Training & Development Corporation (  [Printer-friendly version]
June 20, 2006


By Michael Shuman

Michael Shuman is vice-president of the Training & Development
Corporation in Bucksport, Maine. He has written two books: Going
Local (1998), and The Smal-Mart Revolution (2006).

[Michael Shuman has also produced a "Smal-Mart Checklist" describing
what consumers, investors, entrepreneurs and policy-makers can do to
promote self-reliant communities. See]

In an era of globalization, why should the Katahdin (Maine) Region
consider an economic development strategy of greater self-reliance? A
growing body of evidence suggests the best economic development
strategy for a region is to nurture locally owned businesses to meet
both the existing and emerging demands. Here are the reasons:

(1) Greater Multiplier -- The fundamental building block of community
economic development is the economic multiplier. Local production for
local consumption reduces "leakages" within the economy and increases
the number and speed of consequent transactions from every dollar
spent. Local ownership of business means that profits are re-spent
within the community. And together, all these factors strengthen local
jobs, income, and wealth.

(2) Greater Tax Base -- A greater multiplier within a jurisdiction
increases the number and size of the taxable transactions. Local sales
allow the capture of sales taxes. Local property use allows the
capture of property taxes. And local hiring and local ownership allows
the capture of income taxes.

(3) Greater Stability -- The greater the portion of a region's economy
that is locally owned, the less vulnerable it is to the instabilities
of the global economy. Firms that are not locally owned, such as most
paper mills in Maine, are tempted to move to jurisdictions with lower
wage and environmental costs. And these departures knock huge,
catastrophic holes in the regional economy. Locally owned firms to
continue producing benefits for the community over many generations.
Plus, communities with a high degree of local and public ownership,
like university and medical-center towns, tend to be recession-proof.

(4) Greater Character -- Every community has a unique character that
reflects its culture, ecology, climate, history, ethnicities,
achievements, music, art, etc. Chain stores tend to diminish this
character, while locally owned stores tend to enhance it. "Character,"
of course, is usually what attracts tourists, retirees, and home-based
workers -- all increasingly importance sources of income for U.S.

(5) Greater Public Health and Safety -- Dependence on certain global
imports has created new risks to local health and safety. For example,
greater dependence on foreign beef has increased risks of e-coli and
mad-cow disease. Greater dependence on foreign fruits and vegetables
exposes consumers to higher levels of pesticides and toxics.

(6) Greater Legislative Flexibility -- Communities dependent on a small
number of companies not locally owned find themselves making painful
legislative compromises -- along with exorbitant payouts through
"financial incentives" -- to attract new outside businesses and to hold
onto existing businesses. Communities with primarily locally owned
enterprises find that they can set wage, environmental, and product
safety standards very high, with confidence that existing firms will
adapt rather than flee.

(7) Greater Civic Strength -- Several studies have suggested that an
economy made up primarily of a large number of locally owned
enterprises tends to have a higher degree of civic and democratic

(8) Greater Competitiveness -- As the noted urban planner Jane Jacobs
has demonstrated, the most globally competitive cities in the world -
places like New York, Chicago, and Los Angeles -- have built their
export niches from a base of increasing self-reliance. While
communities built around one export industry, such as automobiles in
Detroit, tend to rise and fall with the fate of that industry, cities
with highly diversified economies and diversified export sectors
better weather a variety of global economic conditions.