gotacaseofwanderlust

The Importance of Buying Local 

We’ve all heard it before: support local businesses. But does it really even matter? 

Spoiler alert — yes, it really does. Read on to find out why. 

What is it? 

Allow me to introduce an economic term called leakage. 

Economic leakage is when funds leave a circular flow of income. In tourism, this “circular flow” refers to the host community’s economy. 

How does this happen? When the money spent in a destination is diverted to an economy outside of the destination. 

In other words, when people buy from multinational enterprises, rather than local enterprises. 

An example

Let’s say you’re exploring a city in Italy and work up an appetite after walking around so much. 

What to eat? 

Perhaps there’s a conveniently located McDonalds right in front of you. 

A filling, cheap meal that is familiar to you. No work necessary to try to find lunch. 

You end up buying a cheeseburger to satisfy your hunger, and continue on your way to learning about a new culture. 

Only, you end up missing one of the most significant cultural experiences when traveling: the food. 

Instead, you could’ve gone a little further down the street and tried homemade pasta from a grandmother who’s been doing it for years; or wood-fired pizza straight from the source of its creation at a family-owned business. 

Not only would you have had a better quality meal for the same, if not cheaper, price, but you would have gotten to experience the kind of food that has shaped Italy’s identity. 

Most importantly, your money would have supported local people’s livelihoods, rather than an international chain. 

Why is leakage a problem? 

Tourism can be hugely beneficial for a country’s economy, often generating more income than any other industry, and providing jobs to a vast amount of people.  

But when leakage occurs, tourism’s profits do not benefit the destination’s economy. 

According to the UN, of every $100 spent by a tourist from a developed nation, only around $5 actually stays in the local economy. 

This results in fewer job opportunities for locals, less revenue for community development, and less room for preexisting cultures to flourish or exist. 

How you spend your dollars has a greater impact than you may think. 

Supporting local 

When you spend at locally owned businesses, your money supports, and is often essential to, the local communities you are visiting. 

A local business is much more likely to employ local people (rather than recruit from overseas), buy from other local businesses (rather than shipping supplies from outside of the community, which also increases greenhouse gas emissions), and take greater care in the wellbeing of the destination you are visiting. 

Supporting local is a simple, yet crucial step in making tourism more beneficial for a destination by creating more opportunities and empowerment for local residents, and creating more enriching travel experiences. 

How to Support Local: it’s simple

Finding and supporting local businesses is easier than you think. 

Simply avoid international chains as often as possible. 

Take the time to seek out businesses owned and operated by people actually living in the community you’re visiting. 

Before you buy products, ask the vendor to verify its origins. Is it actually a unique souvenir made in the destination or is it mass produced somewhere overseas? 

Most importantly, ask yourself: who is profiting where I spend my money? 

If it’s NOT people in the community you’re traveling to, then it is likely you are contributing to economic leakage.