Developing Rural Communities

A note for our readers: the views reflected by the authors do not reflect the views of ASPA.

By William Hatcher

Recently, The New York Times blog Upshot analyzed county-level socioeconomic data, and labeled six counties in eastern Kentucky as being the “hardest places to live in the nation.” In fact, according to the Upshot’s analysis, all of the top 10 hardest places to live are in the rural South. The blog’s findings are not new and only reinforce decades of research on the problem of persistent poverty in Appalachia and communities throughout the rural Deep South. To help fight poverty, though, many policy makers in these communities are placing misguided hope in flawed policies that focus on growth and not development.

In a 1938 speech, President Franklin D. Roosevelt described the Depression Era poverty in the South as the “nation’s No. 1 economic problem.” In order to address this problem, “questions of taxation, of education and of health” had to be answered. Today, the South’s economy is no longer the nation’s top economic problem. Many of the South’s cities, such as Atlanta, Charlotte and Houston, are world-class cities with robust economies. But even with this economic expansion, many rural communities in the South continue to struggle, which causes citizens, policy makers and reporters to wonder: What’s the matter with Appalachia and also the rural South? Community development scholarship and practice can help us answer this question and construct solutions to deal with the issue of rural poverty.

People or Place? Growth or Development?

In development scholarship and practice, experts have argued over the effectiveness of place-based policies or people-based polices and the differences between growth and development. Understanding the role of people and places in development is an important part of explaining the causes and solutions to rural poverty. Place-based policies are ones in which a community focuses on issues such as infrastructure, amenities and attracting needed industries and other companies. People-based policies are ones in which a community focuses on strengthening its workforce or human capital. Research has shown that strategies focused on developing human capital often outperform more place-based economic development policies that are focused on attraction of industry. But, scholarship has also demonstrated the importance of place-based amenities and infrastructure in developing our communities. Accordingly, scholarship and practice tell us that communities should use a combination of people-based and place-based strategies.

In the South, many communities focus on flawed place-based policies that award large tax breaks to companies in the hopes of attracting and/or retaining them. In the past, I have discussed the problems associated with the use of these strategies. When communities practice attraction-based strategies, they often give away large portions of their tax bases to companies that base their location decisions not on local taxation issues but on a community’s infrastructure and labor force. When communities in the South rely too heavily on attraction-based policies, they further weaken their local economies.

Communities are driven to attraction-based strategies because their economic plans are focused on growth, not development. Growth policies are strategies that are concerned mostly with increases in numbers—the number of jobs, the number of people living in the community, the number taxpayers, etc. These policies pay little attention to the overall health of a community’s social, economic and political institutions. Development of a community seeks to build local assets and community institutions. A focus on growth, and not development, does little to help communities in the rural South deal with the problem of poverty.

A Development-Based Strategy for Rural Communities

Instead of relying on growth-based policies, rural communities in the South need to construct development-based, long-term strategies. In the past, I have used this column to discuss many of these strategies. I would like to recap them now with a special emphasis on rural communities.

First, communities need a development-based vision. This vision needs to contain strategies that are effective but also representative of the opinion held by citizens living in the community. Local ideas put forth by local citizens are needed. At its foundation, the vision should be focused on cultivating community assets.
Second, to development local assets, community visions need to include both people-based strategies, such as initiatives to improve the education of the workforce and place-based strategies, such as the expansion and maintenance of modern infrastructure, like affordable and fast broadband service.
Third, communities need to recognize the limitations and problems associated with growth-based policies, such as tax breaks that often do not affect the location decisions of private firms. These policies often benefit only a few in a community and erode the local tax base.
Fourth, communities need to advocate for tax systems that are less regressive and provide the needed funding for investments in public goods. Throughout the nation, policy makers are refusing to construct tax systems to finance vital public goods. This problem is only more pronounced in the South. Unless this trend changes, our communities will be unable to develop sustainable political, social and economic institutions.
Fifth, communities need to strengthen local businesses. Investing in local businesses is a more effective and efficient use of public dollars to help local economies than attraction-based policies. Local businesses produce a multiplier effect because money spent on sales is kept in the local economy by often going to pay employees that spend the money in local businesses, to pay for local utilities and to pay for local taxes.
Last, rural communities need to be realistic and practical. Communities need to have attainable visions and plans. Constructing a vision that is too ambitious will only lead to a community becoming frustrated with trying to put in place sustainable development policies. Spending significant resources to attract companies that are most likely not going to relocate to rural communities is not being realistic. Those resources would be better spent in a practical manner following development-based strategies.