. The clustering of similar manufacturers was found to have important effects on firm revenue growth, with the benefits of firm clustering increasing significantly with the level of local urbanization. For these reasons, policies that promote intra-industry or cross-industry collaboration would likely benefit food manufacturers, but these benefits would not be limited to firms in close geographic proximity to one another. Moreover, in rural areas especially, manufacturing firms and community planners need to be aware of possible negative effects of competition from growing concentrations of firms so that these issues can be addressed before local business growth is adversely affected.