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Image: Rural Economy & Population

Main Components of Strategies

Rural development strategies, at the local or regional level, build upon local strengths (assets) or shore up local weaknesses (liabilities).  On net, these assets and liabilities can be viewed as types of capital or wealth.  A recent ERS report, for example, noted 8 types of capital or wealth: physical, financial, human, intellectual, natural, social, political, and cultural (See Rural Wealth Creation: Concepts, Measures, and Strategies, ERR-131, March 2012). Most rural development strategies build on these forms of capital through infrastructure improvement, business assistance, education and training, and community development. 

Infrastructure Improvements

Infrastructure, including facilities and equipment for transportation, telecommunications, water, and energy, improves rural quality of life and connects rural America with the urban and global economies.  Hence, infrastructure improvements may contribute significantly to rural development strategies.  For example, transportation infrastructure (such as interstate highways and airports) has been found to significantly contribute to rural economic growth (see Rural Economic Development: What Makes Rural Communities Grow?, AIB737, October 1997).  ERS research has also documented broadband's beneficial rural impacts (see Broadband Internet's Value for Rural America, ERR-78, August 2009).

Although infrastructure improvements can benefit rural communities and their economies, they come with a price tag. Infrastructure improvements often cost more, per job generated, in rural areas than in urban areas because rural areas lack economies of scale (see Economic Impact of Water/Sewer Facilities on Rural and Urban Communities PDF icon (16x16)). Moreover, it is difficult to predict the impact of infrastructure improvements on a local economy. Hence, careful planning is important when undertaking infrastructure projects.

Infrastructure also often has a regional dimension, partly because it is more economical to build infrastructure for the entire region than for each town separately, and partly because of the need for a community to control negative externalities, such as traffic congestion or pollution spilling over from neighboring communities (See Development at the Urban Fringe and Beyond: Impacts on Agriculture and Rural Land, AER803, June 2001).

Business Assistance

Business development is an important component to rural development strategies because businesses provide jobs, income, tax base, and local access to goods and services. Many rural businesses, however, face difficult challenges as globalization and other factors are taking a toll.  Because local conditions vary significantly, business assistance strategies will vary from community to community. For example, communities with natural amenities might target assistance to businesses that capitalize on amenities to attract tourists and new residents.  Research-based industrial targeting approaches have been increasingly used to identify clusters of businesses ideally suited to particular communities (See Rural Wealth Creation: Concepts, Measures, and Strategies).

The traditional approach to rural business assistance involved the use of tax concessions to recruit large business establishments. This approach proved costly to the public and in many cases offered little guarantee of lasting benefits to the community. In recent years, communities have placed more emphasis on nontraditional approaches involving credit, training, and technical assistance to help strengthen existing businesses and grow new small businesses capable of creating more long-term jobs. For example, venture capital programs have been used to get more out of small businesses with growth potential.  In many places, clusters of related businesses have replaced individual businesses as targets for development, with assistance aimed more at promoting improved functioning of networks of such businesses.  An increased focus on the use of educational and research facilities has aimed at promoting the growth of innovative, high-wage, knowledge-based industries.  Some communities have sought to promote the growth of innovative small businesses by improving community facilities and public services that add to quality of life in the hope that this will attract the more highly educated "creative class" of people who become innovative entrepreneurs (See The Creative Class: A Key To Rural Growth, Amber Waves, April 2007).

Education and Training

Technological change and globalization have ushered in an era in which rural employees are increasingly required to have a higher level of skills and education if rural businesses are to be competitive.  Recognition of this link between education and economic development has led to a shift in rural development strategies to place more emphasis on educational improvement.  This may be particularly beneficial to rural areas that have most of the ingredients needed for development in place, but find their potential limited by their populations' relatively low education levels (see Education as a Rural Development Strategy, Amber Waves, November 2005).

To improve their education and skill levels, many rural communities try to upgrade their schools. However, attracting better teachers, providing more teacher training, and building new and improved schools can be prohibitively expensive.  Consequently, rural communities are increasingly turning to lower-cost alternatives, encouraging more residents to volunteer as teacher aides or tutors and by providing advanced science classes through distance learning.  And to orient their schools more toward local concerns, some rural schools have tried adopting curricula that encourage students to identify more with the community's challenges, including programs that help students create small businesses or participate in local businesses and other institutions.  Other strategies use apprenticeships and school-to-work programs that can lead students to productive employment with local businesses (see The Role of Education: Promoting the Economic and Social Vitality of Rural America).

Community colleges and universities also play an important role in rural economic development. In addition to providing basic education and training, these institutions can help local firms or industries directly by developing new industrial products and processes, identifying new markets, and providing specialized training for the workforce and for community leaders (see Rural Community Colleges: Creating Educational Hybrids for the New Economy PDF icon (16x16)). They can also help improve local quality of life by providing a more intellectually stimulating environment that can help attract or retain creative employees and entrepreneurs.

Community Development

People and businesses generally prefer places where the quality of life is good.  Hence, improvements in community conditions (community development) may address such underlying community and social issues such as crime, inadequate health and housing, excessive traffic and sprawl, pollution, and neighborhood blight.  Problems in any of these areas can hinder economic development.  In contrast, communities with good community facilities, such as libraries, hospitals, schools, senior centers, parks and recreation facilities, police and fire departments, will tend to offer quality of life advantages that attract and retain people and firms. Thus many rural communities find they must develop their community if they are to succeed in developing their economy.

Community development is important for places lacking the local support and leadership capacity needed to design and implement economic development objectives-for example, in high-poverty counties. (see Community Empowerment: A New Approach for Rural Development PDF icon (16x16)). In these places, improving community conditions may address some of the most pressing local needs, and thereby bring about more active involvement of local leaders and community organizations in the development process.  This could lead to improved leadership and community support for economic development strategies, and help establish better connections with external support agencies. 

Community development is also important for development strategies that seek to attract tourists and recreation lovers (see Rural Areas Benefit From Recreation and Tourism Development), retirees (see Retiree-Attraction Policies for Rural Development), innovative entrepreneurs (see The Creative Class: A Key To Rural Growth), and strategies to reverse outmigration (see Nonmetropolitan Outmigration Counties: Some Are Poor, Many are Prosperous). These people-based development strategies aim to first attract or retain people by improving amenities and quality of life, so that business and job growth will follow.         


Last updated: Wednesday, May 30, 2012

For more information contact: John Pender