A barn decorated with a mural inspired by Grant Wood's painting "American Gothic" in Mt. Vernon, Iowa
A barn decorated with a mural inspired by Grant Wood's painting "American Gothic" in Mt. Vernon, Iowa Jim Young/Reuters

A growing body of research shows that innovative businesses are common in rural areas, and rural innovation gets a boost from the arts.

One of the most persistent myths in America today is that urban areas are innovative and rural areas are not. While it is overwhelmingly clear that innovation and creativity tend to cluster in a small number of cities and metropolitan areas, it’s a big mistake to think that they somehow skip over rural America.

A series of studies from Tim Wojan and his colleagues at the U.S. Department of Agriculture’s Economic Research Service documents the drivers of rural innovation. Their findings draw on a variety of data sets, including a large-scale survey that compares innovation in urban and rural areas called the Rural Establishment Innovation Survey (REIS). This is based on some 11,000 business establishments with at least five paid employees in tradable industries—that is, sectors that produce goods and services that are or could be traded internationally—in rural (or non-metro) and urban (metro) areas.

The survey divides businesses into three main groups. Roughly 30 percent of firms are substantive innovators, launching new products and services, making data-driven decisions, and creating intellectual property worth protecting; another 33 percent are nominal innovators who engage in more incremental improvement of their products and processes; and 38 percent show little or no evidence of innovation, so are considered to be non-innovators.

The first table below charts this breakdown for rural and urban areas. Establishments in urban areas are more innovative, but not by much. Roughly 20 percent of rural firms are substantive innovators, compared to 30 percent of firms in urban areas.

(Data by Tim Wojan and Timothy Parker. Graphic by Madison McVeigh/CityLab)

In fact, the urban-rural divide in innovation may be more a product of the relative size of firms than of geography. The next chart shows this: Rural areas actually have a slightly overall higher rate of substantive innovation for large firms (those with 100 employees or more), while urban areas win out in their rate of substantive innovation by small and medium-size firms.

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Rural areas also have a slight advantage over their metro counterparts in the rate of substantive innovation by the most innovative firms (those that are patent-intensive). That’s because innovation in rural areas tends to be a product of patent-intensive manufacturing in industries like chemicals, electronics, and automotive or medical equipment, while urban areas have higher rates of innovation in services.

(Data by Tim Wojan and Timothy Parker Graphic by Madison McVeigh/CityLab)

Of course, innovation concentrates and clusters in certain rural areas, just as it does in cities and metros. In a 2007 study, Wojan and his collaborators identified 100 or so rural creative havens, such as Woodstock, New York, and the area around Telluride and Silverton, Colorado. These rural creative centers tend to be in relatively close proximity to and have good connections to major metro areas; are home to a major university or college; or have considerable natural amenities which draw people to them.

Whereas arts districts in urban areas are typically in high-density, mixed-use neighborhoods with lots of foot traffic, rural artistic districts tend to crop up around natural, physical, and recreational amenities. According to a 2017 study by the National Endowment for the Arts (NEA), the likelihood that a rural county will contain a performing arts organization is nearly 60 percent higher if the county overlaps with a forest or national park.

The most notable difference between the rural and urban arts districts is the distance one must travel: Rural arts organizations reported that 31 percent of their visitors travel “beyond a reasonable distance” to visit, compared to 19 percent in urban areas.

(Data from NEA. Graphic by Madison McVeigh/CityLab)

If anything, the arts may be even more important to rural innovation than they are to urban innovation. While my own research has drawn a connection between the arts and clusters of innovative high-tech startups in urban areas, Wojan and his colleague Bonnie Nichols’ data suggests an even stronger connection between arts and innovation in rural areas. And according to the NEA paper, probability that a rural firm will be a substantive innovator rises from 60 percent in rural counties with no performing arts organizations to nearly 70 percent for those that host two or three, to as high as 85 percent if a rural county hosts four or more.

Furthermore, the share of firms that are highly innovative rises sharply alongside performing arts organizations in rural areas. The probability that a rural business will be highly innovative increases from 17 percent to 44 percent as the number of performing arts organizations in a rural county increases from zero to one. When that number rises to two, the probability that a business will be highly innovative grows to 70 percent or higher.

(Data from NEA. Graphic by Madison McVeigh/CityLab)

Ultimately, Wojan and company’s analysis find a strong statistical association between the arts, innovation, and economic dynamism in rural areas. And this leads them to conclude that the arts are a direct force in rural innovation, not just an indirect factor that helps to attract and retain talent.

Artists and creatives in America have long sought out rural places to fuel their creativity, from the Hudson River School painters to Bob Dylan and The Band developing their music in Woodstock. But the arts in rural places are not just a byproduct of the scenery; they play a key role in spurring the innovation that ultimately leads to economic development and rising living standards. The myth that urban areas are creative and rural areas are not is just that: a myth.

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