Community Economics Research

Rigorous data is sparse, but the community economics research that does exist suggests financial resources migrate out of poor neighborhoods rather than into them.


| November/December 1980



066 community economics - Fotolia - SCANRAIL

Community economics research suggests poor neighborhoods lose cash and other resources.


ILLUSTRATION: FOTOLIA/SCANRAIL

Almost everyone uses some sort of household budget, simply to keep track of how much money comes into the home and how much goes out of it. Nations keep similar records — on a grander scale — in order to control the balance of trade with other lands. And the same kind of accounting can be done for neighborhood economies as well.

When looked at in the same way that we commonly view nations, many American communities — particularly low-income urban and rural sectors — resemble Third World countries because most natural resources in these areas are either undeveloped or owned by outsiders. They also export considerable wealth, and depend upon other regions for such key resources as energy and food.

Of course, sometimes the drain on a community's resources isn't at all obvious. A busy fast-food restaurant, for example, may seem to add life to a neighborhood business district, but it can't do so if most of the restaurant's revenue is leaving the community.

To better understand community economics, several researchers have studied models of typical cash flows, tracing — as carefully as possible — how money comes into a community and how it goes out. One such study concerned two neighborhoods — one a low-income area and the other in the middle-income bracket — in Brooklyn, New York. Predictably, it was discovered that capital flowed out of the less affluent neighborhood by the millions of dollars, while the wealthier community kept a greater share of its resources at home.

The Brooklyn study provides us with a benchmark to use in looking at community economies, but no other research has been attempted on the same scale in the past seven years. One reason that few studies are completed is the fact that accurate data on community economies are difficult to find. In some cases, specific information either isn't available, or isn't broken down by neighborhoods. In other instances, the public isn't allowed — or can obtain only at considerable expense — access to the necessary records.

In addition to the difficulty of gathering data, community cash flow studies must wrestle with problems of evaluation. There is often no accurate way of measuring the quality of goods and services received by neighborhood residents, or whether the population values government services, or the influence of local notions of exploitation and racism, or the relative impact of certain flows (narcotics trade and housing disinvestment, for instance, have more influence than their dollar total might suggest).





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