08/06/2026
What if communities built stronger economies not by attracting outside investment, but by producing more of what they already consume?
This idea rests at the intersection of Jane Jacobs' theory of Import Replacement and E. F. Schumacher's vision of a "rational economy," where local resources meet local needs.
Jane Jacobs, an author and activist in urban economics, coined the term “Import Replacement.” Import replacement is a broad strategy for community economic development that, at its core, asks the question: What goods and materials are being imported to the region that could be produced locally? In her book “Cities and the Wealth of Nations,” Jacobs stated:
“Economic life develops by grace of innovating; it expands by grace of import-replacement.”
Jacobs rejected the now-widespread economic development model where cities use subsidies and incentives to attract the the largest corporations possible, hoping that outside investment will drive local prosperity. Instead, Jacobs believed that the most sustainable and efficient way to grow the economic life of city-regions was to reduce reliance on imports by incubating new import-replacing enterprise within the community, allowing city-regions to build productive capacity from within rather than relying on outside investment.
Similarly, E. F. Schumacher made the famous claim in “Small is Beautiful: Economics as if People Mattered” about what constitutes a rational economy:
“Production from local resources for local needs is the most rational way of economic life.”
Put together, these ideas offer an alternative vision of economic development through import replacement plans that ask communities to identify what they currently import, then create the conditions for local entrepreneurs and enterprises to produce those goods and services themselves.
At the Schumacher Center, we recognize that the elements of any economic system are land, labor, and capital. We advocate for import replacement strategies that build the conditions for productive local enterprise by ensuring communities have access to affordable land, locally controlled capital, and opportunities for worker ownership.
Two particular tools for which the Schumacher Center has been a pioneering voice include Local Currencies and Community Land Trusts— but such institutions cannot, on their own, direct a regional economy. As explained by Jacobs in "The Nature of Economies,"
“Nobody commands an economy that has vitality and potential. It springs surprise upon surprise instead of knuckling down and doing what’s expected of it, or wished for it.”
Interested in learning more about the Import Replacement? Our Executive Director, Susan Witt, explores the philosophy behind import replacement and the institutions that make it possible in her 2010 essay "The Grace of Import Replacement." Read the full essay on our website: https://centerforneweconomics.org/publications/the-grace-of-import-replacement/
