Ocean & Coastal Management 91 (2014) 58e64

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Ocean & Coastal Management

journal homepage: www.elsevier.com/locate/ocecoaman

Producing regional production multipliers for Irish marine sector

policy: A location quotient approach
Karyn Morrissey*
Department of Geography and Planning, University of Liverpool, UK

a r t i c l e i n f o a b s t r a c t

Article history: Economic activity does not exist in a vacuum. Activities in the marine sector not only directly affect the
Available online 22 February 2014 industries in the sector but also influence other sectors through inter-sectoral linkages. Recent research
in Ireland has estimated the impact of inter-sectoral linkages of the marine sector at the national level via
production multipliers. However, the importance of the marine sector on regional economies has been
well established. Disaggregating the national Input-Output table using location quotients has become
widely accepted as a quantitative method for regional impact assessment of industry performance. Using
a relatively novel location quotient, the FLQ, this paper produces a set of regional production multipliers
for ten marine based sectors for the Border, Midland and West (BMW) region and the South East (SE)
region in Ireland. A final analysis, using the regionalised marine production multipliers provides a
preliminary case study for the potential of a seafood cluster in the BMW region. Whilst concluding
comments offer an insight into how the LQ method may be used to develop a strategy for the multi-
sectoral Irish marine sector.
Ó 2014 Elsevier Ltd. All rights reserved.

1. Introduction From a regional development perspective, policymakers’ inter-

The economic importance of the marine sector in industrialised
countries tends to be low, between 1% and 3% of nations GDP (Kwak
et al., 2005; Kildow and McIlgorm, 2010; Morrissey et al., 2011) but
the marine economy as a whole can still be significant at the
regional level (Morrissey and O’Donoghue, 2012). Specific sub-
sectors within the marine economy, such as fisheries (Eggert and
Tveterås, 2013; Midelfart-Knarvik and Steen, 2002; Virtanen
et al., 2001; Sigfusson et al., 2013) and shipping (Morrissey and
O’Donoghue, 2013b; Benito et al., 2003) can have a significant
impact on regional and coastal economies. Human activities in the
world’s oceans and coasts are at an unprecedented scale and
expanding rapidly (Stojanovic and Farmer, 2013). The oceans have
become a focal point for many new activities including wind and
wave power, marine biotechnology, marine technology and other
enterprises (Kildow and McIlgorm, 2010; Morrissey et al., 2011). In
terms of public policy, research has indicated that there may be
substantial gains from marine based industries for the regions
(Morrissey and O’Donoghue, 2012).
* Tel.: þ44 151 794 2854.
E-mail address: Karyn.morrissey@liv.ac.uk.
est in spatial concentrations or clusters has increased over the last
two decades for a number of reasons. Firstly, particularly in view of
enduring regional disparities (Braunerhjelm et al., 2000), regional
development is increasingly understood as a context-specific pro-
cess in which policymakers should understand and respond to the
singularities of the regions in which they operate (Deloreux and
Shearmur, 2009; Gertler and Wolfe, 2006). Secondly, policy-
makers now have a better understanding of innovation dynamics.
Innovation is now understood as a social and evolutionary process
resting on interactive learning and regional externalities (Deloreux
and Shearmur, 2009; Doloreux, 2004). Weight is now given to the
influence that cultural, economic, and institutional environments
have on innovation. Thirdly, policymakers are increasingly aware of
the impact of successful regional clusters, which have brought into
focus the specific advantages that some regional contexts seem to
bring to the performance and competitiveness of sectors (Deloreux
and Shearmur, 2009). Previous research on the impact of the spatial
concentrations of interlinked marine activities indicates that ma-
rine based industrial clusters have the potential to play an impor-
tant regional role (Morrissey and O’Donoghue, 2012; Deloreux and
Shearmur, 2009; Chang, 2011; Morrissey and O’Donoghue, 2013).
Acknowledging the regional importance and potential of the
marine resource, applied social research on the marine resource is
increasingly recognized as indispensable to management,

http://dx.doi.org/10.1016/j.ocecoaman.2014.02.006
0964-5691/Ó 2014 Elsevier Ltd. All rights reserved.
 K. Morrissey / Ocean & Coastal Management 91 (2014) 58e64 59

