1. The State of the Appalachian
Economy
Alison F. Davis, PhD
Executive Director
Community and Economic Development Initiative of Kentucky
Associate Professor
Department of Agricultural Economics
Presented to Appalachian Funders Network

2. Some promising news…

5. County Level

8. Population Change

10. Relative per capita income

12. 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.

13. 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 %

14. The Urban/Rural Difference:
A County Level Investigation
Urban Rural Very Rural
Population 50,498 20,841 14,434
Population 5 years in same house 54.5% 57.9% 63.8%
Population per square mile 221.8 80.6 52.3
People of all ages in poverty, 2004 13.2% 16.8% 22.3%
Median value of home, 2000 $90,403 $70,614 $57,879
Median household income, 2004 $42,148 $31,537 $24,609
Males 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 $7,710
Manufacturing Value of Shipments,
2007 $18,760 $17,012 $6,852

15. Quality of life variables
Urban Rural Very Rural
Average travel time to work (minutes) 25.88 25.25 27.75
Uninsured Rate (health) 12.42% 13.6% 17.0%
Drug Arrests (per 100,000 pop) 940 1143.9 1063.4
Crime per capita 0.036 0.026 0.016
Mortality Rates (per 100,000 pop) 976.8 1026.7 1063.3

16. Changes from 1990 - 2000
Urban Rural
Income 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%

17. Six Strategies to Improve Appalachian
Economy
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

18. 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

19. VS

20. 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

21. Industrial Recruitment – There are
other ways…
• Economic gardening
• Targeted attraction models
• New business development
• Business retention and expansion

22. Manufacturing Trends

23. Net Job Growth Continued
All Jobs

24. 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

25. 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

26. 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

27. 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.

28. Regional Opportunities
Stronger Economies Together –A USDA Rural
Development/Cooperative Extension
Partnership to work with selected regions to
identify and strengthen their competitive
advantage
Sustainable Communities Program – HUD, EPA,
DOT
Jobs Accelerator/Innovation Program – ETA,
EDA, DOL

29. Of the 22 regions selected in first round 8 are located in Appalachia:
1) Kentucky Highlands
2) Northwest Region Pennsylvania
3) Coal Heritage Region West Virginia
4) Doddridge and Richie Region West Virginia
5) Hardwoods Region West Virginia
6) New River Region West Virginia
7) Panhandle Region West Virginia
8) Buckeye Hills Region Ohio
Phase 2 Includes regions from: Alabama and Mississippi

30. Industrial Make Up

31. Who is your workforce?

32. New framework can move Appalachia
forward
• Civic leadership and engagement
• Asset based community development
• A culture of innovation
• Diversity, access, and inclusion
• Youth engagement
• Wealth creation and retention
• Regional initiatives

33. We must invest in the infrastructure, civic engagement,
leadership development, access to quality health care and
education, natural and built amenities before the jobs come!!!
It’s not splashy but its sustainable!

34. Alison F. Davis PhD
Alison.Davis@uky.edu
(859)-257-7260