Community-driven economic development is an important strategy for improving economic stability in rural
communities, a major social determinant of health (SDOH). Economic development projects in rural communities
typically seek to increase employment opportunities for and improve the financial outlook of residents, which in
turn can have positive outcomes on health and well-being. For example, one model for community development involves a
holistic approach that focuses on other SDOH that also contribute to economic stability, including housing
affordability and educational opportunities.
Several strategies for economic development include:
Building and supporting a culture of entrepreneurialism
Strengthening small businesses
Strengthening arts and culture in communities
Getting the community involved
Additional strategies for economic development in communities may include workforce development and approaches
to build human capital, as well as asset-based community approaches. For more information about programs that
use these strategies, see the sections on Workforce
Development and Human Capital and Asset-Based
Strengthening Entrepreneurship and Small Business Growth
Many rural communities are incentivizing business growth by providing financial assistance to new small, local
businesses. Research suggests that building and supporting a culture of entrepreneurialism is an
effective economic development strategy for rural communities. Small, local businesses are often more likely to
invest in their communities and donate to local causes. They also provide employment opportunities and can serve
as an incentive for young graduates to return to rural areas to work. Some programs that support
entrepreneurship in rural areas provide funding in the form of loans to new businesses to help them get started.
Other programs may provide support with training and business planning.
For more information about rural strategies for business and operations planning, see Formal Planning in the Rural Health Networks and Coalitions
Community Development Financial Institutions and Economic Development
Community Development Financial
Institutions (CDFIs) aim to improve community access to financial services and products to support
economic development by providing loans to build up small, local businesses. By providing these financial
opportunities for rural communities, CDFIs can work to address SDOH. As community
banks continue to close in rural areas, CDFIs can provide capital to the
communities to implement different economic development strategies.
Place-Based Economic Development to Improve Economic Stability
Place-based economic development strategies that highlight the distinct strengths and assets of rural
communities are a promising approach to achieving economic stability. One innovative approach is known as creative placemaking, which involves
community planning and development efforts that emphasize the importance of arts and local culture for improving
well-being. Increasingly, the arts
are being recognized as a catalyst for improving community life across the country, especially in rural
In some rural communities, residents are using arts, local history, and culture to make changes in
their social and economic environment. Communities can explore their unique local characteristics and
focus efforts on building these assets. For example, communities may organize cultural festivals, art
shows, or other events that bring in local talent and, as a result, can increase tourism while also
providing short-term employment opportunities. Other examples include communities that work to
renovate abandoned buildings, outdoor spaces, or natural monuments to become gathering places for
local art exhibitions or other community events. These renovations provide a venue for artists to
sell their work as well as a way to restore and improve the physical environment.
Examples of Programs Focusing on Economic Development to Address SDOH
The MAY Coalition is a nonprofit organization that
provides capital and low-interest loans for businesses to help improve employment rates in rural North
Carolina. By providing loans to local businesses in rural counties, the MAY Coalition aims to support the
ability of these businesses to employ more workers and improve the economic outlook of the area. The MAY
Coalition loan program has helped to support the growth of entrepreneurialism in rural North Carolina.
The Southern Rural Development Center is expanding economic
development opportunities and focusing on strategies that have been shown to work in rural Southern regions.
Their work features an emphasis on supporting and sustaining entrepreneurship, business expansion, and
The Small Towns
Partnership managed by
the Hope Enterprise Corporation (HOPE) provides community and economic development training and technical
assistance to rural towns in Mississippi. The Partnership aims to improve economic development and stability
for residents in these towns.
Community-driven economic development focuses on community involvement and leadership, ensuring that the process
is community-led. Programs that focus on rural community economic development should consider following several
important steps during this process:
- Developing a strategic plan to identify goals and a vision for the community
- Assessing quality of life of residents
- Assessing community leadership capability to lead change
- Creating ways to promote entrepreneurialism and economic growth
- Involving everyone in the process in an effort to build an inclusive sense of community
Fostering community involvement also involves building cross-sector partnerships. Partnerships across
multiple services, such as business, housing, and planning, can be essential to successful community
economic development. Rural program leaders should consider developing relationships during the
beginning stages of program creation and initiation. Engaging partners throughout the implementation
and evaluation process can also help increase buy-in and demonstrate that all parties are working
towards the same mission.
A focus on improving tourism, expanding transportation services, and broadband deployment have also been
recognized as important strategies
development in rural Appalachian communities. While these strategies all have the potential
to make positive improvements, they also present several challenges for implementation. For example, any efforts
to improve the transportation infrastructure in communities should be made in coordination with other sectors,
such as education and community planning.
While community involvement can be critical to the success of economic development, some rural communities may
face challenges in engaging residents or securing buy-in for certain strategies. For example, some rural
strategies, such as investing resources in small business development, entrepreneurialism, education, and
Resources to Learn More
Encouraging Economic Development
in High-Poverty Rural Communities
Transcript from a policy forum speech about strategies around economic development and how to close financial
service gaps in high-poverty rural communities.
Author(s): Powell, J.H.
Organization(s): Board of Governors of the Federal Reserve System
PolicyMap: Dig Deeper
Allows users to create maps of their community that track poverty and income levels, educational attainment, and
other economic and demographic community variables helpful for economic development and community planning
Organization(s): PolicyMap, Federal Reserve Bank of Philadelphia