Brookings recently published a report titled, "Regional clusters and rural development: To what extent does EDA’s Build Back Better Regional Challenge include rural areas?" The first several paragraphs are excerpted below:
The divergence in economic outcomes across different geographic regions in the U.S. over the past two decades has spurred new interest among policymakers in pursuing place-based policies. The effects of that divergence have been especially acute in rural America: Employment and labor force participation rates in rural areas have still not recovered to pre-Great Recession levels. From most indications, rural America’s economic fortunes continue to diverge from the rest of the country.
These dynamics set forward a strong rationale for the inclusion of rural places in place-based economic programs like the $1 billion Build Back Better Regional Challenge (BBBRC), which was funded through the American Rescue Plan Act (ARPA) to boost economic recovery. A competitive grant program administered by the Economic Development Administration (EDA) in the U.S. Department of Commerce, the BBBRC awarded five-year grants between $25 million to $65 million to 21 regional coalitions in September 2022, choosing from 60 finalists and 529 initial applications.
The potential for rural places in the BBBRC
The BBBRC focuses on strengthening or growing industry clusters to broaden economic opportunities throughout a region, especially for underserved populations. In its guidance to applicants, the EDA explicitly highlighted the key role of rural areas in achieving regional success. This is in keeping with how the EDA articulates its Investment Priorities, stressing the importance of equity and reaching underserved communities, including rural and tribal communities. It reflects a similar recognition among rural practitioners that regional collaboration offers advantages for creating opportunities in rural places.
Yet formulating a regional cluster approach that is effective in benefiting rural places requires sensitivity to a complex set of dynamics. Almost by definition, a focus on industry clusters puts metropolitan areas at the center. In its guidance, EDA acknowledged that clusters are likely to follow a traditional hub-and-spoke model, where a metro area acts as a central hub for a coalition that reaches into or engages other communities.
Such a model generates an inherent tension in effectively reaching and serving rural areas, since simply including them as part of a service area does not guarantee successful economic impacts there. Rural places are often less than full partners in regional coalitions; intentional interventions to meet their unique challenges related to governance capacity, distance, workforce, and access to capital are frequently necessary to enable them to receive proportionate benefits. Program parameters can also play a role. Matching funds requirements, for example, immediately place a substantial burden on rural and tribal places, which often have less fiscal buffer and less access to outside resources. Authentic engagement and trusting relationships among urban and rural leaders—cornerstones for successful inclusion—necessitate investments of time and the building of beneficial partnerships.
Here's the conclusion:
The BBBRC represents a bold innovation in place-based industrial policy, incentivizing proximate jurisdictions and partners to work together as a regional cluster to leverage unique local assets and accelerate economic and social development. EDA’s approach also incentivized applicants to seriously consider rural inclusion and provided flexibility to facilitate this. BBBRC implementation offers an enormous opportunity to advance the knowledge base of how regional approaches can benefit—or disadvantage—rural places. Remaining sensitive to the power dynamics, capacity constraints, and the unique value of rural partners will be important as projects are executed—and acting upon lessons learned and insights will inform future program design and regional models that successfully expand economic opportunity and community development in rural places.
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