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Draft 1.1 -- Not for Distribution or Circulation • Better Social Impacts — Compared to economies dependent on absentee - owned enterprises, local- business economies tend to have more social stability, lower levels of welfare, and greater political participation. Import substitution also promotes economic prosperity. Every time a community imports a good or service that it might have cost - effectively produced for itself, it "leaks" dollars and loses the critically important multipliers associated with them. Moreover, unnecessary imports — of petroleum, for example — subject a community to risks of price hikes and disruptions far beyond local control. They also deny a community a diversified base of businesses and skills needed to take advantage of unknown (and unknowable) future opportunities in the global economy. Three examples help to illustrate the potential benefits of import substitution: • Fifteen years ago, Gussing was a dying rural community of 4,000 in Austria. Its old industries of logging and farming had been demolished by global competition. Many of today's economic developers would have given up and encouraged the residents to move elsewhere. But the mayor of Gussing decided that the key to prosperity was to plug energy "leaks." He built a small district heating system, fueled with local wood. The local money saved by importing less energy was then reinvested in expanding the district heating system and in new energy businesses. Since then, 50 new firms have opened, creating 1,000 new jobs. And most remarkably, the town estimates that this economic expansion actually will result in a reduction of its carbon footprint by 90 percent. • In autumn of 2008 Marian Burros of the New York Times wrote a piece about how the 3000 - person community of Hardwick, Vermont, has prospered by creating a new "economic cluster" around local food. Cutting -edge restaurants, artisan cheese makers, and organic orchardists turning fruit into exquisite pies are just some of the new businesses that have added an estimated 75 -100 jobs to the area in recent years. A new Vermont Food Venture Center hopes to accelerate this creation of enterprises. • Even a single, visionary business can lead a community -wide effort at import subsitution. Take Zingerman's in Ann Arbor, Michigan. On its first day of business in a college town known globally more for its radicalism than for its food, Zingerman's Deli sold about $100 worth of sandwiches. That was 1982. It has since grown into a community of nine businesses, each independent but linked through overlapping partnerships that collectively employ 525 people and achieve annual sales of over $27 million. Over that period the proprietors conscientiously built a food cluster from scratch. They carefully assessed the items going into the deli — bread, coffee, cheeses — and saw profitable opportunities for creating a bakery, a coffee roaster, and a creamery. They looked at the products being sold at the deli — fabulous coffee cakes and high- 13 Attachment number 1 1 -4 Page 315