This article is part of a series that explores Five Big Ideas for economic development in the Cowichan region.
Does local ownership of the economy matter?
Should our regional economic development efforts demonstrate a preference for local businesses based in the community over outside investors and big corporations headquartered in distant commercial centres?
There is growing evidence that local businesses re-circulate a greater percentage of their profits in the community, create more local jobs, and are more likely to buy local products and services.
A recent study on the British Columbia economy conducted by Civic Economics – an organization that analyzes the economic impact of buying locally – concluded that local businesses generate twice as much local economic activity as their chain competitors, and re-circulate more than two-and-a-half times as much revenue in the local economy. At an industry level, it found the "multiplier effect" was greater with both local retailers and restaurants.
Additionally, the study estimated that increasing local purchasing by 10 per cent across the province could create an additional 31,000 jobs and $940 million in wages for working people.
The Civic Economics report followed more than a dozen other similar studies on the impacts of buying locally in U.S. communities such as Chicago, San Francisco and New Orleans – all of which consistently found evidence that local businesses produce greater economic benefits compared to chains.
Various other studies have reached similar conclusions.
For example, a recent study by Michael Shuman – who teaches at Simon Fraser University and is one of North America’s leading experts on community economic development – focused on food production in Northeast Ohio.
Shuman concluded that a 25 per cent shift to meet local demand for food with local production could create 27,664 new jobs, provide work for about one in eight unemployed people, increase annual regional output by $4.2 billion and expand state and local tax collections by $126 million.
Unfortunately, local governments across Canada and the United States have not made local ownership a priority, and in fact often encourage the opposite.
In much of North America, the prevailing approach to regional economic development tends to concentrate on attracting and retaining outside businesses – an approach that often leads to a focus on big corporations at the expense of local business.
"What’s weird about [the attract and retain approach] is that you cannot attract local business," argues Shuman. "That’s an oxymoron. And if the only way you can retain a local business is by bribing it not to seek, say, one more percentage point of return in China, how local is that business really? The entire focus of economic development has become non-local business."
As was pointed out by Dale Wheeldon of the BC Economic Development Association in a recent workshop with the Cowichan Valley Regional District board, global corporations are adroit at moving to a new location as soon as the benefits that attracted them to their current location have expired.
So what is the solution?
At the CVRD our economic development function is currently under review, and a shift in direction may be on the horizon.
Why not make encouraging local ownership part of Economic Development Cowichan’s mandate?
A good place to start may be in better analyzing our local economy and determining which sectors could benefit most from greater local ownership and production. For example, many communities have developed strategies to "plug the leaks," reduce their reliance on imported goods and services, and keep money re-circulating in the economy in order to generate more economic activity.
As was pointed out in the previous installments of this economic development series, encouraging co-operatives, leveraging our anchor institutions, promoting community investment funds and coordinating small business supports could all play an important role in expanding our local businesses, creating meaningful employment and building a more prosperous local economy where no one is left behind.
In this age of sharp income inequality, scarcity of good jobs and growing environmental concerns, economic development is undergoing a profound shift in communities across the world. Local governments are playing an increasingly important role, and are developing innovative tools.
This could be a perfect opportunity for the CVRD’s newly elected board of directors to act boldly and set a new direction. By shifting its strategic priorities and retooling existing programming, the CVRD could one day become a model in community economic development not just for Vancouver Island, but also for British Columbia as a whole.
Rob Douglas is a councillor for the Municipality of North Cowichan and director for the CVRD. Roger Hart is a member of the CVRD’s Economic Development and Environment commissions. The views expressed here are their own and do not necessarily reflect those of the CVRD, its commissions or the Municipality of North Cowichan.