Friday, March 29, 2013

Economist still says Wal-Mart aids local economies

Nearly 25 years after first studying the economic effect of Wal-Mart on small towns in Iowa, economist Kenneth Stone re-visited his study, and came to basically the same conclusion, that the presence of a Wal-Mart usually helps the local economy at large, while hurting some businesses, the Daily Yonder reports.

Stone's 1998 study found that "Wal-Mart took business from local retailers. But, if local retailers could differentiate themselves from the selection of goods found at the retailer, they could benefit from the increased shopping traffic brought to town," the Yonder reports. "The retailers who competed directly with Wal-Mart were hurt. Overall, Wal-Mart helped stabilize or increase local retail sales."

Stone's latest study concludes that "Wal-Mart’s entry into smaller trade centers in Iowa had a big initial impact on host-town retail sales, with some categories experiencing large significant increases while others saw declines in retail sales," the Yonder reports. "Over time, the impact declined, but in general, towns hosting Wal-Mart appeared to have fared better, in terms of total retail sales, compared to similar towns in which Wal-Mart did not locate. This analysis supports the idea that Wal-Mart’s presence helped to stabilize or even expand the local retail sector of most rural host communities." Stone produced this chart:

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