WalMart’s impact on local economies unclear, especially in the long-term

June 27, 2023 (last updated on October 19, 2023)

Alessandro Bonanno and Stephan Goetz, "WalMart and Local Economic Development: A Survey," Economic Development Quarterly 26 (2012): 4

The take-away: This article considers the local economic impacts of WalMart in terms of retail and nonretail businesses, employment patterns, producer- and consumer-welfare, as well as in terms of a wide range of social conditions, including poverty rates, social capital, food insecurity, policy effectiveness, and obesity. In the end, the net effect of WalMart on local economies is inconclusive and may warrant further research. 

Abstract

This article reviews the literature that evaluates WalMart’s impacts on local economies. The authors first describe the methods used to account for potential reverse causality of WalMart’s store location decisions, and then they discuss the literature assessing the company’s effect on three aspects of community life: (a) retail (and nonretail) businesses, across large- and small- sized stores and in different business environments; (b) retail workers, wages, and types of jobs; and (c) producer and consumer welfare through the company’s price-decreasing effect and other potential indirect effects. Last, articles focusing on a broad spectrum of local conditions that could be affected by the company, including poverty rates, social capital, food insecurity, policy effectiveness, and obesity are reviewed. For each dimension, evidence is found of both positive and negative effects, suggesting that we are still far from truly understanding the net effect of WalMart on local economies, let alone the overall consequences in the long run.

Full article (requires access)