Producer Services Development and the Role of Telecommunications: A Case Study in Rural Washington

Abstract

ABSTRACTInformation‐intensive producer services, which constitute one of the fastest growing components of the U.S. economy, have been identified as a potential contributor to economic development in rural areas. This issue is examined in a case study of a community in rural Washington State. The findings indicate that producer services have not been decentralizing to rural Washington, and that opportunities for producer services development in rural communities are limited because of the inaccessibility of markets, smaller pools of skilled labor, and the lack of agglomeration economies. Opportunities for producer services are greatest in large rural communities with high‐quality telecommunications systems. Although the quality of telecommunications systems is important to the economic health of communities, advances in telecommunications can be a two‐way street for rural America. While telecommunications improvements increase a rural community's access to information and make it possible for rural businesses to more easily serve non‐local markets, they can also make it easier for firms located in urban areas to serve rural markets via branch offices or through the telecommunications system.