Effects on employment creation of the food sector - Input-output analysis by province Marja Knuuttila MTT Economic Research, Agrifood Research Finland, Luutnantintie 13, FIN-00410 Helsinki, Finland, marja.knuuttila@mtt.fi Abstract The food sector is part of the economy and creates production, revenues and employment. There has been little information available on the multiplicative effects of agricultural production on regions. This research was intended to study the effects of the food sector on regional economies. The food sector was considered to include agriculture, food industry, catering activities and sales of food stuffs. The research centred on multiplicative effects generated by agriculture. The effects on regional economies were measured by the number of people employed in these industries. Of the input-output models available, the production model, total output model and supply model were adopted. The production model is suitable for studying the economic effects of demand for the end products of the entire food sector and its individual industries. The total output model can be adopted when studying the economic effects of total production in agriculture. The effects of agricultural production throughout the food chain can be evaluated with the use of the so-called net effects. Countrywide, the effects on employment generated by input demands within the food sector and agriculture extended to all 37 branches of industry covered by the material. According to the material, the entire food sector in 1995 employed at least 340,540 people. Indirect effects on employment within the entire food sector were comparable with those experienced within food industry or catering. The demand for intermediate products in agriculture employed altogether 17,400 people in the country. Of this, only 40 per cent could be directed to provinces, i.e. considered to be generated by local agriculture in the regions. The results show that a large share of the intermediate product input of agricultural production shifts between regions. Among local input production are electricity, gas and the generation and distribution of heat, construction and public sector services. A notable share of demand for agricultural intermediate input relates to industries that could be classified as services. The results offer an indication of the concentration of agricultural input production. This means that during periods of agricultural change, economic impacts are felt in areas generating intermediate product input, as well as the areas actually facing the change. Whilst the generation of intermediate products is further centralised, the economic impacts of agriculture on a region remain to be met by revenues originating from production. With regard to the direction of structural funding to an area, the centralisation of input production means that some of the funding will trickle outside the area. Index words: agriculture, employment, food industry, input-output analysis