Rural–Urban Industry Linkages: Comparison
Please note this is a comparison between Version 1 by Anders Van Sandt and Version 3 by Nora Tang.

Rural–urban linkages refer to the goods, people, and money transfers between rural and urban places, and have long been a focus for economic development researchers and practitioners alike. Urban places typically have higher incomes and more diverse market segments, making greater rural–urban market integration a potentially lucrative business and rural development strategy. Indeed, urban-adjacent rural communities often have comparative advantages in the production of food, energy, tourism, and other rural goods and services desired by urban consumers. Thus, identifying how these interdependent economic flows affect the economic prosperity of rural places may better inform rural development policies and strategies.

  • rural–urban linkage
  • rural development
  • local food
  • Carlino–Mills
  • economic development

1. Introduction

Much of the research and understandings of rural–urban linkages have focused on the urban benefits, as these outcomes seem to have been more tangible or measurable by past researchers [1][11]. The potential for improved economic development and the rural-void in the literature have led multiple researchers to call for greater exploration into the rural benefits and limits of rural–urban linkages [2][3][4][12,13,14]
There are many examples of empirical models used to measure the influence of rural community attributes on rural measures of economic growth. One of the most frequently employed models is the conditional convergence growth model developed by Carlino and Mills (1987) [5], used to identify factors leading to US county population and employment growth over time. Deller et al. (2001) [6][15] used the basic framework of this model and added a per capita income equation to the simultaneous equations to assess the role of natural amenities on rural economic growth. Others, such as Rupasingha et al. (2005) [7][16] and Carpenter and Loveridge (2019) [8][17], concentrated on the influence of exogenous variables growth within the Carlino and Mills framework while controlling for spatial dependence. 

2. Food Manufacturing

Agriculture has long been a primary industry of rural economies in the US, but changes in agricultural production and global competition have put a financial strain on many agricultural businesses and the communities that principally rely on them. In response, the U.S. Department of Agriculture (2015) [9][18] identified local and regional food systems as one of its four pillars for enhanced rural development, highlighting its potential to improve rural economic outcomes. Simultaneously, urban centers are becoming increasingly interested in local food procurement and production through food policy plans [10][11][19,20]. However, in a review of multiple case studies, Jablonski (2016) [1][11] accentuates that most of the strong local food systems are located near metropolitan areas where there are greater concentrations of farmers markets and a higher willingness to pay for local agricultural goods. Furthermore, while urban benefits are increasingly understood, there is little to no empirical research that measures the economic flows from urban to rural places or the limitations of these flows. For example, do all rural places experience equal benefits from food-based rural–urban linkages?

3. Tourism and the Creative Class

Gartner (2005) [12][21] discusses the growing importance of tourism for rural communities and the growing types of tourism in those areas. While attribute-specific sites once dominated rural tourism, an increasing number of rural communities are tapping into their heritage, culture, and the potential to become gateway communities to popular tourism regions. Weiler and Seidl (2004) [13][22] measured a significant increase in employment in a region after a nearby National Monument is designated as a National Park and note the output multiplier is somewhere between 1.3 and 1.4 for retail goods and services. In addition, Gartner (2005) [12][21] notes that many of these outdoor recreation gateway communities, such as Jackson Hole, WY, are becoming destinations in their own right, and underlines the importance of viewing tourism as a “collection of related industries.” Given the diversity of tourism industries, it may be best to measure rural tourism activity through multiple industry specifications.
Florida (2002) [14][23] describes an evolving economy where creativity is now the predominant driver of regional economic growth. Places rich in amenities attract creative people who then spur economic growth through new ideas, technology, and enhanced quality of life, creating a virtuous cycle of economic development and growth. McGranahan et al. (2011) [15][4] empirically tested this theory and found that higher shares of creative class occupations increase employment growth for both metropolitan and nonmetropolitan counties. However, one key element of Florida’s (2002) [14][23] proposition is the cyclical idea that creative industries attract more creative people, sustaining the development of new ideas and technologies that support continued economic development. In addition to this inflow of creative people into these communities, these creative places also likely benefit from increased tourism brought on by the entertainment and arts occupations within the creative class. Given these flows of people into creative places, here seek to test the impact of rural–urban linkages on rural economies from the creative class. In other words, are the economic benefits associated with the creative class dependent on a place’s proximity to urban areas or are these flows of creative people and tourists free of urban influence?
For communities with limited natural amenities, diversifying farms and ranches into agritourism enterprises may stimulate the local economy. Agritourism can be any recreational or educational activity on working farms or ranches. Some popular examples are wineries, dude ranches, corn mazes, and Christmas Tree farms, showing the diversity of activities across agricultural production types and seasons. Van Sandt and Thilmany (2020) [16][24] disentangle the types of agritourism travelers and note different willingness-to-pay values for secondary and primary agritourists across agritourism activities and regions in the Western U.S., demonstrating a wide set of economic opportunities for agricultural communities across regions and ruralities. Furthermore, Thilmany et al. (2007) [17][25] found that out-of-state agritourists spent about 2.3 times more in total expenditures during their visit to Colorado agritourism sites compared to in-state agritourists. This suggests that urban visitors looking to get away from familiar settings may stimulate rural economies more than local visitors, on an individual basis. Across the literature, travel infrastructure, including interstates as well as scenic byways, is identified as critical for rural tourism opportunities [12][18][19][21,26,27].

4. Data Processing

As historically extraction-based rural economies lose industries to shifting demand and global competition, many rural areas without comparative advantages in either agriculture or natural amenities are faced with few economic alternatives. The birth of the technology and information age has led some of these limited-growth rural economies to realize a new economic opportunity: data centers. Urban places are generating massive demand for data centers to support burgeoning technology and information-based industries, including the millions of households who are increasingly integrating technology into everyday life. Due to their large footprint and high energy consumption, data centers prioritize low land and construction costs as well as cheap and redundant electricity [20][28]. Data centers also tend to locate near urban markets and travel infrastructure to take advantage of skilled labor or the possible need to quickly bring in specialized technicians. These preferences lead to urban-proximate rural areas having a potential comparative advantage in hosting data centers, which may then improve rural economic outcomes. However, unlike many local food manufacturing and tourism businesses, these data centers require massive capital investments, which likely come from firms outside of the rural community.

5. Benefits and Limits for Rural Places

Using the Carlino–Mills conditional convergence model to estimate the benefits and limits of rural urban linkages between 2009 and 2016 for food manufacturing, tourism, the creative class, and data processing in the U.S. leads to several key takeaways. First, data centers and agritourism have the most potential to increase rural per capita income and employment for rural communities. While most industries generated greater benefits by being located near larger urban neighbors, these two industries also displayed increasing benefits as rurality increased. That is, not only does being close to a large city increase rural incomes and employment, but being more rural also increases agritourism's and data centers' positive impacts on their communities. This may be due to a getaway effect where urban consumers desire agritourism destinations away from the urban sprawl, and land generally becoming cheaper for large data centers the farther from urban centers. Food manufacturing may increase per capita income for rural areas, but only those within 100 miles of an urban center. Evidence also suggests there may be multiple types of rural-urban linkages within food manufacturing, warranting more research into its effect. Similarly, outdoor recreation and the creative class industries displayed not significant influence on rural–urban linkages suggesting further research is needed to understand their roles in community development and their potential to integrate rural economies with urban markets. 
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