Magnetic Communities recognize that consumer spending makes up about 70% of GDP (Gross Domestic Product). With this in mind, it is amazing that economic and community developers do not invest more time and effort on this component of the prosperity equation. The primary reason for this lack of attention is that economic and community developers invest their limited time and resources on high profile projects that build support for their programs and funding. Also, they may not appreciate the vital role that residents play in the economic development process.
Residents Commute to Jobs Outside the Local Economy
When residents commute to jobs outside the local economy, a substantial portion of their wages finds its way back to the local economy. Resident out-commuters, aware that local spending is an effective economic development strategy can help attract money to the local economy by making local purchases when feasible.
In addition to attracting money, residents play a key role in keeping money in circulation locally. Even a small up or down shift in the percentage of goods and services purchased locally by residents can substantially impact the amount of money in circulation. To the extent that residents and local leaders are able to influence where individuals live, work and shop, they can impact the community’s character, wealth and prosperity. It is important to remember that individuals can choose where to live and how to spend their money. Generally, economic developers do a good job of attracting new businesses and jobs. But, if workers live and shop in neighboring communities, very little financial benefit accrues to the local economy.
Attract Money Strategies
- Increase the number of out-commuters.
- Increase the number of residents paid from outside sources.
- Increase government transfer payments.
Retain Money Strategies
- Make residents aware of the benefits of spending locally.
- Increase spending on local products and services.
- Increase the number and quality of products and services available locally.
- Fill gaps in product availability.