Rural economic development under devolution: A test of local strategies

During the past 30 years, the federal government has transferred more responsibility for the control, development, and support of public policy to states and local communities in a process known as devolution. In this context, economic hardships that have hit many rural communities often lead to increased tension over economic development strategies, which is further influenced by a community’s racial composition and racial history. Using devolution as a framework, we quantitatively explore the relationship between general economic development strategies, including two concepts that are linked to entrepreneurship, the creative class and bridging social capital, on several measures of economic development. Analysis includes rural communities that have historically excluded African-Americans from living within city limits, as well as rural communities that did not. Using data from 217 rural communities in the American Midwest and nontraditional South, we find no support for the creative class, the importance of tolerance, the importance of technology, or bridging social capital on increasing economic development, but we do find that formal education and incorporating economic development strategies are significantly related.