Related Links

• Investing in Rural America Webinar Series: Economic Development in Rural Communities
• 2026 Investing in Rural America Conference
• Center for Rural Economies

Transcript

Tim Sablik: My guest today is Daniel Davis, the group vice president for regional economics and director of the Center for Rural Economies at the Richmond Fed. Daniel, welcome back to the show.

Daniel Davis: Thanks for having me back, Tim.

Sablik: When we last spoke, the Richmond Fed had just launched the Center for Rural Economies and the Investing in Rural America webinar series. Those initiatives have now been running for almost a year, and so I'm glad to have you back on the show to talk about the topic of the most recent IRA webinar, which is economic development in rural communities.

To start off, can you talk about some of the unique barriers to economic development in rural places that you've identified from conversations with experts and community leaders around our district?

Davis: What strikes me about rural economic development barriers is that they're often the same challenges you see in urban areas: workforce shortages, housing affordability, child care access, and infrastructure gaps. The difference isn't the nature of the problem; it's the resources and organizational capacity available to address it. In a city, you might have a dozen institutions working on affordable housing. In many rural communities, you have maybe one and that organization is doing extraordinary work, but they're often stretched incredibly thin.

There's something else I encounter consistently across the region. In some of our most economically challenged rural communities, years of contraction have created real gaps in local investment infrastructure: the community banking relationships, the entrepreneurial networks, the economic development organizations that would help good ideas become viable projects. When those institutional building blocks erode over time, it creates compounding barriers to the kind of investment that could turn things around.

Part of what we're trying to do through the Center for Rural Economies is understand where those gaps are and how we can help communities build the infrastructure they need to capitalize on the opportunities in front of them.

Sablik: Yeah, that kind of alludes to my next question. Why is it important for an organization like the Richmond Fed to understand these sorts of challenges?

Davis: Our job at the Richmond Fed is to understand what is actually happening in the economy — not just the aggregate story that the national data tells, but the specific granular reality of what economic conditions look like for the people and places across our region. That understanding has direct implications for how we do our work, including the information we offer to the monetary policy process.

When I think about labor markets, for example, I wouldn't just take the wholesale unemployment rate. I try to break it down as much as possible to understand how it's affecting each of the populations in the communities. It points to some of the employment barriers that we're seeing in some communities that the headline number simply doesn't capture.

When I sit across the table from a small business owner in rural Virginia or an economic development leader in western North Carolina and I hear what they're experiencing — the workforce gaps, the financing barriers, the infrastructure deficits — that's not separate from the Fed's work. That is the Fed's work. It keeps us honest about what the economy is actually doing in practice and it makes us a more useful resource for the communities we serve.

Sablik: How have rural communities found ways to overcome these barriers? What sorts of tools and approaches seem to be working?

Davis: Two things stand out consistently. The first is partnership and collaboration. The communities making real progress are almost always doing it through aligned relationships that cut across sectors.

I recently hosted that webinar conversation you mentioned. Wade Creswell, the county executive of Roane County, Tenn., joined me. He described something that really stuck with me, Tim. Roane County had 17 different organizations all focused on economic development as part of their mission and none of them were communicating with each other. He said getting everyone in a room to just admit they had a problem was like an AA meeting. But once they did and once they agreed that nuclear energy was their shared identity — rooted in the region's legacy, going back to the Manhattan Project and the Oak Ridge National Laboratory — everything clicked. They started getting wins and the wins generated momentum. It became a domino effect. That alignment story is as instructive as the outcome itself.

The second is starting by asking communities what they actually need, rather than arriving at a predetermined solution. The answers are sometimes more concrete than you might expect. I've been in conversations in some of our most distressed communities where leaders, when asked about economic development priorities, talked about having a good gathering place —somewhere to get coffee, somewhere to have a real conversation over dinner. Those kinds of civic spaces aren't peripheral economic development. They're part of the foundation that makes a place feel viable and worth investing in. Quality of economic life and quality of community life are more connected than people often give credit for.

I'd also add something I think about in terms of the workforce. One of the most effective approaches is to take the current workforce — people already working today — and upskill them into middle-skill positions that tend to be the open jobs. Then, backfill those positions with folks who have been on the sidelines. It's a ladder approach. It creates movement through the workforce rather than trying to solve everything at the entry level.

Sablik: Lack of capacity is one barrier that I've often heard about when we've discussed rural development on the show in the past. How are the community leaders you've spoken with finding solutions to capacity constraints?

Davis: Creativity is the honest answer, and sometimes necessity drives it. When you don't have the budget for a full-time economic development director, you build a shared services arrangement with neighboring counties. When you don't have resources for a comprehensive workforce study, you partner with a university that has the research capacity you lack. When you can't afford a downtown revitalization consultant, you recruit the expertise that already exists in your community.

Sarah Lucas, who directs the Michigan Office of Rural Prosperity, joined me in that same recent webinar. She describes something that captures this well. Her office runs a grant program — relatively modest investments of around $150,000 designed to get communities to the starting line, things like hiring a grant writer, or bringing on a housing coordinator, or funding a planning process. Those small investments have already leveraged over $22 million in additional funding. In one case, a $50,000 grant for a real estate development manager helped a small nonprofit secure $11 million. That's the scrappiness that rural communities demonstrate when they have even a modest resource to work with.

