What Rural Communities Don't Know They Have

Recently, I talked about the transition many agricultural communities are facing — or will face — as technology continues to change how much labor agriculture actually needs. I referenced a framework from economists Bruce Johnston and John Mellor, who argued that agriculture's role in development isn't just as a labor pool to be drained as industrialization happens elsewhere. Agriculture also contributes capital, infrastructure, market relationships, and trade linkages that can actively shape what comes next — if a community recognizes those contributions and uses them deliberately.

That's the focus of this article: what those contributions actually look like on the ground, in a community that's spent decades organizing itself around agriculture. My experience has been that most rural communities are sitting on a more competitive industrial asset base than they realize. The problem usually isn't that the assets don't exist — it's that nobody has ever looked at them through an industrial lens, because no one had a reason to.

Infrastructure built for one purpose often works for another

Grain elevators, cold storage facilities, processing buildings, rail spurs — these were built to serve agricultural operations, but the underlying capital is often directly usable, or convertible, for manufacturing and processing uses. A community that's been thinking of a vacant grain facility as "an agricultural problem to deal with" may not realize it's also "an industrial site with rail access that most communities would have to spend years and millions of dollars to create from scratch."

Water rights are a competitive advantage that rarely gets marketed as one

Manufacturing — especially food and beverage processing, but plenty of other sectors — is often water-intensive, and water availability increasingly eliminates candidate sites early in a search before a community ever gets a chance to make its case. A community that secured irrigation water rights decades ago, for entirely agricultural reasons, may have more readily available water capacity than communities that have never needed to think about it. This is rarely framed as an economic development asset, but in a lot of site selection conversations, it's one of the first boxes that has to be checked.

The workforce has skills that don't show up in labor statistics

Equipment operation, mechanical troubleshooting, comfort with shift work and weather-driven schedules, a safety-first orientation around heavy machinery — these are everyday realities for agricultural workers, and they map onto manufacturing labor needs more closely than most labor market data would suggest. The gap is usually formal certification, not capability. A community that can point to a workforce with this kind of practical experience — and can show a credible path to certifying those skills — is offering something that's genuinely hard to manufacture (no pun intended) in a market from scratch.

Logistics relationships already exist, even if they've never been thought of that way

Communities that move agricultural commodities have trucking relationships, sometimes rail access, and an operational understanding of how to get product in and out efficiently. This is infrastructure in the broadest sense — relationships and know-how — that took years to build and that a new industrial operation would otherwise have to build from scratch.

Local capital markets understand risk differently

Rural banks and lenders that have spent decades financing agricultural operations are used to cyclical cash flow, seasonal risk, and long payback periods on big equipment investments. That's a different risk posture than what a manufacturer might encounter from an urban lender unfamiliar with those patterns — and it can translate into local capital being more available, or more flexible, than communities assume.

Energy capacity may have more headroom than anyone has checked

Power and gas infrastructure that was sized for agricultural and municipal demand sometimes has unused capacity that's never been evaluated against industrial requirements — and with how central power availability has become to manufacturing site selection in recent years, this is worth an actual engineering look rather than an assumption either way.

The real work is the inventory, not the marketing — yet

None of this is meant to suggest these assets sell themselves. Having water rights, a usable building, or a transferable workforce doesn't automatically translate into a winning pitch — especially for communities that are also working against real geographic distance from major markets and manufacturing centers, which is its own challenge worth addressing directly.

But before a community can make that case effectively, it must know what case it actually has to make. Most agricultural communities have never done this inventory — not because the assets aren't there, but because the agricultural lens and the industrial lens have never been pointed at the same things at the same time.

The next article in this series tackles that harder question directly: assuming a community knows what it has, how does it actually make the case to a manufacturer who's looking at a map and seeing distance, not assets?

The Transition Every Agricultural Community Eventually Faces

A few months ago, I had a conversation with an economic developer in Washington State who was worried about something people in his community are starting to ruminate on.  . Agricultural technology — automated harvesting, precision equipment, robotics for tasks that have always required human hands — is advancing fast enough that a meaningful share of the region's agricultural workforce could be displaced soon. Our conversation wasn't whether this would happen. It was how do you get a community ready for a shift like that?

A few years ago, I was working on a financial forecast for Center, Texas, where there is a large Tyson poultry processing plant.  Before I got there in 2010, there was a failed experiment with using automation to cut the chickens.  Instead, the company chose to expand and hire more people, leaning into the labor-intensity of their operation. 

But what’s going to happen when the technology progresses to a point of competing with humans?  And what happens to the community that is built around this employment base?

