The State of the AppalachianEconomyAlison F. Davis, PhDExecutive DirectorCommunity and Economic Development Initiative of KentuckyAssociate ProfessorDepartment of Agricultural EconomicsPresented to Appalachian Funders Network
Kentucky• 54 counties of Kentucky’s 120 counties are classified as Appalachia• The 54 counties that comprise Appalachian Kentucky are among the poorest in Appalachia. Compared with the U.S. population, Appalachian Kentuckians have lower income levels, higher poverty levels, and greater unemployment rates.
K e n tu c k y M a le s N o t in L a b o r F o rc e P e rc e n ta g e o f M a le s N o t in L a b o r F o rc e L e s s th a n 1 5 % 1 5 % - - 3 0% 30% -- 4 5 % 45 % -- 6 0 % M o re th a n 60 %
The Urban/Rural Difference: A County Level Investigation Urban Rural Very RuralPopulation 50,498 20,841 14,434Population 5 years in same house 54.5% 57.9% 63.8%Population per square mile 221.8 80.6 52.3People of all ages in poverty, 2004 13.2% 16.8% 22.3%Median value of home, 2000 $90,403 $70,614 $57,879Median household income, 2004 $42,148 $31,537 $24,609Males not in labor force, 2000 27.7% 33.15% 42%Residents working within county 52.3% 64.4% 60.1%Federal Gov’t Exp per capita, 2004 $5,873 $6,910 $7,710Manufacturing Value of Shipments,2007 $18,760 $17,012 $6,852
Quality of life variables Urban Rural Very RuralAverage travel time to work (minutes) 25.88 25.25 27.75Uninsured Rate (health) 12.42% 13.6% 17.0%Drug Arrests (per 100,000 pop) 940 1143.9 1063.4Crime per capita 0.036 0.026 0.016Mortality Rates (per 100,000 pop) 976.8 1026.7 1063.3
Changes from 1990 - 2000 Urban RuralIncome growth 55.4% 54.27%Change in population 18.5% 8.1%Change in poverty rate -22.4% -17.5%Change in median home values 74.9% 68.5%Change in % of those working within county -9.6% -8.2%Change in “not in labor force” % 0.6% 10.6%Change in education % 19.8% 29.0%Change in retail sales 51.7% 37.9%Change in manufacturing employment 50.0% 40.3%Change in mining employment -7.4% -7.8%Change in birth to unmarried mother 41.8% 46.3%
Six Strategies to Improve AppalachianEconomy 1. Invest instead of spend 2. There are other effective tools other than industrial attraction 3. Create access to capital for entrepreneurial and small business development 4. Health care should be a priority 5. Go Regional! 6. Envision a new long term framework for sustainable development
Investment instead of spending• The composition of expenditures in rural areas is significantly different between rural and urban areas• A much higher proportion of federal funds are spending (Social security, SSI, disability, welfare)• Spending does not increase the long term competiveness or economic capacity of an area in the same way as do investments in such things as public infrastructure, healthcare, education and workforce development
Invest in livable communities• Do not do so to attract firms• Do so for two very important reasons ▫ Increase the productivity and profitability of existing businesses and new businesses ▫ Engage in people attraction The new generation is footloose and fancy They decide a location first and then employment
Industrial Recruitment – There areother ways…• Economic gardening• Targeted attraction models• New business development• Business retention and expansion
Improve access and demand for capital• The recent financial crisis and resulting recession has had a profound impact on both businesses and households throughout the country• The impact of declining credit may be particularly severe in the Appalachian region because of the important role small businesses play in the economic growth of the region• Even more, small businesses appear to suffer more from a loss of credit than large businesses
More research is needed to better understand the role of supply and demand in lending. • Supply side• Demand side ▫ Microfinance institutions ▫ Entrepreneurial training ▫ Financial management skills ▫ Revolving Loan Funds ▫ Government secure loans ▫ Improve the economy??? ▫ Attract venture capitalists
Health care should be a priority• Two-thirds of all Federally designated health care shortages occur in rural areas• Inadequate health care is a large problem for those who live in rural America and it’s a huge disincentive for businesses• Workforce development begins at birth• Critical workforce issues• Health care is a driver for economic growth• Health care is an export industry
Go Regional!• Economic transactions, workforce mobility do not begin, end, or follow city limits or county boundaries• Rural counties are not large enough to compete on their own in today’s global economy.• Smaller jurisdictions do not have the critical mass of local leadership and civic infrastructure needed to play the game.
Regional OpportunitiesStronger Economies Together –A USDA Rural Development/Cooperative Extension Partnership to work with selected regions to identify and strengthen their competitive advantageSustainable Communities Program – HUD, EPA, DOTJobs Accelerator/Innovation Program – ETA, EDA, DOL
Of the 22 regions selected in first round 8 are located in Appalachia:1) Kentucky Highlands2) Northwest Region Pennsylvania3) Coal Heritage Region West Virginia4) Doddridge and Richie Region West Virginia5) Hardwoods Region West Virginia6) New River Region West Virginia7) Panhandle Region West Virginia8) Buckeye Hills Region OhioPhase 2 Includes regions from: Alabama and Mississippi
New framework can move Appalachiaforward• Civic leadership and engagement• Asset based community development• A culture of innovation• Diversity, access, and inclusion• Youth engagement• Wealth creation and retention• Regional initiatives
We must invest in the infrastructure, civic engagement,leadership development, access to quality health care andeducation, natural and built amenities before the jobs come!!!It’s not splashy but its sustainable!
Alison F. Davis PhDAlison.Davis@uky.edu(859)-257-7260