WalMart: How local and regional policy can make it work

Georgeanne Artz and Kenneth Stone, "Revisiting WalMart's Impact on Iowa Small-town Retail: 25 years later," Economic Development Quarterly 26 (2012): 4

The take-away: After reviewing data on the local and regional economic impacts of WalMart, Artz and Stone consider what approach local economic developers should take when considering whether to introduce the controversial superstore. They emphasize the value of competition, thereby suggesting the imprudence of offering special incentives to encourage WalMart to open stores. On the other hand, it is suggested that some incentives could actually be beneficial for communities by augmenting tax revenues, especially if such incentives are coordinated at the scale of the region, rather than the municipality.

Abstract

Ken Stone conducted the first study of WalMart stores’ economic impact in Iowa in 1988. Since then, research on WalMart’s impacts has exploded. Recent studies employ sophisticated statistical techniques to more accurately measure the size and direction of effects. Many reach conclusions similar to Stone’s original work. This article updates the original Stone study with additional years of data. It draws on recent methodological advances to help account for the effects of WalMart’s strategic location decisions on estimated retail sales in Iowa. As is consistent with previous studies, we find that WalMart’s entry into smaller trade centers in Iowa had a big initial impact on host-town retail sales, with some categories experiencing significant increases while others saw declines in sales per capita. WalMart’s presence helped stabilize or even expand the local retail sector of most rural Iowa host communities. To conclude, we discuss policy implications for local economic development officials.

Full article (free public access)