The Secret to Rural Communities’ Economic Development: Colleges and Universities

By August 4, 2017Blog

Not surprisingly, many cities with local university or college systems consider themselves lucky to have those institutions as an economic development asset. These higher-ed institutions are a source of pride and also serve as a community gathering place for athletic and academic events. However, for rural communities, colleges and universities are even more important, and indeed critical, to the economic growth and vibrancy of their communities. This happens in several important ways.

First of all, colleges and universities employ local workers and spend money in their local areas and are less susceptible to recessions, making them key economic anchors for small communities. Economic researchers have found that non-metropolitan counties with 30% or more college graduates tend to be growing in population size, whereas those with 30% or less tend to be shrinking. During the last recession, the education sector expanded, as many displaced workers enrolled in educational programs to gain new skills. This provided economic stability but also increased the human capital capacity of many rural communities.

Additionally, college and university events create significant economic activity in rural communities, especially athletic games. For example, in 2016 AngelouEconomics conducted an economic impact study of Kansas State University’s athletic program. We found that the K-State athletic department generated $351 million in economic activity in a single academic year in the town of Manhattan, Kansas. On average, fans would spend $289 per person while in town and would reserve hotel rooms for games far in advance, often staying in town for the whole weekend. This is a significant amount for a town of 55,000 people, making K-State Athletics an economic powerhouse and the largest economic driver in the area.

Furthermore, by creating and changing educational programs as the needs of the community change, educational institutions can drive economic growth in rural communities. For example, the farming community of Walla Walla, Washington, which suffered from low economic growth through the 1990s, has now become a wine industry hub with more than 170 winemakers in the area. However, before the local community college started their enology and viticulture program which trains future winemakers, there were only 16 wineries in the area. There is no doubt that the college served an essential role in driving the expansion of the wine industry in the area.

In sum, it is important for rural policy-makers to view their colleges and universities as crucial drivers for economic development and growth. Colleges and universities have positive economic impacts on rural communities and provide stability during downturns. Economic developers should work in conjunction with colleges and universities to ensure their communities have the right educational and skills training programs to support local workforce needs. This has three primary advantages, it will help retain existing businesses, it will facilitate expansion of existing business, and it will aid in attracting additional businesses to the area.

In the field of economic development, workforce is king, and developing your workforce begins with the local education institutions.

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