A Note from DRF: A question we find ourselves asking right now is what communities will look like and how they will operate in a post-pandemic world. As restrictions are lifted, we may freely move about more but some businesses, organizations and those in the workforce will still struggle to recover for some time to come. DRF asked our friend Ted Abernathy with Economic Leadership LLC to curate some thoughts on the subject from leaders across the United States to help us think about what’s next.

Following the Great Recession of 2008, economic recovery was highly uneven in communities across the country. In many ways, recovery favored large, dense urban centers, often at the expense of smaller communities. But this trend was not universal across places or industries. An analysis of county employment growth from 2010-2016 reveals that communities with industries that were integrated across urban and rural areas within economic regions grew more quickly than those that were not.[1]

Integration matters because local industries and clusters that are connected regionally have a broader base of assets to tap for growth such as an expanded labor market, tailored infrastructure, specialized suppliers and niche customers.[2] For example, discriminating craft beer drinkers in urban Oregon led to the development of specialized markets for rural hops growers who were able to test and refine products regionally before taking them to the global market.[3] In other words, robust linkages within regions, often between urban and rural communities, provide the fuel that drives business innovation, competitiveness and growth.

In the current environment, significant global supply chain disruptions underscore the importance of connected regional economies. A recent McKinsey study found that due to pandemic-related disruptions, 93% of supply chain leaders are prioritizing resiliency with strategies such as near-shoring and regionalizing supply chains.[4] This pivot may provide opportunities for recovery in smaller and rural communities – places that can offer cost savings, enhanced data security and workforce stability to industries located in more urban areas. This strategy already has a foothold in Virginia, with several high-tech firms in urban Northern Virginia exploring domestic outsourcing to rural parts of the state by bringing back supply chain operations from oversees, outsourcing contracts and expanding business operations, including a major software integration and development center in Lebanon, a town deep in rural Southwest Virginia.[5]

For smaller communities, bolstering connectivity to regional economies can start with identifying industries that are strong and growing in the broader region and have a presence locally, then working with state and regional organizations to uncover specific industry needs like supply chain weaknesses and specialized workforce skills, to bolster and align local assets to meet these needs, and to help market assets. For Danville, this might mean an economic development focus on communications services and information technology. A connectivity strategy leverages regional strengths, helps prioritize investments, narrows the urban-rural divide, and opens new pathways for post-pandemic growth for smaller communities.

The full economic impact of the pandemic will not be known for many years. In the meantime, smaller communities can find a silver lining in the renewed value placed on strong, connected regional economies. 

[1] McFarland, C. (2020). Local Employment Impacts of Connectivity to Regional Economies: The Role of Industry Clusters in Bridging the Urban-Rural Divide. Manuscript submitted for publication.

[2] Porter, M.E. (2003). The Economic Performance of Regions. Regional Studies, 37(6-7): 549-578.

[3] Martin, S. (2011). “Critical Linkages: Strengthening Clusters in Urban and Rural Oregon,” in Toward One Oregon: Rural-Urban Interdependence and the Evolution of a State. Oregon State University Press. Corvallis.

[4] Alicke, K., Gupta, J., and Trautwein, V. (July 21, 2020). Resetting supply chains for the next normal. McKinsey & Company. https://www.mckinsey.com/business-functions/operations/our-insights/resetting-supply-chains-for-the-next-normal#

[5] Mayer, H. & Provo, J. (editors). Farmshoring in Virginia: Domestic Outsourcing Strategies for Linking Urban and Rural Economies in the Commonwealth of Virginia. VA Tech, Urban Affairs and Planning, April 2007.