In a world increasingly shaped by globalised supply chains and multinational corporations, the concept of Local Economic Recirculation (LER) offers a refreshing and sustainable alternative. At its core, LER (aka circular local economy) is aimed at rural and underserved communities, and focuses on retaining the larger portion of financial resources derived from a specific industry within a defined community. This ensures that wealth generated locally stays local. By prioritising local businesses, services, and products, LER fosters economic resilience, sustainability, and a sense of shared prosperity.
Benefits of Local Economic Recirculation
The benefits of LER extend far beyond economics. By prioritising local-first practices, communities can:
- Build Economic Resilience: Local economies are better equipped to withstand global market disruptions when they rely less on external supply chains.
- Create Jobs: Supporting SMEs generates employment opportunities directly and indirectly.
- Promote Environmental Sustainability: Shorter supply chains mean reduced transportation emissions and a smaller carbon footprint.
- Foster Social Cohesion: A thriving local economy nurtures a stronger sense of community and mutual support.
- Prevent Rural Depopulation: By strengthening local economies, LER enables residents to remain in their communities rather than relocating to overpopulated cities. This not only preserves family-managed farmland and local cultures but also reduces urban overpopulation and its associated challenges, such as strain on infrastructure and pollution.
Moreover, LER contributes to long-term economic stability by creating self-sufficient communities. For example, rural areas practicing LER can retain talent and skills that might otherwise be lost to urban migration, enhancing their capacity for growth and innovation.
Alignment with Broader Concepts
Local Economic Recirculation (LER) aligns closely with other well-established concepts, including:
- Localism: Advocating for local decision-making and economic prioritisation. Localism complements LER by encouraging policies and practices that put local businesses and communities at the forefront, ensuring resources are reinvested where they are needed most.
- Circular Economy: Emphasising resource efficiency and reducing waste, with LER focusing on financial circulation. The circular economy’s principle of designing out waste mirrors LER’s aim to minimise economic leakage and promote local reinvestment.
- Community Wealth Building: Strengthening local institutions and cooperatives to retain wealth within the community. By building and leveraging community assets, this approach ensures that financial and social capital remain within the local area.
- Sustainable Development Goals (SDGs): LER supports several UN SDGs, including Goal 8 (Decent Work and Economic Growth) and Goal 11 (Sustainable Cities and Communities), by fostering inclusive and sustainable economic growth at the local level.
- Regenerative Economics: A more recent concept that emphasises restoring and enhancing natural and social systems, regenerative economics aligns with LER by seeking to create systems that benefit communities holistically rather than extracting value.
These shared principles underscore the importance of thinking and acting locally, particularly in industries like tourism that thrive on local culture and identity. In fact, by integrating LER with these frameworks, communities can achieve a multi-faceted approach to sustainability that addresses economic, environmental, and social dimensions.
Environmental Synergies of LER
LER also has significant environmental benefits that align closely with sustainability goals. By shortening supply chains and focusing on local production and consumption, communities can significantly reduce carbon emissions associated with transportation. For example, sourcing food locally for restaurants in a tourism area not only ensures freshness but also decreases the environmental footprint compared to importing goods from distant locations.
Additionally, LER encourages sustainable land use and preservation of local ecosystems. When local communities benefit directly from their natural surroundings, there is a greater incentive to protect and regenerate these resources. Practices like regenerative agriculture, sustainable forestry, and eco-tourism flourish under an LER model, contributing to environmental restoration and resilience.
The reduction in reliance on external suppliers also minimises packaging waste, food additives and promotes a circular approach to resource use. Local businesses often reuse materials, reduce waste, and adopt greener practices, creating a harmonious balance between economic and ecological health.
A Focus on Tourism
While LER can be practiced across various industries, its application in tourism is especially critical. Tourism, by nature, is deeply rooted in the local culture, environment, and economy of the destination. Visitors travel to explore the unique aspects of a region — its landscapes, traditions, food, and craftsmanship. For this reason, tourism-related small and medium enterprises (SMEs) are ideally positioned to champion LER principles.
By practicing LER, tourism businesses can:
- Support Local Producers: Use local ingredients in restaurants, stock locally made goods in gift shops, and source materials and labor from nearby businesses.
- Enhance Authenticity: Offer tourists a genuine experience of the region by showcasing local products, flavours, and services.
- Distribute Revenue Fairly: Ensure that the wealth generated by tourism benefits the entire community, not just a few stakeholders.
