Appalachian Regional Commission: Lessons for Regional Planning

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Appalachian Regional Commission Lessons for
Regional Planning in the Era of Globalization
by Greg Bischak, Ph.D. ARC Senior
Economist March 3, 2006
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The Appalachian Regional Commission

• The ARC is a federal-state partnership created in
  1965 to promote the social and economic
  development of the 13-state Region.
• Funds a wide range of programs
• A 3,090 mile Appalachian Development High System
• Physical infrastructure projects
• Education and human resource development
• Entrepreneurial development
• Civic and community capacity development
• Health demonstration projects and initiatives.

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• 13 States

• 410 counties

• 200,471 sq. miles

• 23 million people

• 680 billion GRP

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By the mid 20th century, Appalachia had become a
region apartgeographically and
statistically. - PARC report, 1964

• One of three Appalachians lived in
• poverty, 50 percent higher than the
• national average.

• Unemployment was 40 percent
• higher than the national average.

• Between 1950 and 1960, net
• migration data showed a population
• loss in the region of more than two
• million people.

• The high school dropout rate in
• Appalachia exceeded 50 percent.

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Distressed Counties in Appalachia

• Distressed counties
• 150 or more US unemployment rate
• 150 or more US poverty rate
• 67 or less per Us capita income

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Measures of Progress

• The regional poverty rate has been cut by more
  than half, from 31.1 in 1960 to 13.6 in 2000.
• The percentage of adults with a high school
  education or more has increased from 45 in 1960
  to 77 in 2000.
• The per capita income gap between Appalachia and
  the U.S. has been reduced from 78 of the
  national average in 1965 to 85 in 2005.
• Appalachian employment has grown by 67 since
  1969.
• The infant mortality rate has been cut by
  two-thirds.

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Appalachian Development Highway System

• 3,090 miles
• 2,480 miles open

Interstate System
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County Economic Status, Fiscal Year 2006
Economic Status
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Appalachias Economy, 2005

• Total employment of 12 million workers in 2005.
• Regional employment is 7 of US workforce in
  2005.
• Employment is increasingly service-based, growing
  from 38 in 1990 to 50 in 2000.
• Appalachias total employment is more
  manufacturing-dependent than the rest of nation
• 15 of employment vs. 10 for the rest of the
  nation in 2004.

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U.S. and Appalachian Economic Performance
2002-2005
Source Regional Economic Models Inc
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Economic Restructuring of Regional Economy

• Rebound in job growth in 2004 and 2005 after slow
  period during 2001-2003.
• Manufacturing industries experiencing modest
  revival, particularly durable goods.
• Largest job gains in the service sector,
  particularly in business services, finance,
  health care and professional services.

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Source Regional Economic Models Inc
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Source Regional Economic Models Inc
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Import Competition from Low-Wage Countries
Expanding

• Import competition from low-wage countries have
  especially affected firms in
• Apparel and textiles,
• Primary and fabricated metals,
• Furniture and wood products,
• Rubber products and leather goods,
• Electronic components, among others.
• Forecast of future exposure based on recent
  import growth of number of products by industry.

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Appalachian Exposure to Manufacturing Imports
from Low-Wage Countries
Projected Exposure to Low-Wage Imports
Quartiles of Exposure
4th High Exposure
3rd
2nd
1st Low Exposure
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Appalachias High-Tech Industry Clusters

• Chemicals and plastics
• Motor vehicles and related products
• Industrial machinery
• Information technology and instruments
• Aerospace
• Communications services and software and
• Pharmaceuticals and medical technologies

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Population Change 1990-2000

• Appalachias population grew by 1.9 million since
  1990.
• Population in 2000 was 22.8 million people.
• Gain was 9.1 increase since 1990 vs. US increase
  of 13.2.
• Region is aging faster than the rest of the
  nation, 14.3 65 yrs vs. 12.4 for rest of
  nation
• Share of prime-age workforce is shrinking
  (workers 24 to 55 years of age).

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Demographic Trends

• In the 1990s, population trends have improved in
  non-metro America, reversing the predominately
  negative trends of the 1980s.
• But out-migration remains a problem in very rural
  counties some adjacent to metro areas.
• Out-migration of college-educated youth remains a
  problem for some rural counties.
• Poverty rates have improved in many chronically
  distressed counties, but major pockets remain.

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Percentage Population Change in Appalachia
1990-2000
Percent Change
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Population Percent Change by County, 2000 to 2004
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Urban-Rural Development Issues

• While urban areas account for 2.9 of US land
  use, urbanization affects 17 of the nations
  farmlands.
• Non-metro towns and small cities (pop. 10,000 to
  49,999) are the economic hubs of rural areas
  they are increasingly being affected by
• Exurban residential housing development
• Manufacturing branch plants (new/closed)
• Big box, outlet malls, franchise development
• Highway interchange development.

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Urbanization Impacts on Rural Areas

• Ex-urbanization impacts on
• land use, conservation
• transportation and housing choices
• community design, and
• infrastructure financing and sustainability.

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Highway Access in Appalachian Counties
Interstate
ADHS
County Access
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Social Demographic Challenges in Rural America

• A widening gap in college completion over the
  last decade as compared with metro areas.
• More rapid aging of the rural population will
  strain the health system and fiscal capacity of
  local governments.
• A widening gap in job creation of high-wage jobs.
• A persistence of high poverty rates and low per
  capita income in several non-metro areas.
• MS Delta, Central Appalachia, Rio Grand, Four
  Corners.

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College Completion Rates 2000
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Human Resource Development Implications

• Because Non-Metro college-age population is
  forecast to grow slowly over the next decade, the
  main human resource challenges are
• To improve college-going rates
• To provide further educational opportunities for
  those with no college or some college to obtain
  training or a degree
• To promote entrepreneurial development in
  high-growth sectors
• to provide additional economic opportunities for
  highly educated young adults to stay in non-metro
  areas.

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Economic Development Roles of Higher Education

• Two-year community and vocational colleges
  integrate advanced education with occupational
  training (120 in the Region).
• Four-year comprehensive colleges help focus
  technology transfer activities and
  entrepreneurial efforts (32 in Region).
• Over 100 four-year liberal arts colleges provide
  very good access to higher education, especially
  in counties with higher poverty rates.
• There are 15 Research Universities located in the
  Region, and double that number adjacent to the
  Region.

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Persistent High Poverty Non-Metro Counties
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Key Regional Development Issues

• Size and diversity of national economy will
  foster near-term growthalthough favoring the
  metro areas.
• Improving educational attainment and
  knowledge-based business development will be key
  to fostering regional growth.
• Communities confronting large-scale restructuring
  and urbanization spillovers need
• Advance planning for communities vulnerable to
  import-competition, plant closures, and
  urbanization
• Expanded assistance for local diversification
  efforts
• Better calibrated retraining and assistance for
  displaced workers
• Entrepreneurial support for new business
  formation
• Land use planning in non-metro areas zoning vs.
  conservation trusts.