September 20, 2007
Many communities are launching campaigns that encourage consumers to buy products and services from locally owned stores rather than national chains. N.C. State University economist Mike Walden explores the pros and cons of such efforts.
"There is a pro side and (it's) exactly what the buy local campaigners say, and that is that if you are buying things from, say, a locally owned store where the storeowners live in the community so the money goes to them and they are going to then turn around and spend that money also in the local community, well that has a multiplier effect," says Dr. Walden. "And the average multiplier is two. That is to say if all that money is respent locally, then for every dollar that you spend at the store then there's another dollar created in the local community from all this respending.
"In comparison, of course, if you go to a national chain, you spend money, most of that money is going to go out of the local community and it's going to go to the national coffers of the company, so to speak, so the local effect is going to be reduced," he adds. "So clearly the buy local folks are onto something in terms of looking at the impact on the local community.
"The con side, of course, would be from the individual buyer's perspective," he says. "If what they are looking for is not available from the local store or if they can get a better price and or a better quality product from a national chain, then
obviously from their individual perspective they are better off buying from that national chain and not buying from the local company.
"So this is a matter of weighing your individual benefits against the communitywide benefits," Walden concludes, "And of course every person is going to have to do that weighing on their own."
Posted by deeshore at September 20, 2007 08:00 AM