New approaches to economic development in rural America

Executive summary

Traditional economic development strategies in rural America have historically focused on the recruitment of large-scale employers and new industrial development, often through tax incentives or other attraction strategies. Yet new research and case studies are highlighting an evolution in approaches to rural development that emphasizes the importance of locally owned business activity, strong local governance, civic collaboration, and investments in quality of life as strategies that enable economic resilience and sustainability.

This symposium examined the success of locally led approaches to rural economic development, which shift from traditional firm-attraction models toward resident-based strategies that prioritize local leadership and capacity, quality of life, entrepreneurship, governance, and equitable regional planning and decisionmaking.

Speakers presented evidence that investment in local business development and quality of life can deliver broad-based gains. A striking consensus emerged that the elements of an entrepreneurial social infrastructure—where leadership, trust, civic relationships, and partnerships converge to leverage social capital to solve local challenges—are among the most critical factors for successful rural development, though the hardest to quantify. Participants also emphasized that focusing on improvements in quality of life as a core strategy—by investing in schools, housing, child and elder care, parks, grocery access, safety, broadband, and third spaces—correlates with population, job, and startup growth.

Discussions underscored that development strategies must center local residents as their primary beneficiaries, and investments or technical support must match local community capacity and context. Regional strategies work most effectively when rural communities are treated as equal partners as their urban counterparts and when investments build—rather than substitute for—local capacity.

Key insights

Symposium participants highlighted the following as foundational elements of rural economic development:

• Successful rural development requires genuine local ownership and decisionmaking power.
• Civic ties/relationships and economic development are interdependent. Civic engagement should not be seen as instrumental —i.e., as a means for creating an economic plan—but as a fundamental component of a healthy community that will use that capacity to pursue development on its own terms.
• Quality of life investments should be seen as a foundation for economic growth rather than an outcome. Those investments should prioritize basic amenities that residents desire and that are distinctive to their place.
• Economic strategies must match community capacity and context rather than result from top-down, generically defined development initiatives.
• Small businesses can deliver broad gains compared to capital-intensive industrial development. Job creation tied to local, tradeable sectors can build resilience.
• Federal and state investments in rural communities should focus on bolstering local capacity and leadership to avoid dependency on project-based, short-term injections of external investment.
• Regional development efforts work best when rural communities are true partners and not seen as peripheral. The federally chartered regional commissions offer an interesting policy approach for reaching distressed rural places.
• Assets alone don’t guarantee results without local ownership and control, accountable institutions, governance quality, and the capacity to execute projects.

Ongoing debates

While symposium attendees reached a consensus on the insights discussed above, there were several areas of tension that remained unresolved and would benefit from ongoing discussion.

• Can quality-of-life projects drive economic growth alone? To what extent are “tradeable sector” strategies or investments from outside capital necessary for catalyzing or sustaining economic activity?
• What does effective regionalism among rural and urban areas look like, and how can governance structures—such as regional commissions—exemplify an authentic balance of power between underserved rural communities and urban centers?
• Where is the line between short-term assistance and long-term dependence that risks substituting for, rather than building, local capacity?
• What approaches have the best results in expanding opportunity and equitable outcomes in rural communities that have experienced historical discrimination, persistent poverty, and other structural forms of disadvantage?
• How applicable are quality-of-life strategies—like investing in grocery stores, broadband, and banking—when markets have failed to take root in rural areas?