As recent data point to the beginnings of a recovery for much of the global economy, many segments of the American economy show signs of a more permanent strain. In his December article “Prospects for a Rural Recovery,” Federal Reserve Bank of Kansas officer Jason Henderson stresses the increased importance of entrepreneurship, innovation and access to capital in rural areas in particular, writing “entrepreneurship and innovation may become even more important to the economic revitalization of rural America”.
This is particularly true throughout Central Appalachia, where poverty rates are consistently higher than other regions of the country.While rural regions as a whole have generally fared better in terms of employment numbers than cities, the rural Midwest and Southeast face particularly tough times, according to Henderson.
Structural challenges afflict rural economies in general, and those of Appalachia in particular, including continued outmigration and farm consolidation.Access to capital is another significant hurdle for rural communities, but one rural community banks have often met through community-based lending (See Local banking boosting local communities).
Henderson points to signs that rural America may be well positioned to recover from “the steepest and longest contraction since the Great Depression” pointing out that in addition to sustaining fewer job losses than urban areas, the housing crisis has generally been less severe in rural areas.
One of the sectors likely to drive recovery, Henderson says, is food processing.Given the high concentration of food processing activities in rural areas, this is likely to be a “relatively bright spot” in the near term.
By spurring innovation, encouraging entrepreneurship and ensuring access to capital, the Appalachian economy stands to rebound from the economic crisis stronger than ever before.