Going Local: The Impact of Institutions on the Local Economy Richard Schramm

1. Going Local: The Impact of Institutions on the Local EconomyRichard Schramm Community Development UNH February 26, 2009

2. Overview • Theory: Why Localization? • Goal: More Self-Reliant and Sustainable Local Economy • Strategy: Local Ownership/Import Substitution • Tactics • Planning, Entrepreneuring, Business Alliances, Investing, Policy Making • Local Purchasing (UVM) • BALLE

3. Our Perception of Globalization Michael Shuman

4. Why Localization? Price versus Place/Direct and Indirect Costs Stability through Local Ownership Community through Local Support Economic Vitality through higher multipliers (buying from one another) Social and Environmental Responsibility through direct interaction Environmental Restoration through reduced transportation

5. Building a More Self-Reliant Sustainable Economy • Develop and Support Community Enterprises • Promote Local and Cooperative Ownership • Build Business Culture of Social & Environmental Responsibility • Produce More of What Currently Import (Import Substitution) • Strengthen Local Economic Multipliers • Reduce Consumption and Conserve Resources

6. Size of Community Enterprise Sector Michael Shuman

7. Emerging Community Strategies Michael Shuman

8. Local First Tools • Coupon Books • Labels • Buy Local Weeks • Local Gift Cards Michael Shuman

9. Local First Tools • Coupon Books • Labels • Buy Local Weeks • Local Gift Cards Michael Shuman

10. Local First Tools • Coupon Books • Labels • Buy Local Weeks • Local Gift Cards Michael Shuman

11. Local First Tools • Coupon Books • Labels • Buy Local Weeks • Local Gift Cards Michael Shuman

12. UVM Economic Impacts Project (1999-2003) • Use UVM employment and purchasing practices to increase support for workforce and business development for Old North End residents • Focus on UVM $300 million annual budget, about $160 million for personnel, $140 for purchases of goods and service

13. Why Should UVM Buy Locally and Within State? ·UVM Mission to Support the State ·       Support Existing Businesses, their Employees and Communities ·       Develop New Businesses within Vermont. Diversify Economy ·       Create Positive Multiplier Effects on Employment, Income and Earnings ·       Reduce Environmental and Social Costs from Out-Of-State Purchasing (e.g. associated with transportation) ·       Build Closer Relations between UVM and Vermont Businesses. Develop Stable Partnerships. Greater Awareness of Negative Impacts (Externalities) ·       Can Have Impact - $300 Million Budget (60% Employment; 40% Goods and Services) ·       Weigh Against Issues of Cost, Quality, Delivery, Reliability, etc.

14. Local Business Strategies • Help Local Business Sell to UVM • Developed and Distributed 500 Copies of “How to Do Business with UVM” • Increase Local Purchasing by UVM • Inform and encourage buying local within UVM • Analyzed UVM purchasing patterns and developed Targeted Buy Local Policy

15. Types of UVM Expenditures on Goods and Services ·        UVM purchases for fiscal year 2000 was about $136.4 million. ·        Categorized all UVM purchases by industrial sector (Standard Industrial Classification – SIC code) for fiscal year 2000. ·        Consisted of 8,250 individual purchases across almost 400 sectors. ·        Eliminated international purchases, individual purchases less than $750, purchases unidentifiable by sector or location, and non-wage purchases from individuals. ·        Result was $106.8 million of purchases that could be identified and described in standard industrial classification (SIC). 79% of Total. ·        $106.8 million was paid out to 2816 vendors from 382 industries each with their own standard industrial classification

16. UVM Purchases By Economic Sector - 2000 *Totals differ because of rounding

17. In and Out of State Purchases (2000) Of the $106 million: ·       56%, or $59.8 million, was purchased from 923 Vermont vendors. ·       44%, or $47.0 million, was purchased from 1,893 vendors throughout the United States (outside of Vermont). The amount of in-state purchases as a percent of the total purchases within a sector varied by sector from 100% of utilities to 10% of communications.

18. Percent of In-State Purchases By Sector

19. Factors Used to Examine Specific Industries Purchase Location ·        Focus on out-of-state purchases UVM’s costs and profitability: ·        Price ·        Quality ·        Time required to get product ·        Reliability of vendor ·        Availability of good or service within Vermont Income Effects. ·        The higher the average wage in a given industry the more likely we will be to recommend it for increased local purchasing.

20. Factors Used to Examine Specific Industries, Cont. Multiplier Effects ·        Employment and earnings impacts beyond initial firm UVM buys from Local Industrial Capacity ·        Adequate number of establishments and employment levels in industry. ·        Industry importance in Vermont relative to US Economy, and growth rate Other Impacts ·        environmental impacts of different industrial purchases, price, quality, delivery, and other vendor and product characteristics of importance to UVM purchasing ·         local and state priorities (when present) for advancing specific sectors.

21. Business Alliance for Local Living Economies (BALLE) An international alliance of more than 50 independently operated local business networks with more than 15,000 members dedicated to building local living economies. They envision a sustainable global economy made up of local living economies that build long-term economic empowerment and prosperity through local business ownership, economic justice, cultural diversity and environmental stewardship.