TESTING LOCALIZATION OF CHINESE FOOD INDUSTRIES: EVIDENCE FROM MICROGEOGRAPHIC DATA

Abstract

Uneven distribution of economic activity is commonly observed, particularly in the food industry. Generally speaking, the food industry is transportation intensive; therefore, the extent of localization is relatively low. Previous research in China has confirmed this fact; however, analysis was based on aggregate data and discrete measurements that might contain bias. On the basis of microgeographic data, this study evaluates localization of the Chinese food industry using the Duranton–Overman index. Our results indicate that contrary to previous research, the extent of localization in China's food industry is high. Specifically, among 50 four-digit food industries, 21 exhibit localization while 15 are dispersed. The remaining 14 do not deviate significantly from randomness. Yellow wine (C1523) and aquatic products freezing (C1361) are the two most localized industries. A possible rationale for this result is that the location of the food industry follows the distribution of raw material, while the production of raw material is agglomerated in China.