conservation, and policy around the globe (Koehn et al., 2013; Jin
et al., 2013; Morrissey and O’Donoghue, 2013a). Information and
knowledge from past trends are essential to inform forecasts of the
future (Hawkins et al., 2013). Drawing on current economic data on
the Irish marine sector (Morrissey, 2010) this paper uses location
quotients (LQ) to regionalise the Irish marine inputeoutput (IO)
table (Morrissey and O’Donoghue, 2013a). Regionalising the Irish
marine IO table at the NUTSII level1 will provide policymakers with
the direct and indirect impact of the marine economy to the Border,
West and Midlands (BMW) and South East (SE) regions of Ireland,
as well as indicating key inter-industry linkages within the sector
and provide policymakers with exploratory data on the potential
for spatial clusters in the marine sector.
2. Data
Regional models typically contain far fewer sectors than the
corresponding national models (Flegg et al., 1995; MacFeely et al.,
2011). However, this is not the case for the study to hand. In
contrast, utilising the disaggregated marine IeO model for Ireland
(Morrissey and O’Donoghue, 2013a), this paper seeks to regionalise
the newly created IO table into the two NUTII regions e the Border,
Midland and West (BMW) region and the South East (SE) region for
each of the ten marine based industries within the Irish economy.
across different datasets, the industry estimates should operate
within an established measurement of economic activity, such as
the national income and production accounts [10]. The CIP, ASI and
CBC datasets collected by the CSO form the basis for the calculation
of Ireland’s national income and production accounts. Access may
be granted to researchers interested in examining the data, through
the CSO officer of statistics facility.
With regard to marine based sectors where no data was avail-
able (Type 3 data) a survey was administrated to each company
within each sector (Morrissey et al., 2011). The survey was prepared
in line with the CSO surveys used to obtain data for the CIP, ASI and
CBC datasets. This ensured that the necessary data to disaggregate
the national IO table; intermediate consumption, output, final de-
mand and compensation of employees, compiled between public
and non-public data was consistent. Companies that provided both
land-based and marine-based goods and services were specifically
asked about their commercial marine-based activity (i.e. what
percentage of their turnover was derived from marine-based ac-
tivity). The central year for the study was 2007. To ensure temporal
consistency, public datasets that were from earlier or later years
were not included in the estimates. Data collected via survey spe-
cifically asked for company accounts for the year ending the 31st of
December 2007. Table 1 indicates the data type and the data
sources for each sector of interest.

