Regional cluster identification in food manufacturing industry in Latvia

Abstract

Regional clusters are widely used tool to promote growth of local businesses that leads towards the growth of the region and the nation. Regional clusters offer a platform for cooperation, collaboration and interaction between enterprises working in the same industry, supplementary industries, research, science and other institutions. Collaborative ties between cluster members ensure business growth in terms of efficiency, innovation capacity and competitiveness. The main issue with promoting regional clusters is the identification of region specific cluster industries developing in the specific industries naturally, that allows concentrating cluster support and establishing formal clusters in the industries with high cluster potential. Therefore, the aim of the research is to identify regional clusters and find industries with the highest cluster potential in regions of Latvia. The regional cluster identification methodology is applied to identify regional clusters in the food industry in Latvia. Cluster potential in the food industry in the regions of Latvia has not been researched before, although the food industry is fast growing industry in Latvia, ensuring both local demand and export growth. The regional cluster identification methodology is based on ranking four ratios- number, location quotient, specialization quotient and dominance, which are calculated for a number of enterprises, number of employees and turnover. Also authors identify clusters using Elisson and Glaeser and Maurel and Sedliot indexes. In each region, industries with the highest rank are identified as industries with the highest cluster potential. The results show that clusters in the food industry are resource dependent, emerging close to natural resources and ignoring formal borders of planning regions. Fish production and manufacturing cluster is identified in the coastal region, covering three formal regions- Riga, Pieriga and Kurzeme. Meat production and manufacturing cluster is identified in Zemgale and Latgale region, and milk production and manufacturing cluster is identified in Vidzeme region. The findings of the research show that clusters in the food industry are emerging in region specific industries, promoting local resources and establishing growth poles, therefore the need for cluster support to form formal clusters is indispensable in these regional clusters.

Category: Research paper