Examining the factors of interlocal economic development collaboration in rural areas

Abstract

Understanding collaboration among local governments for economic development has been a significant research topic over the last few decades. However, because much of the literature has focused on urban and metropolitan areas, there is little evidence of the factors that influence collaboration among local governments in rural areas. To address this gap, this study examines interlocal economic development collaboration in three rural regions in West Texas, USA, by using a unique survey dataset of these regions. We employ an exponential hurdle model on a set of factors that are expected to predict the probability of and the extent to which cities in rural areas engage in collaborative activities for economic development purposes. We find that a combination of local business diversity, institutional support, and regional competition has a positive effect on the scope of collaboration among our sample of communities, whereas stronger fiscal capacity and greater economic development challenges decrease the extent of their collaboration.