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.
I recall chatting with a former Madison School District Superintendent, who, when I asked about learning from rural (far less $) schools, replied that “I would never do that”.