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Small, Local Businesses Speed Income Growth

on Thursday, 18 August 2011. Posted in Business News

Rural Development

Small, Local Businesses Speed Income Growth

  This Blog article is an excerpt from the Northeast Regional Center for Rural Development, research at Penn State University...http://nercrd.psu.edu/Publications/rdppapers/rdp48.pdf

Researchers: David Fleming and Stephan J. Goetz

December 3, 2010

 It does matter whether a business is locally owned.

 Researchers at Pennsylvania State University have found that counties with more small, locally owned businesses have stronger economic growth than communities with larger businesses owned by outsiders. "Local ownership matters in important ways," said economist Stephan Goetz who was co-author of the study with David Fleming, a Penn State graduate student. "Smaller, locally owned businesses, it turns out, provide higher, long-term economic growth."

 Larger firms owned by people outside a county depress growth, the researchers found.

 Goetz and Fleming looked to see if per capita income growth in counties was affected by the size and ownership of local businesses. The two studied U.S. counties during the period from 2000 to 2007.

 The effect of having locally-owned, small firms (with between 10 and 99 employees) on a county's economy was significant. There was a strong, positive relationship between the presence of smaller, locally-owned firms and faster growth in incomes.

 The presence of larger firms owned by those outside the county had the opposite impact. Those counties had slower growth in incomes. Goetz and Fleming found that this impact extended to big box retail stores, such as Walmart and Home Depot.

 "Although these types of (larger, non-local) firms may offer opportunities for jobs, as well as job growth over time, they do so at the cost of reduced local economic growth, as measured by income," Goetz and Fleming wrote. "Small-sized firms owned by residents are optimal if the policy objective is to maximize income growth rates." 

 One of the reasons locally owned firms are better for county economies than big box stores and larger, out-of-town corporations is that these larger firms outsource many services that the smaller companies buy within the community, Goetz explained. They use local accountants and wholesalers while big firms do this work themselves.

 Small businesses and local start-ups not only buy locally, but they tend to spur innovation and productivity within the county.

 "This is really a story about start-ups," said Goetz. "Many communities try to bring in outside firms and large factories, but the lesson is that while there may be short-term employment gains with recruiting larger businesses, they don't trigger long-term economic growth like start-ups do."

 Goetz said his findings might provide a better strategy for local economic development officials. Encouraging local businesses would be better for growth than recruiting larger firms from outside the county.

 "We can't look outside of the community for our economic salvation." Goetz said. "The best strategy is to help people start new businesses and firms locally and help them grow and be successful."

 

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Nebraska continues to rank high

  • 4th Best Quality of Life
    Business Facilities Magazine, 2008 Annual Rankings Report
  • 5th Best Education Climate
    Business Facilities Magazine, 2008 Annual Rankings Report
  • 4th Best State for Jobs
    CareerBuilder.com, 2008
  • 4th Lowest Average Travel Time to Work
    U.S. Bureau of the Census
  • Top 10 States Receiving a 5-Star on the 2007 State's Healthcare Cost Quotient
    Expansion Management Magazine
  • Top 10 Best States for Business
    2008 Forbes Magazine

Cuming County Ranks:

  • 1st in the state for total value of agricultural products sold
  • 1st in the state for value of livestock, poultry and their products
Top crop items:
  • Corn for grain (23rd in the State)
  • Soybeans for beans (6th in the State
  • Corn for Silage (5th in the State)
Top Livestock inventory items :
  • Quail (1st in the state)
  • Cattle and calves (2nd in the state)
  • Hogs and Pigs (3rd in the state)
  • Colonies of Bees (5th in the state)
  • Sheep and lamb (12th in the state)

Cuming County Mission

To renew, retain, and recruit our businesses, people, and future.

To work in partnership with local citizens in our communities to support the economic opportunities of our county by retaining, expanding, and attracting business, industry, and agriculture.

Demographics

Demographics


Population: 9,306
(2008 estimate)
Projected Population: 9,118
(2013 estimate)
Median Age: 39.2 years
(2008 estimate)

 


Average Household Income:
$44,672
(2008 estimate)

Number of Business Establishments:
989
(2002 estimate)

Education: (2000 estimates)
78.7% have High School Diploma or higher
12.3% have a Bachelor’s Degree or higher

 

Major Economic Activities:

 
Agriculture - 48%;
Manufacturing - 27%;
Trade - 5%;

 

Finance, insurance, real estate - 4%;
Construction - 3%
Services - 5%;