Supporting Rural Entrepreneurship: What Can States Do? What Should They Do?

by Erik R. Pages, EntreWorks Consulting

It’s a commonplace observation that the twin processes of globalization and technological change create winners and losers.While this statement is true, it is no consolation to the “losers,” those regions that have been hard hit by economic change. While lots of places - such as Pennsylvania’s steel towns or Detroit’s auto plants - have been hard-hit, rural America arguably has faced the most wrenching economic transformation over the past few decades. Small towns across the U.S. face depopulation, declining industries and significant economic development challenges.

Many rural residents pride themselves on their rugged independence and ability to persevere in tough times. Rural communities and their leaders are no different. Instead of simply bemoaning their fate, rural leaders are seeking to transform their regions through the embrace of new economic development strategies, including entrepreneurial development.

Fortunately, they’re not on their own. State governments can and should play a critical role in supporting rural entrepreneurs and communities that are trying to support and nurture such activities. This essay takes a look at the field. State governments are relative newcomers in their support of rural entrepreneurship, but they are now engaging in a big way.What are they doing right? What’s not working? By reviewing the work of several “early adopters,” we can gain a better understanding of where the field is going and where it ought to go in the future.

Defining the issue

As other essays in this volume attest, it’s pretty hard to develop a single monolithic definition of “rural America.” After all, Jackson Hole,Wyoming, the Pine Ridge Indian Reservation, the Mississippi Delta, and the Iowa cornfields are all rural, yet they face widely differing economic, political and cultural circumstances.

But acknowledging differences doesn’t mean that there are no similarities. At the broadest level, these regions face similar economic challenges. Their traditional economic anchor – agriculture – can no longer support a large portion of the population. Economic anchor number two – manufacturing – is also under fire. Rural America’s competitive advantage of low cost offers fewer advantages when the competition is global and firms can easily move production overseas. Various other anchors, such as tourism, still persist, but they may not be able to provide the number and quality of jobs needed to keep a community economically viable.

Faced with these daunting circumstances, rural leaders have opted to look within. If they can’t count on a new branch plant coming to town, new tools for economic development are required. As a result, entrepreneurial development has taken hold as an alternative approach and it has reached critical mass quite rapidly. As recently as the year 2000, few rural communities and even fewer states had an entrepreneurship strategy. Today, such programs are commonplace. In fact, researchers at the Center for Rural Entrepreneurship note that there are now 600,000 places you can go on the Internet to explore rural entrepreneurship.

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