The idea of economic development is to grow the local economy it terms of jobs, standard of living, and other related measures. This can be accomplished through various means, one of which is import substitution. Import substitution identifies the goods and services imported into the region and attempts to replace these purchases with those made from local sources. This keeps money in the region, instead of flowing out to other areas.
This is not always easy; there may be good reasons why purchases are made outside of the region. One of the reasons is a “gap” in production. A gap occurs when goods and services demanded locally are not produced locally. Another is a “disconnect” which occurs when goods and services are produced locally, but are purchased elsewhere. Gaps may occur due to the fiscal, physical, environmental, governmental or other constraints that prevent local production. Disconnects may exist because of quality or quantity issues, contractual obligations or other reasons.
A good example of a disconnect in Nevada is in the Processed animal (except poultry) meat and rendered byproducts commodity as defined by the IMPLAN model and database. IMPLAN shows Nevada industries imported approximately $780 million of these products in 2010. Local Nevada companies produced $58.6 million worth of this commodity, of which $45.5 million was exported outside of the State. This shows that very little of this product is produced locally and even less of it is consumed locally. There is much demand in this market and a need for the expansion of existing facilities or attraction of new companies to the area.
Recently there has been news of the Walker River Meat Processing Inc. plant seeking approval to locate in Lyon County. Most recently, the Lyon County Commissioners approved a special-use permit for the plant. According to the Reno Gazette Journal, the plant will employ 600 workers at full operation and 300 to 400 construction employees during construction. It is important the plant work with local customers to ensure the quantity, quality and other requirements are met and products produced by the plant will be purchased by local companies. If this occurs, the amount of processed meat and byproduct imports to Nevada can be reduced, keeping more resources local.
This is a good example of findings the gaps and disconnects in the Nevada economy and filling them with companies that will allow the State to reduce its imports and keep money and its “ripple” impacts local.