Buying Local Is the Key to Strong Regional Economies
In the leaky bucket analogy for local economies, money flows into a region to circulate through local businesses like water into a bucket. Water that leaks out is money that escapes the local economy to pay for imports. The more watertight the bucket, the more wealth retained.
In the early 1980s, unemployment rose steeply in Lane County, Oregon, because of a downturn in the once-dominant timber industry. The Neighborhood Economic Development Organization (NEDCO) in Eugene, Oregon, was trying to respond by funding job-training programs, but no new jobs were open and it seemed like pouring money into a bottomless bucket. Government economic development efforts focused on tax breaks and other financial incentives in a failed attempt to lure corporations to the region.
Alana Probst, who directed NEDCO, began to develop a different approach, one that would work to plug the leaks. Here’s how Jane Jacobs described the approach in Systems of Survival:
Her idea was simple: Go to several businesses and ask what they were planning to buy from outside the city and county in the coming year. Then immediately see if there were local businesses capable of putting in bids for the work. In the meantime, while those searches were being made and bids prepared, visit more purchasers, start seeking potential suppliers for their items, and so on. In short, the program was to be made up as it went along. No expensive studies that would be obsolete before they were finished. She put together a grant of thirty-eight thousand dollars from the city and county governments and a local bank so she and a staff of two could try the scheme.
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