I’ve been fascinated by the concept of economic evolution – the process an economy goes through moving from one state to another.  There is some literature that gives us some clues on how an economy can transition from agriculture-based to manufacturing/industrial.  What’s less understood, from a practitioner standpoint, is how that actually happens.

The pattern, and where it breaks down

The foundational framework comes from the economist Arthur Lewis, who in 1954 described how economies with a large agricultural workforce transition as industrial sectors develop and absorb labor that agriculture no longer needs (Lewis, 1954). In Lewis's model, this transition is fundamentally a good thing — labor moves from lower-productivity agricultural work to higher-productivity industrial work, and the overall economy grows as a result.

But Lewis's model rests on an assumption that doesn't always hold at the community level: that there's an expanding industrial (or other) sector nearby, ready to absorb the labor that agriculture sheds. For a national economy, that absorption can happen across regions. For a single rural community, it's a much narrower bet. If the local economy doesn't have — or doesn't build — that second sector, displaced agricultural labor doesn't transition. It just leaves, or it stays and the community's economic base shrinks, placing a great burden on the tax base.

This is where a different line of research becomes useful. Bruce Johnston and John Mellor, writing in 1961, argued that agriculture's role in economic development isn't just as a labor source to be drained — agriculture also contributes capital, market demand, and trade earnings that can fuel growth in other sectors, if those contributions are channeled deliberately (Johnston & Mellor, 1961). In other words, an agricultural economy isn't just a waiting room for industrialization. It has assets — financial, relational, infrastructural — that can actively shape what comes next, but only if a community recognizes and uses them.

There's a third piece worth introducing here, from Theodore Schultz's 1964 work on traditional agriculture. Schultz pushed back on the idea that agricultural communities are simply "behind" and need to catch up. His argument was that traditional agricultural practices are often quite rational given the resources available — and that transformation doesn't happen just because new technology exists. It happens when new inputs arrive: education, infrastructure, capital access, and the institutions that let people use new technology productively (Schultz, 1964). Technology alone doesn't transform an economy. Readiness does.

Where this series is headed

Put these three ideas together, and a different question emerges than the one most communities ask. The question isn't "will agricultural technology displace workers?" — that's largely a function of economics and engineering, and it's coming whether a community plans for it or not. The real question is whether a community has built the conditions — the second sector, the channeled assets, the readiness inputs — before that displacement happens, or whether it's starting from zero when it does.

Over the next few articles, I want to explore two distinct paths a community can take in response: one toward manufacturing, building on the linkages agriculture already provides, and one toward entrepreneurship, building a more distributed and resilient base of local business activity. Neither is automatically "the answer" — they involve different timelines, different capital requirements, and different ideas about what success looks like.

But both start from the same premise: the transition is coming. The only real choice is whether a community is ready for it.

References: Lewis, W.A. (1954). Economic Development with Unlimited Supplies of Labour. The Manchester School. Johnston, B.F. & Mellor, J.W. (1961). The Role of Agriculture in Economic Development. American Economic Review. Schultz, T.W. (1964). Transforming Traditional Agriculture. Yale University Press.

The Equipment Investment Case: What BRE Programs Are Missing

Most Business Retention and Expansion programs operate on a simple logic: keep the company happy, keep the company here. Relationship visits, surveys, problem-solving calls. It feels good, and it works — at least for the purpose it's designed for.

But there's a more powerful argument hiding in the background from the economics literature that most BRE practitioners have never encountered. This might change how you think about whether and how your program incentivizes capital investment.

What the Research Actually Says

In 1962, Kenneth Arrow published "The Economic Implications of Learning by Doing" in the Review of Economic Studies — one of the most cited papers in modern growth theory. Arrow's central finding was that productivity gains are not simply a function of time or labor. They are tied directly to cumulative investment in new capital equipment. When firms invest in new machinery, they don't just upgrade capacity — they generate learning, process improvement, and productivity gains that compound over time. The investment itself drives growth.  And, there can be other social, or spill-over effects from this learning.  The benefit does not necessarily accrue only to the investing business.

Three decades later, Bradford DeLong and Lawrence Summers tested this empirically. Their 1991 paper in the Quarterly Journal of Economics analyzed data across 61 countries from 1960 to 1985 and found that each additional percentage point of GDP invested in equipment was associated with an increase in GDP growth of roughly one-third of a percentage point per year. Critically, this relationship was stronger than any other category of investment — including structures, infrastructure, and human capital. They concluded that the social return to equipment investment in well-functioning market economies approached 30 percent annually.

That is not a marginal finding. That is a structural claim about how economies actually grow.

