Once upon a time -- about 100 years ago, when my grandparents were younger than my children are now -- small towns and small cities were real economic entities. Their very city directories were often locally (or regionally) published. Purdue historian John Lauritz Larson wrote in The State of Indiana History 2000:
"At the turn of the nineteenth century, Indianapolis and half a dozen smaller cities in Indiana boasted hundreds of factories, mostly family owned. In towns such as Lafayette, Terre Haute, Evansville, and Fort Wayne, one could buy bread flour, buggies, and even locomotives of local manufacture. Everything from automobiles to bicycles, boots, baking powder, caskets, cheese, cigars, doorknobs, furniture glassware, grits, handbags, harnesses, hats, lawn mowers, pianos, pork-and-beans, roller skates, sheet music, and wagon wheels was available -- all marked 'made in Indiana.'"What happened? Some few entrepreneurs got big and eventually elbowed the rest out of the way -- they had easier access to capital and made things shinier and cheaper than their competitors who stayed local.
But how did it happen? What were the left-behind manufacturers thinking and doing as the levers of power moved out of town in the 1920s and 30s and 40s? What about the family capitalists? Once they were local decision-makers, who were settled for the duration and who belonged to the place -- now their "successors" run multinational corporations that have little loyalty to any particular nation, let alone any smaller place. Most local businesses (by dollar volume) are franchises or chains whose bosses have none of the same local commitment or clout.
Did someone say "family"? Actually, genealogists might be in a position to contribute to answering these questions. (To my way of thinking they are microhistorical questions, in that don't primarily deal with issues of relationship or identity, but the methods are much the same.) Studies of these families, conducted with these questions in mind, might be very interesting. It wouldn't surprise me if some have already been done. The interesting ones will stick to the facts and avoid big-picture assumptions, either positive (that it was all a painful but inevitable and wonderful change) or negative (that it was some kind of dastardly plot).
John Lauritz Larson, "'Striving after Wind': The Changing Sources of Hoosier Prosperity," pp. 249-271 [quote on p. 255], in Robert M. Taylor, Jr., ed., The State of Indiana History 2000: Papers Presented at the Indiana Historical Society's Grand Opening (Indianapolis: Indiana Historical Society, 2001).
Harold Henderson, "Could genealogists investigate how local economies disappeared in the 20th century?," Midwestern Microhistory: A Genealogy Blog, posted 20 November 2014 (http://midwesternmicrohistory.blogspot.com : viewed [date]). [Please feel free to link to the specific post if you prefer.]