Rural Economic Development: Simple Strategies for Success

By Nicholas Samuel

Director of Research, Angeloueconomics

Rural America is defined by many things, both real and perceived. If we use the US Census Bureau to help us define this part of the nation, we find that rural places are simply areas of the country that are not urban. Yet, it remains that there are a variety of types of rural communities found in the US. Rural places can be part of metropolitan and micropolitan areas, given that the Office of Management and Budget defines these areas at the county level. About half of all rural residents live in counties defined as mostly urban, as the figure below details.

The US is, and has been for some time, a mostly urban nation. At present 80.7% of Americans live in urban areas or urban clusters, as defined by the US Census Bureau. Yet, these areas only account for 3% of the total land area of the US. This lack of agglomeration is truly the distinctive factor for rural America. Due to this rural areas also exhibit lower concentrations of employment in high value-add sectors of the economy, such as information, finance, and professional services. The figure below displays the percent employed by type of industry for those 704 completely rural counties.

Unsurprisingly, rural areas face different economic realities than most urban areas. Rural areas have, on average, older populations and lack residents in age groups usually considered to be ‘young professionals.’ Labor force participation rates for both men and women of all ages are lower than in rural areas than in urban areas, meaning that not only do these areas have smaller labor pools for employers, but that smaller proportions of their populations are working or looking for work. On average, rural residents have lower incomes, but not by much and, despite what we may think otherwise, residents of rural areas see lower rates of poverty overall than residents of urban areas. In many ways, this is likely due to the difference in the cost of living between urban and rural areas, with transportation and housing costs accounting for a large part of this discrepancy.

So, if these are the challenges that rural American faces in regard to economic development, there can be some clarity to the way forward to building sustainable and vibrant economies. Developing agglomeration economies and attracting high value-add industries are paths to economic development, but not paths that rural economic development actors can likely follow since these kinds of changes are brought about through intense utilization of capital and significant population growth. Rural communities are likely better to fare with trying to tackle the challenges of labor force participation and the age of their labor pool. There are many specific fixes to these challenges, such as ensuring access to childcare and offering re-training programs to workers, but the challenges are also alleviated through the following more general strategies.

First, since rural economies have fewer supply chain connections and fewer resources it is imperative to support local industries and local initiatives. Building local networks to take on the challenge of economic development is key. Many rural areas already have organizational support through their participation in Metropolitan Planning Organizations (MPOs), Council of Governments (COGs), or through US Department of Agriculture or related statewide agencies (such as agriculture or engineering extension offices). It is important for rural communities to understand the opportunities for funding and support that these organizations can offer.

Small business support is also crucial, as vacancies can have long lasting impacts to the overall desirability of commercial developments. One way to help small business owners be more successful is to encourage residents to buy local. Buy local programs throughout the US have had impacts on Main Streets and downtown districts and can help to ensure that more spending stays within the local area. More broadly, however, assisting major employers through traditional business retention and expansion initiatives is likely to be the most impactful role of a rural community’s economic development program.

Second, rural communities have the same potential to offer amenities to prospective residents and businesses, but the amenities that rural communities can offer are just of a different kind. Like the amenities of density, access to a variety of art and entertainment, and the appeal of cosmopolitan attitudes, rural areas can provide residents access to wilderness areas and associated activities, peaceful environments, and less congested commutes. For certain, the amenities of rural communities may not appeal to everyone, but the same is the case for urban areas. Thus, it is most important to understand what each rural community can offer to residents and businesses and be able to market those amenities effectively.

Revitalizing Main Street districts and historic buildings is important to this cause, as these are typically important assets for the commercial capacity of rural communities. Farmer’s markets can help to bring consumers to these districts and provide support for local agriculture and artisans. Nearby wilderness areas, interesting natural features, and sites of historical significance should be maintained and marketed as sites of tourism and points of pride for rural communities as they contribute to the richness of daily life.

Finally, rural communities should guide their economic development efforts through effective strategic planning. This includes getting behind a Comprehensive Economic Development Strategy (CEDS) and hiring economic development staff that can implement the action plan. Through the effort of developing a CEDS for the community, a “bench” of local experts and leaders will likely be built. These individuals, given their understanding of the economic development initiatives needed to achieve the goals of the strategy, can both act as liaisons to the community and to those outside the community who may be targets of marketing or informational trips the economic development team puts together.

Regional partnerships can help extend the abilities of rural communities to do economic development. However, it is important to not duplicate efforts since most rural communities find it hard enough to support economic development and associated programs at all. Therefore, it is very important that rural communities understand what economic development programs are offered in their area by other sources before instituting programs of their own.

The variety of rural communities in the US (some being neighbors to exurban communities and others being more remote) makes it hard to pin down just what specific strategies are going to be successful for each and every community. Nonetheless, we know the challenges that rural communities have across the board. Each, given these challenges, need to ensure that resources for economic development are used efficiently, that local businesses can find sufficient and effective support services, and that the amenities that rural communities offer are well known and well cared for.