Economic Development

Community-driven economic development is an important strategy for improving economic stability in rural communities, a major social determinant of health (SDOH). Economic development projects in rural communities typically seek to increase employment opportunities for and improve the financial outlook of residents, which in turn can have positive outcomes on health and well-being. For example, one model for community development involves a holistic approach that focuses on other SDOH that also contribute to economic stability, including housing affordability and educational opportunities.

Several strategies for economic development include:

Building and supporting a culture of entrepreneurialism
Strengthening small businesses
Strengthening arts and culture in communities
Getting the community involved

Additional strategies for economic development in communities may include workforce development and approaches to build human capital, as well as asset-based community approaches. For more information about programs that use these strategies, see the sections on Workforce Development and Human Capital and Asset-Based Community Approaches.

Strengthening Entrepreneurship and Small Business Growth

Many rural communities are incentivizing business growth by providing financial assistance to new small, local businesses. Research suggests that building and supporting a culture of entrepreneurialism is an effective economic development strategy for rural communities. Small, local businesses are often more likely to invest in their communities and donate to local causes. They also provide employment opportunities and can serve as an incentive for young graduates to return to rural areas to work. Some programs that support entrepreneurship in rural areas provide funding in the form of loans to new businesses to help them get started. Other programs may provide support with training and business planning.

Community Development Financial Institutions and Economic Development

Community Development Financial Institutions (CDFIs) aim to improve community access to financial services and products to support economic development by providing loans to build up small, local businesses. By providing these financial opportunities for rural communities, CDFIs can work to address SDOH. As community banks continue to close in rural areas, CDFIs can provide capital to the communities to implement different economic development strategies.

Place-Based Economic Development to Improve Economic Stability

Place-based economic development strategies that highlight the distinct strengths and assets of rural communities are a promising approach to achieving economic stability. One innovative approach is known as creative placemaking, which involves community planning and development efforts that emphasize the importance of arts and local culture for improving well-being. Increasingly, the arts are being recognized as a catalyst for improving community life across the country, especially in rural places.

In some rural communities, residents are using arts, local history, and culture to make changes in their social and economic environment. Communities can explore their unique local characteristics and focus efforts on building these assets. For example, communities may organize cultural festivals, art shows, or other events that bring in local talent and, as a result, can increase tourism while also providing short-term employment opportunities. Other examples include communities that work to renovate abandoned buildings, outdoor spaces, or natural monuments to become gathering places for local art exhibitions or other community events. These renovations provide a venue for artists to sell their work as well as a way to restore and improve the physical environment.

Examples of Programs Focusing on Economic Development to Address SDOH

The MAY Coalition is a nonprofit organization that provides capital and low-interest loans for businesses to help improve employment rates in rural North Carolina. By providing loans to local businesses in rural counties, the MAY Coalition aims to support the ability of these businesses to employ more workers and improve the economic outlook of the area. The MAY Coalition loan program has helped to support the growth of entrepreneurialism in rural North Carolina.
The Southern Rural Development Center is expanding economic development opportunities and focusing on strategies that have been shown to work in rural Southern regions. Their work features an emphasis on supporting and sustaining entrepreneurship, business expansion, and business retention.
The Small Towns Partnership managed by the Hope Enterprise Corporation (HOPE) provides community and economic development training and technical assistance to rural towns in Mississippi. The Partnership aims to improve economic development and stability for residents in these towns.

Implementation Considerations

Community-driven economic development focuses on community involvement and leadership, ensuring that the process is community-led. Programs that focus on rural community economic development should consider following several important steps during this process:

Developing a strategic plan to identify goals and a vision for the community
Assessing quality of life of residents
Assessing community leadership capability to lead change
Creating ways to promote entrepreneurialism and economic growth
Involving everyone in the process in an effort to build an inclusive sense of community

Fostering community involvement also involves building cross-sector partnerships. Partnerships across multiple services, such as business, housing, and planning, can be essential to successful community economic development. Rural program leaders should consider developing relationships during the beginning stages of program creation and initiation. Engaging partners throughout the implementation and evaluation process can also help increase buy-in and demonstrate that all parties are working towards the same mission.

A focus on improving tourism, expanding transportation services, and broadband deployment have also been recognized as important strategies for economic development in rural Appalachian communities. While these strategies all have the potential to make positive improvements, they also present several challenges for implementation. For example, any efforts to improve the transportation infrastructure in communities should be made in coordination with other sectors, such as education and community planning.

While community involvement can be critical to the success of economic development, some rural communities may face challenges in engaging residents or securing buy-in for certain strategies. For example, some rural strategies, such as investing resources in small business development, entrepreneurialism, education, and leadership development.

Resources to Learn More

Encouraging Economic Development in High-Poverty Rural Communities
Document
Transcript from a policy forum speech about strategies around economic development and how to close financial service gaps in high-poverty rural communities.
Author(s): Powell, J.H.
Organization(s): Board of Governors of the Federal Reserve System
Date: 2/2019

PolicyMap: Dig Deeper
Map/Mapping System
Allows users to create maps of their community that track poverty and income levels, educational attainment, and other economic and demographic community variables helpful for economic development and community planning purposes.
Organization(s): PolicyMap, Federal Reserve Bank of Philadelphia