The Richmond Fed's role, through the Center for Rural Economies and the Rural Investment Collaborative, is to be that kind of outside partner, bringing research capacity, convening power, and connections to a broader network that rural communities don't always have on their own. We're not there to do the work for communities. We're there to work alongside them.

Sablik: Are there any new barriers or opportunities in rural economic development that have cropped up in the last few years?

Davis: Well, the pandemic reshaped things in ways we're still working through. One of the more significant shifts in our region is that many rural areas have seen real population growth — people leaving denser areas for more space, lower costs of living, or the flexibility of remote work. In most cases, that's genuinely good news. More people means more economic activity, more demand for local businesses and services, and potentially some relief from the workforce shortages that rural employers have been dealing with for years.

But growth creates its own set of challenges. When population grows faster than the housing supply, affordability erodes and it often erodes first for the people who have been there the longest. When wages in the remote work economy are higher than local wage norms, it can price long-term residents out of the housing markets they've always called home. The challenge for rural economic development professionals right now is making sure that growth works for the whole community, that the people who were there before the growth arrived don't feel left behind by it.

There's something else worth naming that Wade Creswell raised in our recent conversation: the pace of technological change itself. He made the point that companies going through a two- to five-year planning cycle to locate in a community [are] now facing a world that may look fundamentally different by the time they break ground. That uncertainty increases risk and it may make some projects less likely to happen. I don't have a solution to offer for that yet, but it's something rural economic development professionals need to be paying attention to and building into how they think about the future.

Sablik: You've mentioned some already, but are there other examples of rural communities in our district that have positioned themselves to take advantage of new development opportunities?

Davis: Earlier this year, I was in Halifax County, Va., visiting the Virginia International Raceway and spending some time in South Boston. What I saw were communities that figured out how to build on what they already had.

Virginia International Raceway is not a new idea. It's a track that opened in 1957, closed in 1974, sat overgrown for decades, and then two entrepreneurs saw what it could be and reopened it in 2000. Today, it's a world-class motorsports resort on 1,200 acres, drawing tens of thousands of visitors on a single race weekend. In fact, Car and Driver has called it the finest road course in America. That's a community seeing what it already had and investing in it.

Just down the road in South Boston, Hitachi Energy just announced 825 new jobs at a facility that's been anchored in that community for nearly 60 years — a company that's been there for more than six decades deepening its commitment rather than leaving. That's exactly the kind of anchor institution story that changes what's possible for a region. On Main Street, a historic hotel that's been vacant for two decades is finally being transformed into a boutique destination.

Halifax County is telling a coherent story about its own future: a world-class motorsports resort, an anchor manufacturer deepening its commitment, and a historic downtown coming back to life. That's what asset-based economic development actually looks like in practice.

Sablik: Drawing from all these conversations that you've been having and on the ground research, visiting these places, what advice would you give to rural economic development professionals in rural places who are maybe trying to get started with a new project?

Davis: Start by listening, genuinely listening to what a community understands about its own assets and challenges. The people who live and work in a place have knowledge that no outside analysis fully captures. Honor that knowledge and build from it.

Be honest about what's in your control and what isn't. There are structural forces, demographic trends, global supply chains, and policy decisions at the federal level that no economic development strategy can overcome by itself. Being clear-eyed about that isn't defeatism. It's what allows you to focus your energy on where local action can actually make a difference.

And, build your relationships before you need them. The communities that respond most effectively when an opportunity appears or a challenge arrives are the ones with strong networks already in place.

Alexander Hamilton, who has reached a certain cultural acclaim lately for other reasons, was the first Secretary of the Treasury. He said the local bank should be a facilitator of prosperity in the community. That idea of the local institution as a genuine partner in community economic life is as relevant today as it ever was.

Sablik: Nice working Hamilton into things. [Laughs]

Davis: You got to catch the kids, right?

Sablik: Yeah.

I mentioned at the outset that this topic came from the IRA webinar series. The Richmond Fed will be hosting this year's Investing in Rural America conference from September 30th to October 2 in Asheville, N.C. Would you like to share a bit more about that event and how listeners can register if they're interested in attending?

Davis: Absolutely, and you're right. We're hosting this year's Investing in Rural America conference in Asheville, N.C. and the location feels meaningful.

Asheville in western North Carolina showed the country something remarkable in the aftermath of Hurricane Helene. The storm caused devastating damage across the region in 2024 and the recovery has been real but ongoing — businesses have reopened, the Blue Ridge Parkway is welcoming visitors again, downtown Asheville is active and thriving, and communities throughout the region have demonstrated the kind of resilience that doesn't always make headlines but gets the real work done. Hosting the conference there is a statement of confidence in the region's continued recovery.

On the program, I'm genuinely excited about this year's lineup. Raj Chetty from Harvard will be presenting research on economic mobility and opportunity, including work specifically focused on rural communities. That's a significant contribution to the conversation. We'll also hear from practitioners and leaders from across the country who are doing serious work on rural economic development.

Registration is open through the Richmond Fed's website. If you're listening to this and you work in economic development, finance, workforce or policy in rural areas, this is worth your time.

Sablik: Daniel, thanks so much for taking the time to join me today.

Davis: It's always a pleasure, Tim. I'll just say the work happening in rural communities across the Fifth District gives me genuine optimism; not because the challenges aren't real, but because the people working on them are creative, committed, and clear-eyed about what it takes. The economic conditions in a place determine what becomes possible for the people who live there.