The purpose of this workshop is to describe one Appalachian community's approach to developing a rural economic development strategy for creating jobs through new and expanding businesses in the context of the current recessionary times. The workshop demonstrates methods for executing a community “strategic plan” and visioning process that lead to the identification of thirteen strategies for strengthening local rural businesses and three final community actions (alternative energy initiatives, community food system assessment, and crowdfunding) that can be particularly relevant for replication of Appalachian grassroots actions. This workshop was for the 36th Appalachian Studies Conference on March 22nd, 2013 in Boone, NC at Appalachian State University.

1. Localizing the Rural Economy from
the Inside Out
36th Appalachian Studies Conference
Appalachian State University
Boone North Carolina
March 22, 2013
Peter Hackbert and Jalissa Hunter
Berea College

2. Introduction
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 2

3. Resilience
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 3

4. “at the heart of resilience is a very
simple notion – things change – and
to ignore or resist this change is to
increase our vulnerability and forego
emerging opportunities, in so doing,
we limit our options.”
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 4

5. The Appalachian Region
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 5

6. EPG searches for “real-world”
solutions
• Mission statement -
educating and inspiring
students from Appalachia to
become service-oriented
leaders
• 1,600 liberal arts students
• 150 years
What better way to encourage young Appalachians to start their own businesses than to reach out to them while they’re still trying to figure
out what they should be doing with their lives?

7. The EPG Program defines
“Entrepreneurial Leadership” as:
"A process when one person or a group of
people in a community originate an idea or
innovation for a needed change and influence
others in that community to commit to
realizing that change, despite the presence of
risk, ambiguity, or uncertainty".

8. 3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 8

9. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 9

10. Small Rural Appalachian Community Economic
Development (CED)
Traditional ED Strategy / Tool Direct, Short-term
• Industrial development Economic
• Business retention / expansion Outcomes
• Workforce development • jobs
• Tourism • firms
Economic Development • prosperity
• wealth
Approaches
Alternative ED Strategy / Tool
• Entrepreneurship 1. Recruit firms from the outside
• Downtown development 2. Strengthen/expand existing firms
• Arts / Creative economy 3. Promote development of new firms
•
•
Cluster-based development
Residential development
Other
Outcomes
• social
• civic
• environmental
CD Capacity Building Strategy /
Tool
Indirect, Long-term
• Transportation
• Broadband / Internet / Social Media
• ED finance
• Philanthropy
• Strategic planning
• Leadership development
• Organizational development

11. “Would you tell me, please, which way
I ought to go from here.” asked Alice.
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 11

12. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 12

13. “That depends a great deal on where
you want to go,” said the Cheshire Cat.
Lewis Carroll, Alice in Wonderland
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 13

14. Begin with a vision statement
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 14

15. Possible Community Goals
• Economic Goals • Environment Goals
• Social Goals • Political Goals
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 15

16. Problem Statement
How do rural communities hit hard by the 2008
economic recession approach economic
development?
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 16

17. Review of the Literature
• Scholars Lambe, 2008; Drabenstott & Moore,
2009; Morgan, Lambe, & Freyer, 2011
• Rural local economic development writers
(Shuman, 2012; Cortese, 2011; Moltz &
McCray, 2012)
• Both advance strategies for homegrown
prosperity
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 17

18. Localization
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 18

19. Local Ownership Matters
1. Higher multipliers
2. Great community wealth: Fleming and Goetz
(2011)
3. More dynamic
4. Healthier residents: Blanchard, (2012)
5. Better community planning
6. Greater creativity
7. Greater political participation
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 19

20. Producing better, truer, ways of
measuring economic, environmental
an social performance, is a critical step
in making progress towards building a
better world.
- Joseph Stiglitz, Nobel Laureate in
Economics
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 20

21. How can this be accomplished?
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 21

22. Develop Census Indicators
Go to:
quickfacts.census.gov
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 22

23. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 23

24. Develop Small Business Indicators
Go to:
www.census.gov/eos/www/naics
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 24

25. To learn about NAICS
explore this site
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 25

26. Develop Small Business Indicators
Go to:
www.census.gov/eos/www/naics
www.census/gov/econ/cbp/index.html
Self-Employed
www.censtats.census.gov/cgi-
bin/nonemployer/nonsect.pl
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 26

27. Develop County Business Patterns
Go to:
www.census/gov/econ/cbp/index.html
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 27

28. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 28

29. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 29

30. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 30

31. Develop Small Business Indicators
Pick two or three NAICS categories
• How many small businesses?
• Does the data appear accurate?
• Is the number growing or contracting?
• How to you compare against similar
communities?
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 31

32. Develop Self-Employed Indicators
Go to:
Self-Employed
www.censtats.census.gov/cgi-
bin/nonemployer/nonsect.pl
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 32

33. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 33

34. Develop Small Business Indicators
Pick two or three NAICS categories
• How many categories have small business
growth?
• If the number of categories are growing this is
an indicators of diversification.
• What categories are shrinking?
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 34

35. Environmental indicators
Go To:
www.epa.gov/ncea/roe
www.epa.gov/myenvironment
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 35

36. Other Building Block Indicators
• Local Foods
• Renewable Energy
• Green Building
• Community Capital
• Local Arts
• Independent Retail
• Green Manufacturing
• Human Capacity
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 36

37. City of Berea Case Study
Methods
• County Business patterns from the Census Bureau
• Nonemployer Statistics from the US Census Bureau
• Zip code analysis indicated that all but two of the 392
establishments in Berea have fewer than 500
employees and therefore qualify as small businesses.
• The Census Bureau’s Nonemployer Statistics, revealed
an estimated 1,548 individuals have their own
businesses in Berea, with sales of $47 million per year.
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 37