2.1. Data for the Irish marine inputeoutput model 3. Methodology

Disaggregating a national IO table to encompass a new sector Using the marine based data listed above, we define the national
requires detailed sectoral data on intermediate consumption (input marine IO model created by Morrissey and O’Donoghue (2013a) as:
coefficients), output, compensation of employees and final demand
(Morrissey and O’Donoghue, 2013a). Given the fragmented nature x ¼ Xe þ f
0x ¼ Ax þ f (1)
of the marine sector (Colgan, 2013), to collect and collate the
necessary data to disaggregate the national IO a variety of data 0x ¼ ðI  AÞ1 þ f
types or collection methods must be employed [10]. These data
Where matrix X represents the transaction flows between sectors
types may be broken down into three broad categories. Type 1 data
of activities and is the sum of gross outputs, matrix I is an identity
is data that is in the public domain. Such estimates are generally
matrix, vector x is the sum of gross outputs, vector f represents the
confined to those sectors whose connection to the sea is clear (i.e.
part of gross output sold to final demand, and A is a matrix of input
commercial fisheries, coastal transportation). Type 2 data is data
coefficients defined as;
that is publicly collected but is not released into the public domain.
This data is at a lower industrial or geographical classification and is zij
therefore considered confidential. Type 3 data is data that is not A ¼ aij ¼ (2)
xj
available in the public domain. The sectors where there is no
publicly available data are sectors that are not easily recognisable as Where zij is intermediate demand for inputs between sector i and
marine based (Morrissey et al., 2011). These sectors are often the supply sector j and xj is the final output for sector i. (I e A)1 (Eq.
indistinguishable from their land based counterparts within eco-
nomic datasets (Colgan, 2013). For example, one cannot difference Table 1
between water based recreational activities and land based recre- Overview of marine sub-sectors and data sources used to compile the disaggregated
ational activities. As such, to disaggregate the Irish national IO table marine inputeoutput table.
to include a marine component, public data was not sufficient to Marine sector Data type Data source
estimate the full value of the Irish marine sector.
Ship owners & Type 2 data ASI
In terms of collating non-public data (Type 2 data), the Irish maritime logistics
Central Statistics Office (CSO) provides data on turnover, interme- Water based activities Type 3 data Company survey
diate consumption, gross value added, exports, and employment Tourism expenditure Type 2 data ESRI report
for each sector within the Irish economy. This data is collected Cruise Type 2 data UCC report
High tech services Type 3 data Company survey
across a number of censuses and surveys. The censuses and surveys Marine commerce Type 3 data Company survey
used for the collation of the data on the marine sector include; the Other services Type 3 data Company survey
Census of Industrial Production (CIP), the Annual Services Inquiry Fisheries Type 1 data SFPA/CSO
(ASI) and the Census of Buildings and Construction (CBC). These Aquaculture Type 1 data Bim report
Seafood processing Type 2 data CIP
three micro datasets provide detailed firm and enterprise level
Seaweed & biotechnology Type 3 data Company survey
information on the economic activities for each company at the Oil & gas Type 2 & 3 data CIP/company survey
four digit NACE code. In order to assure consistency of treatment Renewable energy Type 3 data Company survey
Marine manufacturing, Type 2 & 3 data CIP & CBC/company
engineering & construction survey
1
NUTS (Nomenclature of Territorial Units) is the spatial classification system CIP e Census of Industrial Production, ASI e Annual Services Inquiry, CBC e Census
used by the European Union. of Building and Construction.
60 K. Morrissey / Ocean & Coastal Management 91 (2014) 58e64
(1)) is known as Leontief’s inverse matrix and represents the total
direct and indirect outputs in sector i per unit of exogenous final
demand, d for sector j [11]. One of the most important uses of IO
models has been the use of the Leontief inverse matrix in the
structural analysis of an economy (Tohmo, 2004). One can compute
the regional input coefficients, rij, by the corresponding national
coefficients, aij, using the formula (Tohmo, 2004):
rij ¼ tij*aij
where: rij is the regional coefficient; tij is the trading coefficient
estimated using location quotients (LQ); and aij is the national
coefficient. Therefore:
b
r ij ¼ LQij*aij
Using inputeoutput analysis, one can study the economic im-
pacts of investments in regions and also the economic structures
and interdependency of regions (Tohmo, 2004).
3.1. Location quotients
Regional economies differ from national economies in several
respects, most notably in terms of trading relationships. For
instance, intermediate inputs purchased from other regions within
a given country represent a leakage from the regional economy but
are classified as domestic production at the national level. Failure to
account for these leakages is likely to lead to certain sectors being
seriously over-valued within some regions. Thus, the continued
absence of regional import and export statistics to estimate inter-
regional trade flows has restricted the capacity to construct sound
regional economic models and provide an evidence base with
which to formulate and assess regional policy (MacFeely et al.,
2011; Flegg and Tohmo, 2013). However, as the importance of
developing the economies of regions becomes more apparent
(Moylan, 2011) the need to develop interregional trade flow pat-
terns has re-emerged.
In principle, the best way of obtaining the data required to
construct a regional inputeoutput table would be via a well-
designed survey (Flegg et al., 1995; Flegg and Tohmo, 2013). How-
ever, such surveys are resource intensive and generally outside the
budget of individual research projects (Tohmo, 2004). Thus, given
the need to compile regional economic models, indirect methods of
estimation have been developed. A straightforward and inexpen-
sive way of regionalising a national inputeoutput table is to apply a
set of employment-based location quotients (LQs) to estimate
trading coefficients (Flegg et al., 1995; Flegg and Tohmo, 2013). For
instance, Simple Location Quotients (SLQ) may be defined as:
 
REi
NEi
SLQ ij ¼ TNE
TRE
where the proportion of regional employment (RE) in each sup-
plying sector i is divided by the corresponding proportion of na-
tional employment (NE) in that sector. This is then multiplied by
total national employment (TNE) divided by total regional
employment (TRE). A SLQi < 1 indicates that sector i is underrep-
resented in the regional economy and unable to meet all of the
needs of regional purchasing sectors for that input. In such cases,
the national input coefficient for sector i is scaled downwards by
multiplying it by SLQi, therefore creating an allowance for ‘imports’
from other regions. Conversely, where SLQi  1, the supplying
sector is judged to be able to fulfil all requirements of regional
purchasing sectors, so no adjustment is made to the national input
coefficient.
However, it is well noted that the use of SLQs to adjust the na-
tional coefficients may produce misleading results (Tohmo, 2004).
To explain why such distortions might occur, consider the case
where an SLQ is 0.80. As noted above, all input coefficients with an
SLQ less than 1 are multiplied by the SLQ to allow for the presumed
lesser importance of that sector in the region and the greater reli-
ance on imports to satisfy any increase in regional demand. This
presupposes that the discrepancy between the national and
(3) regional coefficients is the same, regardless of the downstream
sectors to which sector i is selling their output. This presumption
cannot be sustained, as it does not take into account of the relative
size of the sector providing the inputs and the sector purchasing
them. Moreover, sector i may have specialised in fulfilling the needs
of particular sectors and may have no difficulty in satisfying local
(4)
needs in full.
Cross-industry locution quotients (CILQs) go some way towards
overcoming the shortcomings of SLQs. An employment-based CILQ
for sectors i and j may be defined as (Flegg et al., 1995):
 
