Innovative State Policy Options to Promote Rural Economic

Economic and Technology Policy Studies States employing economic development strategies that build on a region’s strengths have been more successful in creating dynamic rural economies.

Development Contact: Paul Kalomiris NGA Center for Best Practices

The traditional divide separating rural America from its urban and suburban counterparts continues to define the challenges facing rural communities. Rural communities are isolated from robust markets, impeding access to markets and making it difficult to move people and goods. Rural areas also have fewer cultural amenities, making it harder to attract new residents and businesses, which in turn hinders the development of new amenities.

The innovative state policy options outlined in this Issue Brief have helped states overcome these challenges and build promise for sustainable rural economic development. The policy options are:

* Adapt Cluster-Based Strategies to Rural Communities. Clusters of interconnected businesses that cooperate and collaborate are integral to economically successful regions. State support for rural clusters can help them thrive. Connecticut, North Carolina and Ohio have encouraged the development of industry networks that provide a channel for businesses to work together. Minnesota and North Carolina have deployed community colleges and universities as training centers to meet industry needs for highly skilled workers. North Carolina also has ensured that cluster businesses in remote areas have access to the same capital and technical resources as their more advantageously located competitors.

* Promote Entrepreneurship Outside of the Agriculture Sector in Rural Communities and Regions. Given the declines in traditional resource-based, extractive rural industries, entrepreneurship development is an effective strategy. Through programs tailored to specific community needs, Kansas and Nebraska are developing the local ability to identify and encourage entrepreneurs. Minnesota uses an online network and other technology to connect entrepreneurs with critical informational and financial resources. Kentucky and Wisconsin are addressing the critical rural business need for access to capital by creating or supporting the creation of venture funds.

* Reinvigorate the Agricultural Sector Through Diversification and Value-Added Agriculture Strategies. Farmers have recognized that they can earn more income by growing different types of crops or raising non-traditional species of livestock (agricultural diversification). Others are directly processing their crops into finished products that they market and sell themselves (valued-added agriculture). States can provide the capital and technical assistance that allow farmers to follow this new path to wealth creation. Kentucky, North Dakota, South Dakota and Iowa stress financial incentives for farmers and other entrepreneurs who are interested in these new strategies. Iowa complements its diversification efforts by promoting market expansion opportunities for locally grown products outside the state.

However they are formed and implemented, rural economic development policies must build upon the inherent strengths of rural America, chief among them are abundant natural resources, close-knit communities, strong local business networks and a largely untapped tradition of entrepreneurial creativity. State policies that understand this new environment can be successful in creating sustainable and replicable economic development where it is needed most.

Innovative State Policy Options to Promote Rural Economic Development http://www.nga.org/cda/files/0203RURALDEV.pdf

http://www.nga.org/center/divisions/1,1188,C_ISSUE_BRIEF%5ED_5017,00.html