David Freshwater

SOCIAL CAPITAL AND ECONOMIC GROWTH: A COUNTY-LEVEL ANALYSIS

The effect of social capital on economic growth is examined using linear regression analysis and U.S. county-level data. Results reveal that social capital has a statistically significant, independent positive effect on the rate of per-capita income growth.

State-Level Determinants of Entrepreneurship and a Preliminary Measure of Entrepreneurial Climate

State and local governments increasingly look to entrepreneurship as a means of stimulating economic growth. However, can the public sector play a role in promoting entrepreneurial activity—and if so, what should that role be? The authors investigate independent effects of financial and human entrepreneurial capital and ideas on entrepreneurial activity in the 50 states. Financial entrepreneurial capital has an inverse U-shaped relationship with entrepreneurial activity, suggesting there are limits to using increasing amounts of financial capital to stimulate entrepreneurship, all else being equal. The authors rank each state in terms of predicted and actual entrepreneurial activity scores and propose a preliminary measure of the entrepreneurial “climate” of each state. Although most states are ranked near where casual analysis might place them, the authors find that others have predicted values that differ significantly from actual values. This suggests that climate may be an important factor in stimulating entrepreneurial activity.

Factors Influencing Local Government Cooperation in Rural Areas: Evidence from the Tennessee Valley

Various forms of cooperation among local governments have long been advocated as means to aggregate resources and demand in rural areas so that public services and infrastructure can be improved. This research assesses the degree of multicounty collaboration in rural parts of the Tennessee Valley. It uses both a regression model and key informant interviews to establish the factors that stimulate and impede collaboration. Our work finds that while there is considerable collaboration already taking place in the Tennessee Valley Authority region, there are factors, such as a lack of strong advocates for cooperative projects, suspicion of neighboring communities, and differentials in available resources that impede collaboration. Conversely, there are supporting factors, including financial inducements, opportunities for officials to interact, and the presence of a neutral facilitator that can increase the amount of collaboration.

Farm Production Policy Versus Rural Life Policy

For more than two decades, the Rural Development Division of the Economic Research Service of the U.S. Department of Agriculture, along with most of the university community engaged in rural development research, argued that farm policy is no longer sufficient rural development policy. At the end of the 1980s, it appeared that continuous repetition had made an impact. The 1990 farm bill contained a title that included far more rural policy than had been seen since the 1970s, and members of Congress actually appeared to have become comfortable talking about the need for a rural policy that was something other than farm policy. Similarly, in the early 1990s, the Canadian government created a rural secretariat within Agriculture Canada that was to coordinate the activities of all ministries when those activities

Cooperatives in Rural Community Development: A New Framework for Analysis

Although cooperatives are viewed as an important vehicle for community development, the relationship between cooperatives and communities is a neglected research issue. Because of this neglect, no framework for analysis of the relationship between cooperatives and communities exists. We present case studies of non-agricultural cooperatives in rural areas that provide some general insights into the innovative activities of successful cooperatives in rural community development. The case studies help define a new framework for analyzing the complete impact and efforts of cooperatives as community development agents. In contrast to the typical unifunctional and multifunctional categorization of cooperatives, our framework identifies two main categories of cooperative community development activities: unintentional, by simply organizing a business as a cooperative, and intentional, by creating community development programs. Cooperatives in this latter group are further sub-divided according to how closely the development activity is related to their core function.

Self-Organization and Community-Based Development Initiatives

The self-organization paradigm, a theoretical framework with roots in biology and physics, is proposed to have relevance to understanding change in social systems. The processes and design features associated with self-organization can be used to describe the dynamics of social groups and organizations, especially in cases where non-marginal change disrupts the basic structure of a community. Self-organization refers to the ability of a complex system, when exposed to severe shock, to find a new equilibrium that may be far from its starting point. When applied to economic systems it leads to a major shift in perspective, from a search for ways to return to the prior equilibrium, to a search for a new one. Recent advances in our understanding of community-based development initiatives are shown to be consistent with the notion of a self-organizing system. In this article, we discuss the conditions necessary for this type of approach to work When development is seen in this context, the roles of community d...

The Rural Economic Capacity Index (RECI) A Benchmarking Tool to Support Community-Based Economic Development

Economic development practitioners and theorists recognize that community-based strategies offer the best opportunity for rural economic development. But, rural communities also need assistance in identifying and implementing their strategies. Two key needs are financial support and technical assistance. In this article, the authors describe a benchmarking tool that provides rural communities in Newfoundland and Labrador, Canada with a means to identify their individual strengths and weaknesses, and how they compare with immediate peers. This is the typical benchmarking function, but the tool also provides a way to show individual communities the benefits of regional agglomerations at different levels of geography. Unlike most benchmarking exercises that simply provide lists of indicators, the authors link the indicators through a simplified structural model of the local economy. By focusing on composite indicators, the Rural Economic Capacity Index provides community leaders with a sense of the “big picture” that can help them in the process of framing a development strategy.

Can continuation of GSE status for the farm credit system be justified

This article reviews the development and future of the Farm Credit System (FCS) as a government sponsored source of credit for American agriculture. While agriculture is now a minor sector of the U.S. economy, and there is considerable competition for the FCS from other lenders suggesting no further need for GSE status, it still may be possible to argue that there is some ongoing need. Although credit market imperfections are no longer as clear cut as in the past, they may still act as an impediment to a desirable allocation of capital. Consequently, refocusing the FCS may provide a relatively efficient form of government intervention that can enhance capital flows in rural areas.

Is a revised mandate for the US farm credit system needed

The Farm Credit System (FCS) underwent a major financial crisis in the mid-1980s, after having exhibited a strong financial position over the prior 50 years. Since 1990 the System has returned to profitability, but its inherent nature and underlying changes in agriculture and the financial services industry suggest that it remains vulnerable to future losses. To improve its viability we suggest that in the near term the FCS should be given a broader mandate to diversify its loan base in rural America. In the longer run the system may need to give up government sponsored enterprise status in order to remove all restrictions on lending eligibility and improve its chance of survival.