And this is not just an economic trend that has arrived in the midst of a lockdown.
As an advocate of community-based economics, Michael Shuman has been promoting the “buy local” movement since 1982.
So, in the post-pandemic world, can localism drive an economic revival – or is it just another “trendy” topic to discuss? Let us see some of its key impact areas:
The Shift Towards Local Consumption
All around the globe, we are now seeing the rise of consumers who are more in favor of procuring products that have been manufactured locally. Going by the 2020 Kantar COVID-19 Barometer, the local consumption – or “buy local” – movement is now being led by China at 87% followed by Italy (83%) and South Korea (76%).
As revealed in the Kantar report, 42% of global consumers are now paying more attention to the country of origin of the products that they buy.
Is this a trend that has been purely driven by the current pandemic? Not exactly.
The 2019 Brand Footprint report on the FMCG industry reveals that local brands in 2018 gathered 64.8% of brand choices for consumers – as compared to 35.2% for global brands.
While it may not kill globalization completely, localism is projected to becoming mainstream and can drive market consumption of local goods – along with economic growth - in the post-pandemic world.
That being said, how can localism impact job generation?
Among the ill-effects of increased globalization, profit making has become the prime purpose of many global businesses – while the local community continues to suffer from higher unemployment, job losses, and even poverty. A Harvard Business Review study concludes that per capita job growth is higher in places with better local business communities.
According to Michael Shuman, a study was conducted in Cleveland, Ohio on the impact of a 25% move towards local food business. This move would result in the generation of 25,000 new jobs in the city – along with an increase in $250 million of local tax revenues and $1 billion in wages. This shows the power of localism – and that too in just one industry sector!
Impact on the global supply chain
During the ongoing pandemic, we have also seen the impact of failed supply chains on countries that have for long depended on China – and other producers - for their essential supplies. For example, with the increase in demand for surgical masks and respirators, dependent countries including the U.S and Switzerland faced a shortage of medical supplies despite an increase in production.
Other factors that are driving localism in supply chain management include increased trade protectionism and imposed trade tariffs – along with the consumer’s preference for local procurements. At the same time, manufacturing companies are facing enormous challenges transitioning from a global supply chain – for their procurements and distribution – to a localized supply chain.
How local financing works
Based in Washington D.C, Main Street Genome is a management consulting firm that specializes in improving the profits of local businesses by analyzing and fixing common business problems. And this is not the only one! There are many other firms that are working towards providing easier finance and cost management for local businesses.
What has also driven the growth of local financing is that small and local businesses in most countries – including the U.S and India – do not easily get business capital from banks and NBFCs. This is despite their high contribution to the country’s economy.
Easy capital is the key to building local business communities where small and local businesses can thrive – thus increasing employment and reducing the wage gap.
In the midst of a global pandemic, localism has been a life saver for many consumers and can reshape the way business is conducted in the post-pandemic world. This is the reason why 1 in every 4 consumers want to use local brands – produced in their own country.
The need of the hour is self-reliance – that can only be achieved through localism. Mahatma Gandhi’s s idea of a “self-sufficient village economy” is finally beginning to make deep inroads now.