- Preserve Cultural Identity: Strengthen the local culture by investing in traditional practices, crafts, and knowledge.
For example, a bed-and-breakfast that sources breakfast ingredients from nearby farms, collaborates with local tour guides, and decorates with artisan-made furnishings embodies LER in action. Tourists not only enjoy an authentic experience but also contribute to the livelihood of multiple community members.
Challenges and Opportunities
Implementing LER is not without its challenges. Economic leakage from multinational corporations, the convenience of global supply chains, and a lack of awareness about the benefits of local-first practices can hinder progress. While LER focuses on economic factors, its success can be complemented by strategies that address other non-economic drivers of urban migration, such as access to healthcare, education, and infrastructure. However, these challenges present an opportunity for leaders and innovators to step up and drive change.
For instance, rural tourism projects adopting LER can collaborate with policymakers to establish incentives for businesses sourcing locally. Communities can also engage in educational campaigns that demonstrate the tangible benefits of LER to both residents and visitors. By positioning LER as a foundational element of sustainable development, communities can overcome initial resistance and build lasting systems of support.
Driving Change Through Leadership
At Mintly, we see Local Economic Recirculation as a cornerstone of sustainable tourism especially beneficial to rural and underserved communities. By leveraging LER principles, we aim to create a model where tourism not only delights visitors but also uplifts local communities and businesses. Through tools like digital marketplaces, knowledge-sharing platforms, and partnerships with tourism-related businesses, we aspire to become a thought leader in this space, setting the standard for sustainable and community-centered tourism practices.
Moreover, our focus on tourism is just the beginning. We believe that by pioneering LER practices, we can inspire other industries to adopt similar principles, creating a ripple effect that extends beyond tourism into broader economic systems. Our commitment to transparency, innovation, and collaboration ensures that Mintly remains at the forefront of this transformative movement.
The Importance of LER in the Digital World
Technology is poised to support and amplify the impact of Local Economic Recirculation on rural areas and underserved communities. Digital platforms, geolocation, blockchain, AI and marketplaces are some of the technological ecosystems that can support LER by efficiently connecting the right local producers and service providers with customers through tourism-related businesses (hospitality, restaurants etc), both within and outside the community, while ensuring that the majority of financial benefits remain local. Such technology implementations can also ensure that any tourism-related businesses seeking to adopt an LER framework, possess the tools to discover service providers and food producers nearby, therefore supporting local communities and maintaining a low carbon footprint. A marketplace app that highlights local businesses nearby for tourists can also guide spending towards local producers, artisans, and farmers, boosting LER in the sector.
Blockchain technology also holds promise for enhancing transparency in LER. With blockchain, consumers can trace the origins of products and verify that their purchases truly support local businesses. This builds trust and strengthens the connection between consumers and local economies.
While social media tools provide local businesses with a low-cost way to reach broader audiences, such platforms are cluttered by many other purposes and none of the social platforms prioritise rural or underserved communities. A specialised platform shared by tourism-based SMEs would connect local producers directly to the SMEs and in addition, serve as a bridge between tourists and the local producers and artisans. The platform would be tailored for this purpose, allowing local producers and artisans to share their products, services, cultures, stories and emphasising their local roots. Such an approach can attract conscious consumers (tourists), tourism-related businesses who prioritise sustainability and community support. Furthermore, e-commerce platforms tailored for local-first practices can help small businesses compete in an increasingly digital economy without losing their community-focused values.
As the digital world continues to evolve, integrating technology into the LER framework will be essential for scaling its benefits while maintaining its core principles. This fusion of traditional practices with modern tools ensures that LER remains relevant and impactful in the future.
Call to Action
For tourists: Choose accommodations, restaurants, and activities that prioritise local products and services. Your spending power can directly impact the communities you visit. If you are unsure, ask the guest house, hotel, or the accommodation you’re visiting about their sourcing and partnerships.
For businesses: Start small. Source one product locally, partner with a nearby producer/artisan, or highlight regional specialties in your offerings. Every step towards LER makes a difference. Over time, these incremental changes can transform your business into a community champion.
For policymakers: Support initiatives that incentivise local-first practices within the tourism industry in rural and underserved communities. Invest in education and awareness campaigns to build a culture of economic recirculation. Collaborate with community leaders to identify areas where LER can make the greatest impact.
Together, we can redefine tourism as a force for good, creating lasting benefits for visitors and locals alike. By embedding LER into our strategies, we not only support local economies but also contribute to a more sustainable and equitable future for everyone.
