Debunking the Myth that Rural Places Don’t Innovate

Rural places in the United States have experienced slower economic growth than urban places due to a host of socioeconomic and global forces. For starters, the pandemic has dramatically and disproportionally impacted rural communities, hitting hardest those that lack broadband access and other critical infrastructures. But the reality is that socioeconomic and global forces have worked on rural places for decades and were simply exacerbated during the pandemic. Communities once dependent on agriculture, forestry, and mineral mining have seen these industries decline. As well, certain manufacturing sectors have experienced global transformations that have resulted in job losses, stagnant wages, and ultimately contributed to population decline in the places where they are located.

Despite these challenges, some rural places appear to be more resilient than others in the wake of major social and economic changes and major system shocks. The success of these rural places lies in the fact that they adapt to change and capitalize on opportunities in innovative ways. They do so by cultivating an innovation ecosystem at the community or regional scale—a system of supports that gives entrepreneurs and innovators the tools and resources to succeed. Common attributes of rural places with an innovative ecosystem are that they maintain a proactive local government that is attuned to the needs of local businesses, they maintain an engaged citizenry, they have strong social networks, they cultivate public-private partnerships, they foster a strong system of supports for local businesses and entrepreneurs, and they harness the creative energy that resides in the people who live there.

Unfortunately, traditional measures of innovation largely fail to capture the innovations that occur in rural America. Most indices of innovation—such as Bloomberg’s index—are urban-centric in that they track indicators such as venture-capital investment, number of patents, number of startups, startup job creation, ratio of research and development spending to new sales, advancements in communications technology, etc. While these indicators reflect important shifts taking place in more urban settings that often lead to breakthrough technologies and result in significant employment gains in larger firms, they do not necessarily reflect the forms of innovation that occur in sparsely populated, rural places.

Characteristics of Rural Innovation

We are learning that a wholly different set of innovation characteristics contribute to rural community resiliency. Innovations don’t necessarily come in the form of life-changing products or breakthrough technologies. They can be subtle and take the shape of the following:

1.  A new method for accomplishing a task

2.  Adapting an existing technology to shift business transactions or service delivery online

3.  Reskilling workers to leverage their talents for new and emerging sectors

4.  New forms of collaboration such as integrating value chains of brewers and distillers

5.  Creative leveraging of financial capital to spur local investment in downtown revitalization

There is also a phenomenon known as latent, or “hidden” innovation, which refers to the incremental improvements that businesses make to their products and processes because of information they obtain from outside their business. Hidden innovation occurs as businesses, communities, and organizations connect, learn from each other, and adopt and iterate practices to create incremental improvements. Recent research from Penn State University suggests that hidden innovation is at least as important to local income and employment growth as patent-level innovation.

There are so many ways that rural communities foster innovation. One way is through the promotion of the arts. Research from USDA’s Economic Research Service suggests that communities that maintain one or more arts organizations outperform those that don’t when it comes to earnings and productivity. Scholars believe that is because the design orientation that artists maintain is infused into other aspects of economic life in rural communities. Case in point, places like Littleton and Rochester, New Hampshire have both successfully promoted and leveraged the arts and used it as a vehicle to revitalize their Main Streets.

Other places like Franklin, New Hampshire have figured out how to leverage their natural assets to create new opportunity. Franklin, which sits at the convergence of three rivers, is seeking to harness the power of these rivers to create a whitewater kayaking park. Once developed, it will be the largest whitewater park in the Northeast and has the potential to generate millions of dollars in economic activity each year.

Still other places like Perry, New York—which is like so many other towns in the Northern Forest tier—have figured out how to generate resources for downtown revitalization by creating a new financial mechanism that enables local residents to invest in the rehabilitation of buildings, giving them a stake in the community and a share of future revenues resulting from the redevelopment.

The point is that rural places have a deep history of innovating and continue to innovate. We simply fail to characterize and capture these innovations because they don’t meet the big tech, high growth definition of innovation that is so often heralded. If this past year has proven anything, it is that rural places are resilient and adapt to change in amazing, innovative ways. 

Interested in learning more about rural innovation – check out our upcoming webinar