Estimating Rural and Urban Minnesota's Interdependencies, by Kate Searls, Minnesota Rural Partners, March 2011
This is the report of a study, funded by US Dept. of Agriculture Rural Development, to document the degree to which rural and urban areas are economically linked. The study looked at Minnesota, but the conclusions apply to Wisconsin as well. Key findings:
- Rural Minnesota provides critical employment in a number of the most sought after industry sectors. Forty percent of Minnesota’s total employment in 17 targeted industry clusters takes place in rural Minnesota.
- Well over half of the state’s jobs in the following clusters are located outside the urban region:
- Education and Knowledge Creation
- Energy (Fossil and Renewable)
- Arts, Entertainment, Recreation and Tourism
- Agribusiness, Food Processing & Technology
- Forest and Wood Products
- Glass and Ceramics
- Forty-seven percent of Minnesota’s manufacturing cluster output originates in rural Minnesota.
- Minnesota’s urban region receives substantial economic bene"ts from improved prosperity among its rural neighbors.
- If rural Minnesota’s manufacturing cluster experiences a 6 percent growth in output ($1 billion), the urban area picks up 16 percent of all the jobs gained and 38 percent of all additional output.
- The reverse is also true: a $1 billion decrease in manufacturing output in rural Minnesota results in 1,043 jobs lost and a loss of $207, 822,848 in revenue among Twin Cities area businesses.
- Certain clusters have a footprint spread more evenly between rural and urban regions. For instance, agribusiness has very little output originating in the urban region (only 15 percent of the total statewide output), while manufacturing is almost evenly split (53 percent of the total statewide output originates in the urban region).
- Even though $1 billion is a smaller change in output for the agribusiness cluster (3 percent) than it is for the manufacturing cluster (6 percent), those billion dollars of additional agribusiness output generate 12 percent more subsequent dollars of spending captured in Minnesota and 13 percent more new jobs than would the same dollar value increase in manufacturing output.
- The rural urban distribution of a cluster’s suppliers varies depending on the industry cluster.
- Over three-quarters of agribusiness’s subsequent increase in output (the statewide “ripple effect”) comes in the form of increased business-to-business sales. More than three-quarters of that stays in rural Minnesota.
- Almost two-thirds of manufacturing’s “ripple effect” comes in the form of increased business-to-business sales. Nearly half of manufacturing’s increased business-to-business sales occurs in the urban region.
- Increased consumer spending and investment activities, as a result of increases in agribusiness and manufacturing output, benefits Minnesota’s urban region in fairly similar ways.
- Urban Minnesota realizes close to 30 percent of the additional consumer spending and investing activity due to an increase in either rural manufacturing or rural agribusiness output.
- The urban jobs added due to rural output increases were very similar between agribusiness and manufacturing.
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