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Measuring Economic Distress: A Comparison of Designations and Measures

Amy Glasmeier, Lawrence Wood, Kurt Fuellhart

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Federally Designated Counties with High Economic Distress (EDA 5A & 5B and Economic Health Index)

Summary: This paper explores the use of different measures of economic health and distress primarily in relationship to rural areas. It begins with a quick review of some of the more common measures used by organizations concerned about economic distress. It then investigates a measure we developed in earlier research for the Appalachian Regional Commission that was subsequently employed in a comparison of the Economic Development Administration's distress designation, which qualifies counties and communities for funding under the agency's programs.

The paper concludes with brief comments about the overlap and differences among place-based distress measures used by agencies and organizations. Perhaps not surprisingly, we found that regardless of the measure used, there is a core pool of long-term economically distressed counties in the U.S. In light of this fact, over the last 40 years political exigencies have forced policy to be increasingly flexible and inclusive, often enlarging the number of places eligible to receive funding and thereby diluting the efficacy of place-based policies. In the case of such policies, the meaning of these designations of distress has often become more blurred and imprecise over time. Targeting places of greatest trouble or need has been largely abandoned and replaced with a designation that emphasizes cyclical downturn rather than structural impediments. The distribution of dwindling pools of resources has become increasingly diffuse and thus less able to demonstrate real impact over time.

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