Locally Owned, Import-Substituting Businesses

Description

By Michael H. Shuman & Doug Hoffer:

"A growing body of evidence suggests that the businesses most beneficial to a community economy are those that are locally owned and import-substituting.

• Local ownership means that working control of a company is held within a small geographic area.

• Import-substituting means that the company is focused first and foremost (though not

exclusively) on local markets."

(https://mvcommission.org/sites/default/files/docs/leakagestudy.pdf?fref=gc&dti=322508360006)

Characteristics

"Local ownership turns out to matter for economic development in at least five ways:

• Locally owned businesses generally contribute more to the “economic multiplier” than nonlocal businesses – which translates into more income, wealth, jobs, and tax payments – because the former spend more money locally.

• While absentee-owned businesses increasingly move away to Mexico or China to secure a higher rates of return on investment, even if the consequent exit throws a U.S. community into an economic tailspin, locally owned businesses reliably stick around and produce wealth for many years, often many generations.

• Because local businesses tend to stay put, a community can raise labor and environmental standards with more confidence that these businesses will adapt rather than flee."

(https://mvcommission.org/sites/default/files/docs/leakagestudy.pdf?fref=gc&dti=322508360006)