Halting Rural Decline

What does it take for rural communities to flourish in today's rapidly changing economic environment? This is a question of vital interest for a quarter of our nation's people who live in rural communities.

Karl Stauber, PhD, is president of the Northwest Area Foundation in St. Paul, MN. In a recent speech entitled, "Why Invest in Rural America and How?" he lists three principles of success for economic development. The speech can be found at www.kc.frb.org.

- Communities and firms without competitive advantage will not prosper - they lapse into decline or subsistence.

- Nations, communities and firms that prosper constantly invest in creating new competitive advantage rather than protecting old advantage. Risk-taking entrepreneurs are one of the keys to the continual seeking.

- Economic improvement and growth alone are not enough to sustain communities. They are necessary, but not sufficient. Communities that survive and prosper also invest in building the social and human capital of their institutions and people. But communities with high social and human capital and declining economic opportunity are not likely to have positive futures.

Here are six ideas that I feel are essential for stimulating entrepreneurial activities in rural communities.

1. Local leadership. The future of rural communities depends on a core group of enthused, dedicated community leaders who can energize and mobilize the community toward common goals.

Leadership is the engine that pulls the rest of the train. Successful leaders are civic minded, inclusive, open to diverse opinions and have a track record of cooperation and teamwork.

They are adept at getting grass roots consensus and participation. They articulate a vision of the community that is persuasive and energizing. They are successful at creating open and constructive dialogue around important issues.

2. Local businesses. The best strategy for economic development is the expansion of local businesses that are already successful in carving out a local, regional, national or even international market niche. Local lenders and investors can mobilize and attract resources for already successful businesses to expand and improve their market position. New business start-ups and ideas also deserve technical and financial backing.

Money generated by locally owned businesses has a multiplier effect on the local economy. In addition, local owners tend to be community-minded and contribute their energy and resources for community development.

3. Quality of life. Quality of life is a powerful tool in competing for families and retired couples who have a choice about where they want to live. The quality of schools, medical services, roads, recreation, aesthetically pleasing surroundings, affordable housing and other amenities make a difference as people choose to locate or remain in rural communities.

People will increasingly look to rural communities as a way of enjoying a balanced lifestyle that is compatible with quality family life. Community development and economic development go hand in hand. The willingness of the community to invest in itself will be a factor in future growth.

4. Regional development. The well-being of small towns depends on the economic growth that takes place regionally as well as locally. People are willing to commute for jobs and consumer opportunities and still maintain their residency in rural communities. Economic growth in the region will keep people at home by giving them options for a quality lifestyle.

As commuting becomes even more of a reality for rural life, a regional approach to economic development makes sense. Several communities working together can make things happen that otherwise wouldn't. If rural communities are to survive, they must figure out ways to connect with each other and to regional trade centers. They gain a competitive advantage by joining together.

5. Telecommunications and the new economy. The information age offers new opportunities for the development of location-neutral businesses in rural communities. Local entrepreneurs using information technology figure out how to position themselves to do regional or national business from a rural location. Government support is essential for laying the foundation for telecommunication infrastructure so that rural areas can compete in producing and marketing high value goods and services.

6. Building the human resources. Youth growing up in rural communities need to understand the dynamic quality of rural life and develop a sense of community before they leave. Teaching entrepreneurship in the schools will also give youth a vision of what is possible from a small community. They need to be inspired by contact with innovative and creative people who are succeeding and making their mark locally.

Taking part in community-building and service opportunities will help youth value community life and invest themselves in its betterment. The feeling of belonging and contributing to something larger than oneself is a powerful attraction of life in rural communities.

Beyond high school, states with significant rural populations need to invest in post-secondary education and research programs that increase the competitive advantage of people living and working in rural areas.

Besides homegrown entrepreneurship, government can encourage immigrants to move to rural areas and assist them in their new enterprises. Enterprising immigrants can help revitalize the economy and culture by their sheer numbers as consumers, their addition to a shrinking work force and their creativity that will flourish in our free enterprise system.