REi
NEi
CILQ ij ¼  RE  (6)
j
NEij
where sector i supplies inputs to j. The logic behind this formula is
that, where the supplying sector is relatively small regionally
compared to the purchasing sector, the CILQ is <1, some of the
required inputs will have to be met by imports from outside the
region (Flegg et al., 1995). This means that the national coefficient
will need to be adjusted downwards by multiplying it by the CILQ,
with a corresponding upward adjustment being made to the rele-
vant import coefficient (Flegg et al., 1995; Tohmo, 2004). Similar to
the SLQ no adjustment is made if the CILQ is 1.
However, research has indicated the poor performance of the
SLQ and CILQ in applied settings (Tohmo, 2004). In evaluating these
formulae for application, Round (1978) proposed three criteria that
a LQ should met to ensure accurate results. Round (1978) suggests
that a trading coefficient should incorporate three variables in
particular: the relative size of the sector i; the relative size of the
purchasing sector j; and the relative size of the region. It is evident
that the CILQ takes the first two variables explicitly into consider-
ation, yet disregards the third, whereas the SLQ incorporates the
first and third, but not the second. Given that neither the SLQ nor
the CILQ meet all three criteria, research has indicated that they
tend to overstate regional multipliers (Tohmo, 2004). This occurs
because these adjustment formulae tend to take insufficient ac-
count of interregional trade and therefore understate regional
propensities to import (Flegg et al., 1995).
Flegg et al. (1995) argue that regional propensities to import are
higher than national propensities. The CILQ method of adjustment
is an attempt to produce regional input coefficients that are more
(5)
representative of local conditions than those produced by SLQ
adjustment (Tohmo, 2004). According to Flegg et al. (1995) the logic
behind CILQ adjustment is that, where the supplying sector is
relatively small regionally compared to the purchasing sector, some
of the inputs will have to be met by imports from outside the re-
gion. National coefficients are adjusted downwards by multiplying
them by the CILQ (Tohmo, 2004). In an effort to address this
problem, Flegg et al. (1995) proposed a new employment-based
location quotient, the FLQ formula, which takes regional size
explicitly into account. Flegg et al. (1995) posit an inverse rela-
tionship between regional size and the propensity to import from
other regions. Brand (1997, p. 792) criticised the initial FLQ formula
d
(see Flegg et al., 1995) on the grounds that the regional scalar l was
very insensitive to variations in the relative size of the regional
economy to the national economy. Based on this criticism, Flegg
 K. Morrissey / Ocean & Coastal Management 91 (2014) 58e64 61

and Webber (1997) reformulated the FLQ to become more sensitive Table 3
to variations in the relative size of regions. The updated FLQ may be Total intermediate inputs and production multipliers for the marine economy in the
NUTSII BMW and SE regions in Ireland.
defined as:
Sector BMW BMW SE SE FLQ 0.3
* co-efficient FLQ 0.8 co-efficient
FLQ ij ¼ CILQ ij  l for i ¼ j (7)
Fishing & aquaculture 0.47 1.44 0.28 1.35
where: Oil & gas extraction 0.3 1.22 0.002 0.98
Seafood processing 0.75 1.81 0.01 0.99
 d Boat building 0.49 1.48 0.002 0.98

