This is known as the Multiplier Effect and it was described first by a disciple of Keynes and applied to nations. But conventional economists and governments haven't yet accepted that the same applies to cities and communities too.
Take two communities:
One has a supermarket, which pays some of its
takings to local employees, then banks the rest to be
invested in the money markets. Studies of very
dependent communities, like native American
reservations in the USA, have found that 75 % of their
money leaves again within 48 hours - to pay bills to
distant utilities, or to shop in Wal-mart, which sends all
their takings every night to Arkansas.
The other community has a range of small shops, and when any of the shopkeepers need something, they can buy it locally. What is earned by one shop is used in the next and so on. Not only is the town centre vibrant and alive, but the small businesses are in charge of their own destiny. Their owners haven't been transformed into relunctant employees by dominant supermarkets.