What This Means for Local Economic Development

EDOs have long justified equipment incentives as retention tools — a way to tie a company to a location.  The company signals that they are doing well enough to make the investment.  They have to train their employees on the new equipment, increasing productivity and, hopefully, their wages.  A company making an investment like that becomes more bound to their location. That justification is real and it works. But it undersells what's actually happening.

When a manufacturer in your community upgrades its production line, it isn't just staying put. According to Arrow, it is generating productivity improvements that ripple forward — into workforce skills, process knowledge, and competitive position. According to DeLong and Summers, it is contributing to the kind of capital formation that the empirical record associates most consistently with economic growth.

The Practical Question for EDOs

Most EDOs have some version of an equipment incentive — some form of a direct cash incentive, a sales tax rebate on qualifying purchases, an abatement tied to capital investment thresholds. But few have examined whether those instruments are designed to capture the full growth potential of the investment they're subsidizing.

Some questions worth asking: Does your incentive structure reward incremental upgrades, or only large-scale expansions? Are you tracking capital investment as an economic development metric — not just employment? Are you actively surfacing equipment investment opportunities during BRE visits, or waiting for companies to bring them to you?  Are you able to connect capital sources to your companies?

The research suggests this deserves more systematic attention. Equipment investment isn't just a retention tactic. It is one of the most empirically grounded levers an EDO has for generating real, compounding economic growth in its community.

That's worth building a program around.

Competing for Investment: A Smarter Way to Structure Property Tax Abatements

Communities across the country face the same uncomfortable truth: investment does not come to those who wait, it goes to those who compete. And competing means more than having a good location or a willing workforce — it means crafting incentive structures that speak directly to what businesses actually need.

Property tax abatements have long been one of the most effective tools in an economic developer's toolkit. But the way they are typically structured — flat rates, arbitrary thresholds, or one-size-fits-all schedules — often fails to reflect the real diversity of projects a community might attract. A capital-intensive advanced manufacturing facility with fewer, yet higher paying jobs, is a fundamentally different investment than a call center that creates hundreds of lower-paying jobs with modest equipment. Both have value and can be quite meaningful in the right context.

A few years ago, I developed a tiered abatement framework designed to address exactly this problem. The core idea is a matrix that weighs two variables — capital investment and jobs created — and assigns one of five abatement schedules (you could use any number of different schedules) based on where a project falls. Crucially, the matrix is calibrated so that a highly capital-intensive project is not penalized simply because it runs lean on headcount. Investment is investment, and communities that fail to recognize that will lose projects to those that do.

The five schedules themselves range from modest to highly generous over a ten-year period. A project landing in Schedule 1 receives a meaningful but conservative abatement — enough to acknowledge the investment without straining local tax capacity. Schedule 5, reserved for the largest and most impactful projects, provides deep abatements in the early years and a structured phase-out that gives the business time to stabilize before returning to full taxation.

All schedules phase down to 0% by year 10 (S-4 and S-5) or earlier, returning the property to full taxable value.

What makes this structure different is that it treats economic development as what it actually is: a negotiation between a community's future and a business's bottom line. High-capital projects with fewer employees can still drive job creation through an expansion of the local supply chain and construction jobs. A matrix like this allows a community to say "we see the value in what you're building" — rather than turning away a $40 million investment because it only created 18 jobs.

The communities that will win the next decade of investment are the ones willing to think carefully, act deliberately, and get creative. A structured abatement matrix is one way to do exactly that — showing prospective investors that your community has done the homework and is ready to compete.

NOTE: I tried to include the tables for illustrative purposes, but this platform does not allow tables. DM me if you want to talk more about this.

Economic Development Is a Risk Management Profession

Economic development is often described in the language of growth: job creation, capital investment, new projects, ribbon cuttings. Success is measured in announcements and press releases. Failure, when it happens, is treated as an exception—bad luck, bad actors, or bad execution.

That framing can be misleading.

At its core, economic development is a risk management profession—one practiced in an environment where uncertainty is high, information is incomplete, incentives can be misaligned, and the consequences of failure are personal as well as institutional.

Understanding this distinction matters, because many of the persistent problems in economic development do not stem from poor intentions or weak effort. They stem from unmanaged risk.

The Risk Economic Developers Actually Carry

Economic developers rarely control the outcomes they are judged on.

We do not control global markets, interest rates, technological change, corporate strategy, or supply chains. We also cannot control property owners and their willingness (or lack thereof ) to sell.  We cannot control the behaviors of consumers.  We often do not control final deal approval, incentive authorization, or long-term compliance enforcement. Yet when a project underperforms—or when an incentive becomes politically controversial—the risk crystallizes around a small number of individuals.