P
l* ¼ log2 1 þ
TRE
TNE R (8)
Water construction
Marine retail
Maritime transport
0.61
0.43
0.59
1.63
0.82
1.33
0.002
0.43
0.59
0.98
1.55
1.77
The regional scalar, l, has a range from log2 z 0.693 to unity, 0  services
d   1 (Flegg and Webber, 1997). The inclusion of the regional Auxiliary maritime 0.28 0.87 0.28 1.35
transport services
scalar, l, ensures that the relative size of the regional purchasing Marine engineering 0.46 0.84 0.01 0.99
and supplying sectors is taken into account when determining the Water based activities 0.43 1.39 0.1 1.11
adjustment for interregional trade, as is the relative size of the
region. The inclusion of the parameter d in the FLQ formula makes it
possible to refine the function [log2(1 þ TRE/TNE)] by altering its 2007 Irish InputeOutput table, it is assumes that the relative pro-
degree of convexity (Flegg and Webber, 1997); as d increases, so too duction differences between the BMW and SW region are main-
does the allowance for interregional imports. d ¼ 0 represents a tained between both years. The best fit was deemed to be the
special case where FLQij ¼ CILQij (Flegg and Webber, 1997). multiplier estimates that,
The FLQ adjustment formula allows for both regional size and
the relative size of the purchasing and supplying sectors, and  On aggregate (adding all 6 industrial sectors together) can
overcomes the tendency of the other LQs to overstate regional closest to the aggregate production multiplier calculated by
multipliers (Tohmo, 2004). In an effort to validate the FLQ formula, MacFeely et al. (2011)
Tohmo (2004) carried out an examination of the relative perfor-  Had the smallest mean error for each of the 6 industrial sectors
mance of the FLQ, SLQ and CILQ. Employing the survey-based compared to their corresponding estimate calculated by
inputeoutput table for Finland in 1995 and a corresponding table MacFeely et al. (2011)
for one of its regions, KeskiePohjanmaa the mean error in esti-
mating the type I sectoral output multipliers was found to be 15.1% The aggregate multiplier was 8.47 for the BMW and 8.58 for the
for the SLQ, 13.1% for the CILQ and 0.3% for the FLQ. Thus, Tohmo SE region. It was found that the SLQ and the CILQ overestimated the
(2004) found that in the case of Finland, the FLQ was a more ac- production multipliers for each sector. Using the refined FLQ
curate method of regionalising the Finland IO Table compared to method, (Eq. (3)) nine values, ranging from 0.1e0.9 were tested for
other LQ methods. the inter-regional imports parameter d: The sensitivity analysis
found that 0.8 was the best fit for the inter-regional imports
4. Validation of the location quotients: a sensitivity analysis parameter d in the BMW region (aggregate multiplier, 8.46, mean
error 0.001) compared to MacFeely et al. (2011) 2005 regional
To test the preciseness of the three LQ (the SLQ, CILQ and FLQ) production multiplier estimates for the BMW region. It was further
outlined in Section 3, a sensitivity analysis for each of the three found that 0.3 was the best fit for the inter-regional imports
methods was undertaken. The sensitivity analysis involved parameter d in for the SW region (aggregate multiplier, 8.60, mean
comparing the aggregate production multipliers obtained for the error 0.02) compared to MacFeely et al. (2011) multiplier esti-
Agriculture, Forestry and Fishing, Construction, Business Services, mates for the SE region.
Manufacturing, Distributive Trades and Communications and Other The finding that a different inter-regional import parameter
Services sectors for each of the three LQ methods to the same value for the BMW and SE regions is interesting. This demon-
sectors in a previously regionalised Irish IO table (MacFeeley et al., strates that Flegg et al. (1995) were correct; regional size must be
2011). Table 2 illustrates the values of regional scalar ld when taken into account when calculating LQs. The more prosperous SE
l ¼ 0$782 in the BMW region and l ¼ 0.931 in the SE region. When region required a lower adjustment downwards, compare to the
b increases, for example from 1e2, the value of the function ld less economically prosperous BMW region. That is, the production
decreases by 2% in the BMW region and by 1% in the SE region. for each of the six aggregate supplying sectors is relatively small in
Whilst, the regional IO tables produced by MacFeely et al. (2011) the BMW region compared to the purchasing sectors and some of
uses the 2005 Irish InputeOutput table, and this paper uses the the inputs to production for these sectors have to be met by im-
ports from outside the region. Whilst importation also occurs in
the SE region, the regional import rate is lower than the BMW
Table 2
region.
The behaviour of the function ld for the BMW and SE regions.

