Industrial Diversification in Nonmetropolitan Counties and Its Effect on Economic Stability

Applying indexes of economic instability and industrial diversification to Idaho's forty-three nonmetropolitan counties, this paper tests the hypothesis that unemployment is more stable in a more diverse economy. While results support the hypothesis, other aspects of a county's economic structure are just as influential. Indiscriminate diversification will not necessarily bring economic stability. Key words: economic stability, industrial diversification, nonmetropolitan, rural development. Interest in economic diversification has in-creased in nonmetropolitan areas because of unstable and generally declining employment opportunities in the traditional resource based industries of agriculture, forestry, mining, and related manufacturing industries. Many non-metropolitan counties depend to a large degree on one of these industries as their economic base (Bender et al.). The sensitivity of rural unemployment and employment to swings in the business cycle has been examined by Fin-deis. She concludes that communities must fo-cus not only on providing jobs but on provid-ing stable jobs. Communities and state and local economic planners concur and have made diversification a focus of development efforts. Stability implies that employment and in-come in a community are not subject to ex-treme swings over a business cycle (Tiebout). Diversification-a wide(r) variety of industrial categories-is seen as a means to achieve eco-nomic stability or to cushion the adverse ef