A typical local economy may have residents who dine at a local independent restaurant. The restaurant employs residents from the community and buys goods and services from other local businesses.
They purchase ingredients from local farms or suppliers, use a local law or insurance firm and hire local musicians to play live music on the weekends. A circular economy prevails benefiting the community, the residents and the environment. Strong local economies can include a multitude of different sectors and industries that work together to contribute to local wealth creation, opportunities and prosperity.
STRONGER RELATIONSHIPS AND BETTER CUSTOMER SERVICE
In a local economy, shops are often independently owned by an individual, family, or small group of people. A unique characteristic is that these people are also part of the community. They are the people in your neighborhood.
Local economies are more personal by nature. The interactions between owners and residents can create long-lasting, cherished relationships. Stronger relationships can lead to an increase in social capital. They can also lead to better customer service. Local business owners can tailor their products and services to the residents, rather than being pressured to comply with a national marketing strategy implemented by a chain retailer.
Joe Grafton at TEDxSomerville
While there is clear economic evidence that prosperity lays at the root of a resilient local economy, many of our individual needs for community can be addressed in an increasingly disparate world. If we build strong and sustainable local economies that are inclusive and participatory, many of the world's social and economic ills can, and will, be addressed.
Joe is the founder and executive director of Somerville Local First, a leading local economy network. Joe also serves on boards and committees across New England, and the nation, working to build strong local economies. Joe is a innovative leader, published writer, speaker, entrepreneur and change agent.
This type of grassroots support advances the local economy and creates additional opportunities for its residents.
INCREASED EMPLOYMENT AND EFFICIENCY
Local economies have a positive impact on employment. According to the Small Business Administration, small businesses employ 49.2% of the private-sector workforce.
Local business owners are more invested in their community and are likely to stay there for longer, leading to increased employment. Increased employment and stability mean more opportunities for residents, which can increase local wealth. Additionally, local economies are often more efficient. For example, a local grocer is more likely to buy their produce from a nearby farm rather than a large multinational supermarket. Lower transportation costs reduce costs for the consumer. Increased efficiency not only benefits the customer but also the environment. Less transportation means less fuel consumption, pollution and congestion creating a more sustainable and healthy community.
WEALTH STAYS WITHIN THE COMMUNITY
Money spent with the local grocer or farmhouse is often re-spent locally on other goods services. Finally, wealth stays within the community because money recirculates amongst the local businesses and residents. Research shows that approximately 73% of money spent locally stays within the local community (as opposed to only 43% of money spent at chains).
Community-based economics or community economics is an economic system that encourages local substitution. It is most similar to the lifeways of those practicing voluntary simplicity, including traditional Mennonite, Amish, and modern eco-village communities. It is also a subject in urban economics, related to moral purchasing and local purchasing.
Urban economics is broadly the economic study of urban areas; as such, it involves using the tools of economics to analyze urban issues such as crime, education, public transit, housing, and local government finance. More specifically, it is a branch of microeconomics that studies urban spatial structure and the location of households and firms (Quigley 2008).
Economic democracy is a socioeconomic philosophy that proposes to shift decision-making power from corporate managers and corporate shareholders to a larger group of public stakeholders that includes workers, customers, suppliers, neighbors and the broader public. No single definition or approach encompasses economic democracy, but most proponents claim that modern property relations externalize costs, subordinate the general well-being to private profit and deny the polity a democratic voice in economic policy decisions. In addition to these moral concerns, economic democracy makes practical claims, such as that it can compensate for capitalism's inherent effective demand gap.
Fiscal localism comprises institutions of localized monetary exchange. Sometimes considered a backlash against global capitalism or economic globalization, fiscal localism affords voluntary, market structures that help communities trade more efficiently within their communities and regions."Buy local" or local purchasing is the most visible face of fiscal localism. There are more complex institutions (both new and well established) that contribute to a community's ability to flourish. Institutions like credit unions, CDFI's (Community Development Financial Institutions), and local currency or complementary currency all can contribute to making communities more resilient and wealthy. Local currency has been in the news most, with journalists citing the Berkshares in Massachusetts, and the Ithaca Hours in Ithaca, New York. Beyond these salient examples, there are thousands of local currencies all over the world.
Local food is food that is produced within a short distance of where it is consumed, often accompanied by a social structure and supply chain different from the large-scale supermarket system.
Local food (or "locavore") movements aim to connect food producers and consumers in the same geographic region, to develop more self-reliant and resilient food networks; improve local economies; or to affect the health, environment, community, or society of a particular place. The term has also been extended to include not only the geographic location of supplier and consumer but can also be "defined in terms of social and supply chain characteristics." For example, local food initiatives often promote sustainable and organic farming practices, although these are not explicitly related to the geographic proximity of producer and consumer. Local food represents an alternative to the global food model, which often sees food traveling long distances before it reaches the consumer.
THE LOCAL ECONOMY SOLUTION
Even programs that focus on local business, through buy-local initiatives, for example, depend on ongoing support from government or philanthropy. The entire practice of economic development has become ineffective and unaffordable and is in need of a makeover. Pollinator businesses are especially important to communities that are struggling to lift themselves up in a period of economic austerity, when municipal budgets are being slashed. The book includes nearly two dozen case studies of successful pollinator businesses that are creatively facilitating business and neighborhood improvements, entrepreneurship, local purchasing, local investing, and profitable business partnerships.
COMMUNITY ECONOMIC DEVELOPMENT IDENTIFIES, DISSEMINATES AND IMPLEMENTS SUCCESSFUL BEST PRACTICES FOR COMMUNITY ACTION AGENCIES AND RELATED ORGANIZATIONS.
It provides strategies by which local development organizations initiate and generate their own solutions to their community’s economic problems and thereby build long term community capacity and foster the integration of economic, social and environmental objectives. Public programs may be used and corporate support attracted, but organizations representing the interests of the local community launch and direct the initiatives.