Food Industry Investment Flows: Implications for Rural Development

Food processing firms are often seen as potential sources of growth for rural areas. This paper examines the influence that agglomeration, labor, product and input markets, infrastructure, and government fiscal attributes have on food manufacturing investment flows. The analysis uses aspatial probit model along with spatial clustering methods to analyze county-level data for 12 states in the midwest and southern U.S. Findings suggest that rural areas are at a comparative disadvantage with respect to attracting demand-oriented food processors, but non-metro counties with economic ties to urban centers may be attractive investment sites to supply-oriented food manufacturers.