Abstract

Social capital, political capital, and economic capital are three primary influences on local economic development in small rural towns, but while political and economic capital have positive effects, social capital tends to have negative effects. To induce local services development, then, policy emphases should be placed on political capital development rather than on social capital development.

Issue

Local economic development concerns many local leaders, and its determinants concern many academic researchers. Additional local commercial services, a form of local economic development, conveniently provide people in rural towns and communities with reasonably priced products, and also add to local tax bases thus indirectly providing other public services for the public. Previous studies emphasized social capital as important in affecting local economic development. Our study last year challenged such importance; we found social capital negatively, not positively, related to local commercial services development in towns of Cayuga County, New York, between 1996 and 2001. On the other hand, political capital, especially in terms of greater competition in local government affairs, positively influenced such local services development. Our study is also important to both local leaders as well as researchers in underscoring the controversy over effective ways local leaders can influence local services development.

Response

In 2004, we studied the empirical relations of social, political, and economic capitals in 23 rural towns of Cayuga County, New York. An economic capital measure came from the Census, social and political capital from questionnaires to town leaders, and commercial services growth from data by driving the towns in both 1996 and 2001. Emily Dixon and I produced two indicators for economic development: one on changes in commercial services scales, the other on changes in total numbers of commercial services whether they scaled or not. These two measures overcame traditional ecological measurement problems where commuting highly influences job and income measures from Census data. Sarah Holtz and I used multiple regression techniques, and found that social capital, economic capital, and political capital affected economic development measures about equally. That social capital was negatively related to economic development, and economic capital and political capital were positively related were consistent with findings from our previous studies on other counties in the Northeast United States.

Impact

The paper by Eberts and Holtz delivered at the Annual Meetings of the Rural Sociological Society, finding a negative, not positive, relationship with local economic development challenged previous findings of the effects of social capital did draw attention from some community researchers in that we were asked to submit the paper to the Journal of the Community Development Society. Thus, even if its impact is not yet determined, this paper has received attention from at least certain community development researchers. In addition, in Cayuga County, New York, we have received the attention of the directors for overall county planning and for county economic development planning, as well as the executive director of Cornell Cooperative Extension in Cayuga County and the program leader for small business programs. These officials helped us collect data for the paper, have received copies, and personal briefs from us are being planned. They indicated much interest and our planned meeting will be on generating a strategy for implementing work with local leaders.

Funding Sources

• Federal Formula Funds - Research (e.g., Hatch, McIntire-Stennis, Animal Health)

Key Personnel

• N/A