Policy Issues Affecting Community Economic Development

Abstract

The American economy has been undergoing significant structural change and competitive pressure in recent decades. Some industries and regions have been affected more negatively than others, including the agriculture and manufacturing backbone of the rural regions. States are responding to this predicament with an array of economic development strategies, programs and initiatives.

What are the issues and choices facing state and local decision makers in developing the capacity of communities in rural regions to retain and generate employment? The paper will identify the five foundations upon which economic development is based and primary issues of state and local policy in relation to each. The focus is on nonmetropolitan communities, that multitude of cities and towns below 50,000 population scattered throughout rural America, and on the way state and local policy can influence their development.

Though more thoroughly documented elsewhere (for example, Henry Drabenstott and Gibson 1986, 1987; Krider and Houston 1986), the first section establishes basic dimensions of the serious rural employment problem and the global and technological forces which are buffeting rural economies. Second, the scope for nonmetropolitan economic development is asserted and broad strategic issues facing states and communities are identified. Third, five key foundations for economic growth are discussed which must be present for development and job creation to occur at the community level. Success, finally, will depend in part on how well states and communities develop partnerships to address these significant issues.