38. City of Berea Case Study
Methods (continued)
• The IMPLAN Input-Output model unifies
various federal databases and fill in the gaps
• Compare Berea’s economy to composition
sister cities, State of Kentucky, and the United
States as a whole.
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 38

39. Berea’s Profile
• 329 Establishments
• 1,534 Self employed
• 294 Farmers
• 2,500 Public employees
• $413M in wages
• $25M in state and local taxes
• $1.9B GDP
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 39

40. Compared to the USA
• 23% of the workforce is in manufacturing—more
than 2 X the national average.
• Berea also has much greater numbers of people
in education, health, and social services.
• 1/3 less than the national average of its
workforce in the arts, entertainment, and
tourism.
• Finance sector is about 1/2 the national average,
which suggests how little capital is available for
business growth.
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 40

41. Shuman argues in Going Local (1998);
The Small-Mart Revolution (2006)
“ economic development performs best when it
is focused, laser-like, on businesses “ that are
locally owned and import substituting. Local
ownership means that working control of a
company is held within a small geographic area.
Import-substituting means that the company is
focused first and foremost (though not
exclusively) on cost effective production for local
markets.
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 41

42. Leakage analysis
Identifies all those sectors in the economy where a
community is unnecessarily importing outside goods and
services. Every unnecessary import represents a loss of
dollars and a loss of the "multiplier" impacts those dollars
locally.
Represents a loss of other documented benefits that local
businesses bring: knowledge, skills, tax payments,
charitable giving, revitalized downtowns, tourists,
stronger civil society, and more political participation.
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 42

43. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 43

44. BALLE Job Leakage Calculator
5,739 additional jobs
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 44

45. 40 Export Industries
• Manufacturing parts for automobile supplying
the assembly plant in Georgetown, KY.
• Role of Berea College, and many nonprofits
promoting human rights and environmental
protection;
• Presence of a largely retirement population,
nursing homes, funeral parlors, and cemeteries
• Major services sector providing residents
throughout the region (some of whom may be
coming to work in Berea) with child care, taxis,
limited restaurants
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 45

46. 40 Local businesses that could meet
demand
1. Global companies (no headquarters)
2. Professional services (outsourcing pros)
3. Intermediaries (outsourcing warehousing)
4. Tourism (lacks critical mass)
5. Food and retail (not capturing shopper fair
share)
6. Finance (no local insurance, securities brokers)
7. Health Care (need for full-service mental-health-
care facilities)
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 46

47. What If 25% of Berea businesses could
meet 25% of local demand?
IMPLAN MODEL – forecasts 1,398 new jobs
BALLE Calculator – forecasts new 1,435 jobs
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 47

48. Some New Jobs Not Possible
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 48

49. 3 Largest Sectors
Professional services (317)
Wholesale trade (198), and
Tourism (168)
•
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 49

50. Five Clusters – 1,300 jobs
• Goods distribution, warehousing, and trucking
(232 direct jobs);
• Professional services (247)
• Finance, insurance, and real estate (167)
• Local food (103)
• Tourism (60)
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 50

51. Findings
STRENGTHS WEAKNESSES
• Location • Limits to manufacturing
• Manufacturing • Finance gaps
• Education • Empty storefronts
• Public Sector • No fun
• Infrastructure
• Youth out migration
• Civic Culture
• Tourism deficits
• Tourism
• Local businesses • Workforce shortcomings
• Quality of life
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 51

52. Findings
STRENGTHS WEAKNESSES
• Location • Limits to manufacturing
• Manufacturing • Finance gaps
• Education • Empty storefronts
• Public Sector • No fun
• Infrastructure
• Youth out migration
• Civic Culture
• Tourism deficits
• Tourism
• Local businesses • Workforce shortcomings
• Quality of life
3/23/2013 Hackbert, P.H. “Localizing the Rural Economy from the Inside Out.” ASBE Conference, October 5, 2012 52

53. Findings
OPPORTUNITIES THREATS
• Regional growth • Aging population
• Industrial park • Over-focus on corporate
• Entrepreneurship innovation attractions
• Arts and Crafts • Unplanned growth
• Broader approach to tourism • Divisions
• Integrate the college more
thoroughly into the city’s
economic growth
• Partners
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 53

54. Findings
OPPORTUNITIES THREATS
• Regional growth • Aging population
• Industrial park • Over-focus on corporate
• Entrepreneurship innovation attractions
• Arts and Crafts • Unplanned growth
• Broader approach to tourism • Divisions
• Integrate the college more
thoroughly into the city’s
economic growth
• Partners
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 54

55. Conclusion and Action Steps
3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 55

56. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 56

57. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 57

58. Alcohol beverage sale[City-County]
4th Class cities with permits
1. Corbin – Whitley/ Knox 11. Springfield – Washington
2. Central City – Muhlenberg 12. Vanceburg – Lewis
3. Cumberland – Harlan 13. Elizabethtown – Hardin
4. Eminence – Henry 14. Lancaster – Garrard
5. Falmouth - Pendleton 15. Vine Grove – Hardin
6. Madisonville-Hopkins 16. London – Laurel
7. Mt. Sterling – Montgomery 17. Jenkins - Letcher
8. Morehead – Rowan 18. Whitesburg- Letcher
9. Russellville – Logan 19. Vanceburg- Lewis
10. Shelbyville - Washington 20. Somerset- Pulaski
21. Manchester- Clay

59. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 59

60. 3/23/2013 Hackbert, P.H. and J. Hunter. Localizing the Appalachian Economy from the Inside Out, ASA Conference 60