This creates a fundamental asymmetry:

• Upside is shared across elected officials, boards, and institutions

• Downside is concentrated on staff and leadership

From an economic perspective, this is a classic risk allocation problem. From a professional perspective, it is career-defining.

Why “Safe” Decisions Often Aren’t

In most public settings, economic developers are implicitly rewarded for avoiding visible failure and making short-term wins rather than maximizing long-term value. Think a ‘hunter’ versus a ‘farmer’.  This pushes decision-making toward what appears safe in the moment:

• Smaller, familiar projects

• Conservative incentive structures

• Overreliance on precedent and peer behavior

• Avoidance of decisions that require nuanced explanation

These choices feel prudent. Politically, they often are.  Economically, they can be costly.

The risk that is rarely acknowledged is opportunity cost—the cost of not acting, not adapting, or not reallocating resources in response to changing conditions. Declining competitiveness, eroding tax bases, and missed strategic shifts rarely produce a single headline. They accumulate quietly, over time.

Reframing the Role

If economic development is viewed primarily as growth promotion, then success and failure appear binary: the project landed or it didn’t; the jobs materialized or they didn’t.

If economic development is viewed as risk management, the evaluation changes:

• Was risk appropriately identified?

• Was downside exposure limited?

• Were tradeoffs made explicit?

• Was the decision defensible given constraints and information available at the time?

This reframing does not make decisions easier. But it makes them more honest—and ultimately more resilient.

Why This Matters

Many economic developers are not struggling because they lack passion, intelligence, or commitment. They are struggling because the system asks them to manage complex economic risk without naming it as such—and then penalizes them for outcomes they cannot fully control.

Until economic development is treated as the risk management function it truly is, communities will continue to see cautious decisions labeled as weak leadership, and bold but defensible decisions labeled as failures.

This series will explore the risks economic developers face—political, fiscal, institutional, and personal—and why better economics, not more optimism, is the path to better outcomes.

Small Communities vs. Big Budgets: Competing Asymmetrically for Economic Growth

Economic development is not a level playing field. Larger metro areas often have the upper hand: bigger budgets for marketing, real estate development, incentive packages, and talent attraction. They can afford slick national ad campaigns, splashy trade show booths, high-priced lead generation consultants, and speculative industrial parks waiting for the next deal.

So where does that leave small and mid-sized communities? Outmatched? Not necessarily.

Smaller communities must work smarter, not harder. The truth is, big budgets don’t automatically win every project. Many growing companies—especially in today’s economy—are open to new places, lower costs, and community connections that large metros can’t always provide. To compete asymmetrically, small communities must focus on smart tactics that maximize impact while minimizing spend.

How Small Communities Can Compete Asymmetrically

1. Mastering Social Media on a Shoestring

Social media levels the playing field in marketing. A small community’s authentic voice can cut through the noise far better than generic corporate messaging. Effective social media campaigns don’t require big dollars—but they do demand consistency, creativity, and effort.

• Showcase local success stories and unique community assets

• Create video testimonials from business owners who’ve thrived locally

• Use targeted LinkedIn ads to reach site selectors, executives, and brokers

• Engage with industry conversations rather than just broadcasting messages

2. Building Social Capital

One of a small community’s most powerful assets is its people. Relationships and networks often influence site location decisions as much as incentives or real estate.

• Local Connections: Encourage local business leaders to act as ambassadors for your community. Their word carries more weight than any marketing brochure.

• Personalized Follow-Up: After initial contacts, follow up with thoughtful gestures—a quick call, customized data, or an invitation to visit. Personal touches build trust.

• Regional Partnerships: Don’t try to go it alone. Regional alliances can amplify a small community’s message and share costs for marketing or talent initiatives.

3. Hyper-Targeted Prospecting

Instead of casting a wide net, small communities should be laser-focused:

• Research companies whose growth needs align with your assets (e.g., logistics corridors, workforce skills, lower operating costs)

• Identify executives on LinkedIn and engage them directly

• Track industry news to spot businesses considering expansion or relocation

• Attend smaller, niche trade shows where competition from large metros is lower

4. Creative Real Estate Solutions

Large communities might have speculative buildings sitting ready. Smaller communities can’t always afford that risk—but creative solutions exist:

• Partner with local developers for build-to-suit options

• Identify and pre-permit key sites to save prospects time and uncertainty

• Consider innovative financing tools (TIF, New Markets Tax Credits, etc.) to make deals work

• Keep high-quality aerials, 3D renderings, and virtual site tours ready for prospects

5. Focus on Quality of Life

While big metros tout their “big city amenities,” smaller communities can highlight affordability, safety, less congestion, and a genuine sense of belonging. Many executives and workers today are prioritizing quality of life over urban hustle.