BMW SE

0.782 0.931 5. Results

0.1
0.2 0.02 0.01 Table 3 provides the first set of intermediate inputs and pro-
0.3 0.02 0.01
duction multipliers for the Irish marine sector at the NUTSII
0.4 0.02 0.01
0.5 0.02 0.01 regional level. Using the FLQ with an inter-regional imports
0.6 0.02 0.01 parameter d ¼ 0:8 for the BMW region and the FLQ with an inter-
0.7 0.02 0.01 regional imports parameter d ¼ 0:3 for the SE region, it was found
0.8 0.02 0.01 that the production multipliers were higher in the BMW for fishing
0.9 0.02 0.01
and aquaculture, (1.44) oil and gas extraction (1.22), seafood
62 K. Morrissey / Ocean & Coastal Management 91 (2014) 58e64
processing (1.81), boat building (1.48) and water construction
(1.63). In the SE region, the production multipliers were higher for
marine retail (1.55), maritime transport services (1.77), auxiliary
transport services (1.35) and marine engineering (0.99).
A production multiplier or backward linkage index higher than
one implies that the sector has strong backward linkage relative to
other sectors in the economy (Morrissey and O’Donoghue, 2013a).
An industry with higher production multipliers than other in-
dustries indicates that expansion of its production is more benefi-
cial to the economy in terms of inducing productive activities. Thus,
regional backward linkages serve as indicators for the performance
of a sector from the perspective of the regional economy (Baaijens
et al., 1998). Regional multiplier or backward linkage analysis is a
useful method for regional policy impact assessment (Baaijens
et al., 1998).
Examining the BMW region first, Table 3 indicates that the
natural resource based marine sectors (Morrissey et al., 2011)
including fishing and aquaculture, seafood processing, oil and gas
extraction have high backward linkages. Thus expansion of these
sectors would be beneficial to the BMW region. Looking at the
seafood industry specifically (defined as fishing and aquaculture
and seafood processing), one can see that for every V1 produced
within the fishing and aquaculture and seafood processing sectors,
V0.44 and V0.81 respectively, V1.25 for the seafood sector as a
whole, is backward linked to direct and indirect upstream sup-
pliers. Overall, the average backward linkage for the marine sector
in the BMW region is 128. This indicates that the sectors in the
BMW marine economy had high (greater than one) backward
linkage effects within the region. Thus, although the BMW econ-
omy as a whole relies on interregional imports within the national
economy, the marine sector is a strong self-reliant production ori-
ented sector for the region. Extending the analysis for the BMW
region, using the SEMRU marine company database (Morrissey,
2010) to examine the location and percentage of seafood based
activity in the BMW region, it was found that 23% of seafood based
enterprises, 46% of seafood based Gross Value Added (GVA) and
24% of seafood based employment was based in county Donegal
(nested in the BMW region) alone.
With regard to the SE region, Table 3 indicates the service based
marine sectors (Morrissey et al., 2011) including maritime trans-
portation, services to maritime transportation and marine retail
have high backward linkages and thus expansion of these sectors
would be beneficial to the SE region. Looking at the maritime
transportation sector specifically, one can see that for every V1
produced within the maritime transportation and maritime
transportation services sector, V0.77 and V0.35 respectively is
backward linked to its direct and indirect upstream suppliers. This
result is similar to findings by Morrissey and O’Donoghue (2013b)
using the IO method and Brett and Roe (2010) using the RAND
method found that the SE region of Ireland is a maritime trans-
portation hub and has the potential to become a maritime trans-
portation cluster. Overall, the average backward linkage for the
marine sector in the BMW region is 121. This indicates that the
sectors in the SE marine economy had high (greater than one)
backward linkage effects within the region. Thus, the marine sector
is a strong self-reliant production oriented sector for the SE region.
Comparing the marine sector across the BMW and SE regions,
the backward linkages for the marine sector are higher in the BMW
region (128) compared to the SE region (121). This indicates that
the marine sector is slightly more important in the production
process of the BMW region compared to SE region. This finding is
confirms the study by Morrissey and O’Donoghue (2012) that found
that the in relative terms the marine sector is of greater important
to the North West region of Ireland (which is nested within the
BMW region) compared to other Irish regions.
6. Discussion
Using currently available data on the marine sector and a rela-
tively novel LQ, the FLQ (Flegg and Webber, 1997), this analysis
found that the marine sector has a greater role in the overall pro-
duction process of the BMW region compared to the SE region of
Ireland. This result confirms previous research that found that the
marine sector as a whole is relatively more important in the Border
region of Ireland (which is nested in the BMW region) than the
other Irish regions (Morrissey and O’Donoghue, 2012). Using the
FLQ method to examining the marine sector for the two NUTSII
regions in Ireland, it was found that the seafood industry is an
important industrial sector within the BMW region. Similar to
previous analyses of the Irish maritime transportation sector
