SFU Community Economic Development hosted a webinar called, "Does local ownership matter?” presented by Michael Shuman, author of a new book called, “Local Dollars, Local Sense”. Here are some highlights:
Economic development as practiced today has three dubious characteristics. It focuses on nonlocal business. It lacks a coherent framework for assisting local business. And it is a top-down enterprise. There is an alternative set of principles and practices—a “local living economies” (LLE) approach to economic development that focuses on local business, creates an entrepreneurial ecosystem that supports them, and invites grassroots participation.
Starting in 1970s, the objective of most economic developers became to attract or retain global businesses. Indeed, one of the most common phrases in the professional literature, even today, is “to attract and retain.” What this formulation misses is locally owned businesses. A locally owned business cannot, by definition, be attracted. And most locally owned businesses, because they have deep relationships to a community through its managers, employees, owners, customers, suppliers and other stakeholders, usually do not require special efforts to retain them. The focus on “attraction and retention” suggests that economic developers have increasingly focused on global big business.
A growing body of evidence suggests that a community prospers when it follows three other simple rules:
Rule #1: Maximize the percentage of jobs in your local economy that exist in businesses that are locally-owned.
Rule #2: Maximize the diversity of your businesses in your community, so that your economy is as self-reliant and resilient as possible.
Rule #3: Prioritize spreading and replicating local business models with outstanding labor and environmental practices.
An alternative framework for economic development can be created around six P’s: planning, people, purse, purchasing, partners and public policy.
Here’s what we mean by each:
· Planning – The starting place for LLE economic development should be community planning. What are the most plausible opportunities for new or expanded local businesses given your vision, your goals, your assets and your markets?
· People – Realization of local business opportunities requires entrepreneurs and employees who can lead new or expanded local firms. How can people already living in the community be mobilized for these roles?
· Purse – Most local businesses, whether startups or expansions, require both lending and equity capital. How can existing financial resources, whether savings accounts or pension funds, be tapped to support local businesses?
· Purchasing – Once established, local businesses flourish with concerted Buy Local efforts by consumers, businesses and government agencies. What are the best strategies for promoting these efforts?
· Partners – Local businesses can improve their competitiveness by working together as partners, either in a local business alliance or as part of a sector-specific network in food, energy or finance.
· Public Policy – Laws, regulations and rules at all levels of government —local, state, national and global — should be calibrated to maximize the probability of local businesses succeeding.
Michael Shuman will be elaborating on these concepts in his two day course, Locanomics, as part of the SFU CED program.