A Consumption Base Theory of Development: An Application to the Rural Cultural Economy

Export base theory, which posits that overall regional growth is a function of external sales of locally produced goods and services, dominates economic development practice. But the consumption base can also serve as a growth driver, especially in small towns and rural areas. Local investments may induce residents to divert expenditures into local purchases, attract new and footloose residents and tourists, and revitalize aging town centers. A consumption base approach is not reducible to import substitution, but seeks to serve latent demand and alter the broad portfolio of goods and services purchased locally. I present the analytics for a consumption base theory and demonstrate how cultural investments prompt regional growth, emphasizing the role of artists as catalysts. Three types of arts and cultural investments are explored: artists’ centers, artists’ live/work spaces, and performing arts facilities, with examples from rural and small town settings. I conclude with rural cultural strategy recommendations.