Wednesday, October 8, 2014

Options for rural economies to reflect the present economic climate

It is fairly undisputed that many rural communities face some degree of economic deprivation. Part of this can be attributed to lack of infrastructure hindering development, mobility, and access to markets. Nevertheless, two recent and unrelated articles have addressed avenues for economic access in rural communities. First, NPR published a piece on how rural startups are often overlooked, and the difficulty these startups face in reaching outside their rural communities to gain investors and financial support. On the other hand, the New York Times recently published a piece on the willingness of energy companies to come into rural communities and boost rural economies through industrial energy production efforts.

The NPR piece mentions how President Obama’s administration is trying to convince more investors to back startups and entrepreneurs in rural America, and the administration is unveiling a  $10 billion investment fund aimed at infrastructure projects in small towns. This effort is geared toward ameliorating a “lending drought” faced by rural communities. The goal is to get investors to look outside major urban areas for their entrepreneurial investment projects.

Small-town startups are often overlooked and not taken seriously by investors. In the interview contained in the NPR piece, Mara Smith, who lives and works in a small town that is a day’s drive away from Boston or New York, says that this alone made getting funding for her tech app incredibly difficult. She stated,
“It did matter that I was from Lake Placid. It did matter that I wasn't kind of a funky, city, groovy hipster. I did feel irrelevant a lot.”

On the one hand, Smith’s story is symptomatic of a larger problem. Rural populations are often unable to access economic markets outside their immediate community, which is exacerbated by their physical and social isolation. On the other hand, the New York Times recently published a piece which poses another solution to rural economic deprivation – allowing major energy companies to come into rural communities to provide economic stimulation.

A spokesperson for a global manufacturing practice says new energy production allows economically disadvantaged communities to “renew themselves.”  While states such as New York have banned fracking because of the toxic environmental effects, some states such as Ohio are less opposed because residents are more desperate for the economic growth the energy industry can bring. In Youngstown, Ohio and surrounding rural areas, entire sectors like manufacturing, hotels, real estate, and law are being reshaped because of the changes brought about by the energy industry. Additionally, production such as million-square-foot factories are being built to make steel pipes for fracking.

Either way, both anecdotes – rural startups and the fracking industry – illustrate two distinct stories on how rural livelihoods are attempting to move forward in the present-day economic climate. On the one hand, Mara Smith’s experience demonstrates the economic isolation of rural citizens in accessing major investors and financial infrastructure. On the other hand, Youngstown’s experience demonstrates the willingness of major and perhaps environmentally questionable industrial players to unilaterally spearhead economic stimulation in rural towns.


David Gomez said...

Reading this post made me feel a bit cynical. I am glad to hear that the federal government is taking notice to rural economic problems and are attempting to initiate lending to stimulate the economy. But after hearing the story from New York I couldn't help think that the bottom line is always about money. I feel the same about the Fracking story. The companies that are investing into these communities are really just after resources and money to be made from them. Once the fields bust these companies and their economic development will disappear.

Tiffanie said...

It was interesting to read yet another problem that people in rural places face. Whenever I think of startups, I always think of places like Silicon Valley and big cities like San Francisco. However, I never think of individuals in rural areas creating startups. This in itself is an issue, and I can imagine many investors in the big cities do not take startups from rural areas seriously. I’m glad to hear that President Obama’s administration is trying to convince more investors to back startups in rural America. I hope this encourages people in rural areas to be entrepreneurial while also encouraging investors to take people from rural areas more seriously.