Leakage Analysis
Description
By Michael H. Shuman & Doug Hoffer:
1.
"A growing body of evidence suggests that the best way to strengthen a community economy is by expanding locally owned businesses serving local markets. By studying leaks of dollars – that is, goods and services being imported that could be produced locally – a community can identify the most promising markets for new or expanded local businesses, and the best private initiatives and public policies to support this kind of economic development." (https://mvcommission.org/sites/default/files/docs/leakagestudy.pdf)
2. Multiplier vs leakage:
"Every purchase triggers purchases by others within a community. For instance, a dollar spent on rent might be spent again by the property owners at the local grocer, who in turn pays an employee, who then buys a movie ticket. This phenomenon is what economists call “the multiplier.” The more times a dollar circulates within a defined geographic area and the faster it circulates without leaving that area, the more income, wealth, and jobs it creates. This basic concept in community economics highlights the importance of maximizing the numbers of dollars being spent locally and minimizing their “leakage.”
More information
- Related concept: Locally Owned, Import-Substituting Businesses
By Michael H. Shuman & Doug Hoffer:
"Locally owned, import-substituting (LOIS) businesses. Discerning opportunities for LOIS requires an analysis both of dollar leakages (that is, where residents are spending money outside the local economy) and of opportunities for plugging leaks." (https://mvcommission.org/sites/default/files/docs/leakagestudy.pdf)
* Report: By Michael H. Shuman & Doug Hoffer. Leakage Analysis of the Martha's Vineyard Economy: Increasing Prosperity through
Greater Self-Reliance. Martha’s Vineyard Commission, August 2007
URL = https://mvcommission.org/sites/default/files/docs/leakagestudy.pdf