(Morrissey and O’Donoghue, 2013b; Brett and Roe, 2010) it was
found that the maritime transportation sector has high production
effects in the SE region.
Reflecting the insights of international research (Porter, 1990)
cluster theory has become the focal point for many new indus-
trial policy initiatives (Doloreux and Shearmur, 2009). Cluster
theory argues that internationally competitive industries usually
occur in the form of specialised clusters of indigenous, ‘home-
based’ industries (Porter, 1990). These industries are linked
together through vertical relationships (buyers/suppliers) or
horizontal relationships (common customers, technology, skills,
distribution channels, etc.). However, while both academic
research (Chang, 2011) and policy-makers (Clancy et al., 2001)
have applied the concept of cluster to a diverse range of topics,
little research has been done to assess the potential for devel-
oping clusters within the marine based economy. The one
notable exception is the maritime transportation sector, where
international (Chang, 2011; Doloreux and Shearmur, 2009; de
Langan and Visser, 2005; Wang, 2008) and Irish (Brett and
Roe, 2010; Morrissey and O’Donoghue, 2013b) research has
focused on the potential of developing maritime transportation
clusters.
A further aim of this paper was to extend previous research on
the potential of marine based clusters, which have to date, ten-
ded to focus on the maritime transportation sector. Using a dis-
aggregated IO sector for the marine sector in Ireland and the FLQ
this paper began a preliminary analysis on the potential of a
seafood cluster in the BMW region in Ireland. Within the wider
economic geography literature the natural resource sector has
been posited as a sector with poor agglomeration economies
(Gruber and Soci, 2010; Morrissey and O’Donoghue, 2012), which
does not benefit from proximity to suppliers, knowledge spill-
overs or a joint labour pool. Given these assumptions, it is un-
surprising that there has been little policy focus on the potential
impact of developing a marine natural research sector. However,
the analysis provided in Section 5 indicates that the seafood
based natural resource sector, specifically fishing, aquaculture
and seafood processing, has strong backward linkages within the
BMW economy. The regional production multipliers derived from
the FLQ analysis can be interpreted as the direct and indirect
benefits, which would ensue from future seafood based devel-
opment projects in the BMW region. For every V1 of investment
in the seafood sector in the BMW region, V1.25 is backward
linked to its direct and indirect upstream suppliers. Further
analysis using the SEMRU company database (Morrissey, 2010)
found that in terms of GVA, employment and enterprises, County
Donegal had the highest spatial cluster of seafood based activity
in Ireland. Thus, this paper demonstrates that stimulating in-
vestment in the seafood sector would positively affect upstream
industries in the less prosperous BMW region, particularly in
County Donegal.
 K. Morrissey / Ocean & Coastal Management 91 (2014) 58e64
7. Conclusions
Utilising a disaggregated marine IO table for Ireland (Morrissey
and O’Donoghue, 2013a) and the location quotient, FLQ (Flegg and
Webber, 1997), this paper found that the marine sector is an
important contributor to both the NUTSII regions in Ireland. Inter-
estingly, the paper found that the seafood industry is an important
production sector in the less prosperous BMW region of Ireland.
Although the seafood industry alone accounts for less than 0.5% of
the global economic product (Sigfusson et al., 2013), the FAO and the
World Bank predict that rising global population and the shift in
economic power towards the east, mean that seafood demand is set
to rise sharply for the foreseeable future (Marine Institute, 2012).
The EU market for seafood is already 65% dependent on imports. As
supply becomes more restricted, it is anticipated that prices will rise
and aquaculture will contribute a hugely increased share of global
supply. Thus, there is a clear opportunity for Ireland and specifically
the BMW region to become a major exporter of seafood products,
particularly aquaculture based products, to the European market.
To develop a seafood industrial cluster in the BMW region as a
means to capitalise on current global seafood trends, recent
research indicates that clusters operate and develop along different
paths depending on the sector and region (Doloreux and Shearmur,
2009). Within Ireland, Clancy et al. (2001) highlight five key areas
that public policy must encompass to develop competitive, sus-
tained clusters. These include support for existing policies, support
for the emergence of developing groupings of connected com-
panies and industries, attraction of multi-national companies
(MNC) with comparable characteristics, a strong technology focus
and the support for cooperative alliances between companies
(Clancy et al., 2001). These key points are broadly consistent with
international research on the development of successful marine
clusters (Chang, 2011; Hsieh and Li, 2009; Othman et al., 2011). The
Food Harvest 2020 (DAFF, 2010) is widely based on these five
principles and aims to create a sustainable innovative seafood in-
dustry with the relevant critical mass of multi-disciplinary activ-
ities within Ireland. Thus, given the success previous of industrial
clusters in Ireland, the medical devices cluster in Galway (Giblin
