Rethinking Rural Manufacturing

Rural communities across America experienced great success in recruiting factories over the 30+ year period, starting in the 1960s. Now, factory closings in rural America outpace those in urban areas.

An analysis by the Federal Reserve Bank of Kansas City examines these issues. During the 1991-1998-period, manufacturing jobs in rural areas grew at a 3.3% growth rate, while those in metro areas grew by only 2.2%. Then in 1998-2000-period, both urban and rural areas lost manufacturing jobs at the rate of 1.7% and 1.9% respectively. Since 2000, manufacturing jobs in urban areas declined by 7.1% and those in rural areas fell by 10.1%.

The Fed article questions the prudence of continued efforts to lure more factory jobs to rural communities. My sense is that will be a tough one to talk rural officials out of, unless someone can provide them with a better answer to their growing economic problems. The article urges caution in using economic development incentives to support future recruitment efforts. Again, good idea in concept, but that's the game right now in economic development. Change the game and the incentives might go away. Rural communities would put themselves at an even greater disadvantage if they decided to unilaterally disarm their incentives.

Should rural areas be more selective about what companies they rercuit and how much they give to get them? No question about that.

Go here to download the article.