Strategies for Rural Development: It Takes a Region to Raise an Entrepreneur

January 01, 2006
By  Amy B Simpkins

Regionalism—a buzzword in community and economic development for years—is key to building economically and socially competitive communities. Community leaders have used regional approaches, for example, to manage natural resources and utilities, provide transportation, and respond to a myriad of other community development needs. With small business development emerging as a core strategy for economic growth and community sustainability, regionalism is again in the forefront.

Regional partnerships are particularly important to rural communities where scarce resources for entrepreneurs can be maximized through cooperation. Rural policy-makers wishing to support entrepreneurship are looking beyond traditional political boundaries to regional collaborations.

As an indication of this trend, both regionalism and entrepreneurship are cornerstones in a 2005 report by the Strengthening America's Communities Advisory Committee, issued to the U.S. Secretary of Commerce. Recommendations include a call to "establish regional competitiveness as the overriding goal for federal economic and community development policy." Additionally, the authors maintain that "innovation and entrepreneurship are the new engines for job creation, productivity, growth, economic prosperity, and healthy communities."

The Regional Difference

Regions can make a difference for entrepreneurs in the services they offer, the access to capital they afford, the diversity they encourage and the public policies they influence.

Regions often have a range of assistance for entrepreneurs that is not available in individual communities. In addition, the experience and skills each partner brings to the table are used more efficiently when redundancies are eliminated. Each partner can focus on the resource or service that they do best.

Access to capital and credit is essential to entrepreneurial development. Regional development systems improve access to capital by acting as a conduit, linking financial services and potential investors to entrepreneurs. Investors and financial institutions also may be more likely to fund a new business that has access to a broad range of educational and capacity-building services.

Increasingly, community developers recognize the importance of diversity for encouraging entrepreneurial growth. Regionalism can offer such diversity by focusing on a population beyond the borders of a single community, with a greater range of ideas, experiences and practices. Diversity influences many factors critical to entrepreneurship, including innovation and increased market opportunities.

In addition, the partnerships that develop from a regional collaborative can be influential in creating public policies that support entrepreneurial development.

Simply put, regions that create supportive environments for entrepreneurs influence the way resources, investments and opportunities are allocated.

The Depth of Regional Entrepreneurship

Entrepreneurs are important to rural communities not only for the number of jobs they create, but also for the impact they have on local economies.

The Federal Reserve Bank of Kansas City looked at both the number of new jobs and the wealth created by small businesses to assess the impact of entrepreneurship on regional economic growth. The resulting study, Gauging a Region's Entrepreneurial Potential, found that regional characteristics—including education, quality of life and infrastructure—affect the depth and breadth of entrepreneurial activity. If regional development systems can strengthen these key factors, the influence entrepreneurship has on local economic growth may be enhanced.

Regions Take on Entrepreneurship

Recognizing the critical role regional partnerships play for entrepreneurial development in rural areas, the W.K. Kellogg Foundation is funding six projects focused on supporting entrepreneurs.

The projects represent regional collaboratives from rural areas across the country. Each project will leverage significant investment, promote entrepreneurial activity in its region, produce entrepreneurial models for other communities, and stimulate national and state interest in rural entrepreneurship policies and strategies.

Kellogg also is working with several partner organizations to sponsor a series of roundtable discussions in regions that expressed an interest in creating entrepreneurial development systems. The goal of these sessions is to promote dialogue, planning and action among individuals and groups working in a specific geographic area.

To find out more about these initiatives or the communities involved, visit the W.K. Kellogg Foundation at

Within the Federal Reserve's Eighth District, the University of Missouri Extension Community Enterprise and Entrepreneurial Development (CEED) office is focusing on revitalizing rural economies through entrepreneurship. CEED's goal is to help communities build entrepreneurship by forging regional partnerships. Regional resources will be leveraged to respond to the needs of entrepreneurs and create economic growth. Ultimately, the regional specialists working at CEED hope their multidisciplinary approach will lead to an entrepreneurial development system.

Armed Forces day parade in rural America.

Editor's Note: Rural communities throughout the United States are vibrant places, with great people, rich culture and heritage, and deep social ties. But recent structural changes to the economy, along with long-term challenges, have left many in these communities at a crossroads, wondering which direction will lead to prosperity for all.

Investing in Rural Prosperity, a 2021 book published by the Federal Reserve Bank of St. Louis in collaboration with the Federal Reserve Board of Governors, seeks to help people living in rural areas navigate the challenges and opportunities they face to reach a future in which economic prosperity is a reality.

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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