• Emphasize your community’s hidden gems—parks, festivals, unique local businesses

• Share stories of people who’ve moved from big cities and found a better lifestyle

• Make sure your online presence reflects a modern, appealing place to live and work

Additional Tactics for Smaller Communities

Beyond the ideas above, here are other ways smaller communities can compete effectively:

• Data Storytelling: Use crisp, visual data to make your case quickly. Don’t bury prospects in 50-page reports—deliver insights tailored to their specific business drivers.

• Talent Pipeline Development: Partner with local schools, colleges, and training providers to demonstrate a workforce pipeline for target industries.

• Responsive Service: Large metros can be bureaucratic. Smaller communities can win deals simply by being quicker, more flexible, and easier to work with.

• Earned Media: A story in a national industry publication costs nothing but can yield tremendous exposure. Pitch success stories to trade media or business outlets.

• Virtual Site Visits: Embrace technology to show off sites and buildings virtually, saving travel costs and accelerating early prospect engagement.

Bottom line: competing with major metros doesn’t mean matching their spending. It means being strategic, nimble, and authentic. Smaller communities have unique strengths that big cities can’t replicate—and when those strengths are marketed smartly, they can punch far above their weight.

If your community wants to explore how to deploy asymmetric strategies, let’s talk. At Impact Economics, we specialize in helping places of all sizes unlock their hidden advantages.

Ready to brainstorm how your community can stand out against big-city competition? Contact us today.

Economic Development Isn’t Just Marketing - It’s Strategy

Too often, communities treat economic development like a branding exercise—design a logo, print some brochures, maybe attend a trade show or two, and hope the right company notices. But while marketing is part of the equation, real economic development goes much deeper. It’s not about selling a story—it’s about shaping your future.

At Impact Economics, I work with communities to approach economic development as a strategic, data-driven discipline, not just a promotional effort. And that starts with a hard, honest look at where you are today.

Start With the Fundamentals: Your Fiscal Foundation

Before trying to attract a single new business, every community needs to understand its current fiscal position. That means asking:

• What does our tax base look like?
  Is it concentrated or diversified? Are we overly reliant on a handful of large employers or a specific sector? What is the ratio of residential to non-residential value on the tax base? What is the relationship of our property tax to sales tax?

• What is our effective tax rate—on property, income, and sales—and how does that compare to peer communities?

• What is the state of your employment base?
  Are residents commuting out for work? Do we have an adequate labor pool for different types of industries?

• How many utility customers do we have—and are we growing or shrinking?
  Utility data is a proxy for population, development momentum, and long-term financial sustainability. Is the cost of operating the utility system fall on industry or residents? Are rates competitive to peer communities?

• What are our demographics telling us?
  Age structure, household income, educational attainment, and migration trends all signal what’s possible—and what’s not.

This baseline assessment is critical. Without it, you’re flying blind. With it, you’re ready to move from tactics to strategy.

Economic Development as Strategy, Not Reaction

Once you understand your fiscal foundation, you can begin crafting an economic development approach that fits your reality—not a neighboring city’s highlight reel.

• If your tax base is stagnant, you may need to focus on redevelopment, infill, or adaptive reuse strategies that grow value without increasing infrastructure costs. Or, we may need to consider investments to attract new employers and businesses to town.

• If your labor force is aging or shrinking, it may be time to invest in talent retention and attraction strategies—housing, childcare, and workforce development—before chasing another industrial lead.

• If your infrastructure is underutilized, such as excess water/sewer capacity or an airport that’s underperforming, those can be assets with the right business targets—but only if you know how to position them strategically.

• If you’re seeing revenue erosion, you may need to rethink your incentive policies or tax structures—not just to be competitive, but to ensure sustainability.

This is what strategic economic development looks like: not chasing leads, but building the conditions where the right investment fits, lasts, and lifts the entire community.

Don't Skip the Strategy for the Sake of the Spotlight

Marketing without strategy is like painting the front door of a house with a cracked foundation. It may look good in the photos, but it won’t stand the test of time.

Real growth happens when a community understands its position, defines its goals, and aligns its policies, investments, and partners to move in that direction.

That’s the kind of work I help our public sector clients do at Impact Economics. I bring a private-sector mindset to public-sector challenges—clear-eyed analysis, actionable strategies, and measurable outcomes.

Is your community ready to move from promotion to purpose?
Let’s have a conversation. Because economic development isn’t just about getting noticed—it’s about building something worth noticing.