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Rural North America has undergone a major economic transformation over the past century due to labor-saving technological progress, reductions in transport costs, and rising household incomes. The results are greater rural economic diversity, selected rural population decline, increased rural-urban interdependence, emergent exurban areas, and amenity-led rural growth. We summarize key research insights and provide a selected review of the economics literature over the past 100 years with a focus on this economic transformation of rural places, its implications for rural communities, and key modeling innovations and applications. The many important contributions by agricultural economists are highlighted.

Innovations that reduce costs of transport from rural locations may also reduce transport costs to rural areas. As transport costs fall, producers can afford to concentrate and achieve economies of scale. This paper explains an initially negative, but ultimately positive, relationship between reductions in transport costs and rural development. A two‐region general equilibrium model with firm and worker spatial mobility highlights the firm and household location implications of costly transport‐service use by both industry and agriculture in the context of scale economies and product differentiation. The computable general equilibrium model is initialized and verified with a bi‐regional social accounting matrix and then used for simulations. Changes in relative transport costs are shown to affect relative regional wage rates, thus also determining the location of “production‐cost‐oriented” firms.

The export base hypothesis is that a region’s growth is led by export demand, given perfectly elastic factor supplies. It is a rationale for “sector-based” rural development policies, and it is formalized by input-output models. But it is contested by modern trade, migration, and growth theories, and there is little research about its empirical relevance. We investigate the hypothesis for contemporary U.S. rural development by estimating the influence of export sector employment on subsequent rural development outcomes. The results reject the hypothesis that emphasizing traditional export employment results in rural growth, reject the assumption of perfectly elastic factor supply, and support alternative explanations. Copyright 2009, Oxford University Press.

How does the research about rural economies in developed countries compare to urban/regional economics? What can the new generation contribute? This paper briefly reviews modern research concerning rural development in one country, the U.S., and reports indicators of U.S. rural distress. It examines the market forces and market failures that cause rural distress and that may limit the applicability of existing urban/regional theories to rural problems. A feast of uniquely rural issues that require-and should inspire-theoretical innovations in rural, urban, regional, and spatial economics are identified and discussed. Copyright (c) 2010, Wiley Periodicals, Inc.