Wednesday, October 25, 2017

Large rural manufacturers (100+ jobs) are just as innovative as urban ones, if not more so

"Large manufacturing firms in rural America are at least as likely as similar urban firms to use innovative methods that can contribute to job creation and increased earnings," Bryce Oates and Tim Marema write for The Daily Yonder, citing a new report.

The Department of Agriculture's Economic Research Service looked at data for non-farm rural economic sectors like manufacturing and services in 2010-14, when the overall economy was recovering from the Great Recession. Most of the rural manufacturers studied were in chemicals, pharmaceuticals, computers, plastics and textiles.

The results? About 53 percent of rural manufacturers with more than 100 employees were 'substantive innovators', compared to 49 percent of similarly sized urban manufacturers. "That means those firms did things like reform their business practices based on customer feedback, create new products or significantly modify old ones, analyze data to evaluate progress and efficiency, and use trade-secret protections like non-disclosure agreements or non-compete clauses," the Yonder reports.
USDA graphic; click on it to enlarge.
High scores in innovation matter because, as the study also showed, job growth is faster in highly innovative rural industries. During the time period studied, innovative manufacturers added 153,736 jobs, while non-innovative manufacturers added 130,345 jobs. "The strongest employment growth in the rural innovation sector during the economic recovery period came from transportation equipment, beverages and tobacco, machinery manufacturing, scenic/sightseeing transportation, fabricated metals, and data processing. For the non-innovation sector, the strongest growth was seen in mining support activities, water transportation, oil and gas, and pipeline activities. Significant decreases were found in the rural communications sector, including publishing, broadcasting, printing, and telecommunications," the Yonder reports.

The results are preliminary and will need more study, but it challenges the assumption that urban employers channel advantages like better internet connectivity or more potential skilled workers into more innovative practices, the Yonder reports.

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