The water level in the barrel rises and falls, depending upon the volume flowing into and leaking out of the container. This water line represents the prosperity of the community. When dollars are brought in from outside sources by the city and county governments and by community citizens, then new dollars flow into the barrel. These are captured dollars. These unearned dollars can come from social security and other retirement payments, interest and dividend receipts from outside investments, investments by outsiders, and grants from higher governmental agencies.
Local households go out of town to buy goods and services.
Local employees pay taxes and social security to higher governmental units. Community citizens, local firms, and local government invest and spend local resources on ventures that don't pay off. Community citizens invest their dollars in outside ventures instead of local business opportunities. The idea that the local economy is stimulated by the dollars earned from exports is often called Economic Base Theory . An assumption of this theory is that the way to expand the local economy is to sell more goods and services to outside customers.