and Ryan, 2012), the pharmaceutical cluster in the greater Dublin
Area and Cork (van Egeraat, 2007), the financial cluster in Dublin
(Clancy et al., 2001) and the strong production impact of the sea-
food cluster in the BMW region, this paper posits that there is
potential to develop a seafood cluster in the BMW region of Ireland.
In terms of developing marine strategy, as noted by Cummins
and Kopke (2011) despite an intrinsic link to the sea, marine pol-
icy making has been reactive, rather than proactive in Ireland.
Arguably this could be attributed to the Irish land resource, rather
than the sea being seen as a political priority (Cummins and Kopke,
2011; MacLoughlin, 2010). To date, little emphasis has been placed
on the development of the marine sector in Ireland (Morrissey
et al., 2011). This is particularly evident by the lack of a central
government department dedicated to maritime-related matters in
Ireland (Cummins and Kopke, 2011). Whilst the lack of central
government department may be a response to the fragmented,
cross sectoral nature of the marine economy and the difficulty in
distinguishing between land-based and marine-based activities
(Morrissey et al., 2011), there is a clear need for the a compre-
hensive marine strategy that encompasses the multi-sectoral na-
ture of the marine economy and it’s sustainable development.
Given the focus on cluster theory and agglomerations in industrial
policy since the early 1990s (Porter (1990), internationally, marine
strategies has begun to focus on the development of marine-based
industrial clusters. Whilst the majority of these policies have
focused on the maritime transportation sector (Benito et al., 2003;
Doloreux and Shearmur, 2009; Shinohara, 2010; Chang, 2011), the
63
success of multi-sectoral marine cluster strategies is currently
demonstrated by the Irish Maritime Resource and Energy Cluster
(IMERC). IMERC is a university led (University College Cork (UCC),
Cork Institute of Technology (CIT) and the Irish Naval Service) cluster
with industry and government partners, (IMREC, 2011). IMERC focus
on a number of marine sectors, including marine energy, marine
recreation, marine ICT, shipping, logistics and transport and maritime
security and safety with an over-arching goal of marine sustainability.
Newly created, the research led cluster aims to develop research led
collaborations between multiple, interlinked marine sectors in
conjunction with public and private partners (Morrissey and
O’Donoghue, 2013b). The potential development of further marine
clusters as outlined by Morrissey and O’Donoghue (2013a) would be
greatly aided by empirical evidence demonstrating current sectoral
linkages and dependencies. Given the data requirements and the
relative simplicity of their estimation, LQs have become an important
tool in examining the spatial concentration of firms (Crawley et al.,
2013; Morrissey and O’Donoghue, 2013). The LQ developed in this
paper can be used to examine the potential sectoral inter-
dependencies and links between different marine sectors and the
wider Irish economy to develop a multi-sectoral marine strategy for
Ireland that is underlined by region strengths and sectoral linkages.
Finally, it is important to note that the analysis in this paper
provides an overview of the marine sector at one specific period in
time. Due to data lags and the general lack of data for the marine
sector as a whole in Ireland, this data uses 2007 data. Data lags
within cross sectional analysis are problematic as they provide a
brief snapshot in time. The time lag within this analysis is partic-
ularly problematic given the post 2007 global economic recession.
Whilst the non-availability of a more up-to-date data is problem-
atic, primary data collection is both time consuming and expensive
(Morrissey et al., 2011). Due to these resource constraints the
collection of primary data for the sector is often temporally
inconsistent. Given these circumstances, current research on the
marine economy in the USA, states that the ‘derivation of ocean
economy estimates should be undertaken by adapting existing data
to the purpose (Colgan, 2013, p. 336)’. Once more up to date data is
available, further analysis on the impact of the global recession on
the Irish marine sector at the regional level will be possible through
the use of the FLQ demonstrated in this paper. However, what this
paper does achieve is its goal to increase the number of tools, data
and economic indicators that may be used formulate policy for the
Irish marine economy. Specifically in the use of location quotients
to regionalise national IO tables. Similar to Tohmo (2004) this study
found that the FLQ method of regionalising the Irish IO table was
superior to the traditional SLQ and CILQ methods. This paper
therefore provides a template for international research interested
in regionalising IO tables both in the marine sector and the wider
economy. This data may now be used to better inform future ma-
rine planning and investment decisions for the Irish regions at both
the national and EU level (Koehn et al., 2013; Jin et al., 2013).
Acknowledgements
The data collected for this research has been funded under a
Beaufort Award, which was set up under the Sea Change Strategy
and the Strategy for Science Technology and Innovation (2006e
2013), with the support of the Marine Research Sub-Programme of
the National Development Plan 2007e2013.
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