Examining the main economic trends affecting rural areas today and the types of local programmes that are being implemented in response. The lessening of federal government involvement since the Reagan administration has shifted the public policy focus, placing greater responsibility for economic development on local governments. With more states encountering financial austerity, even greater requirements for economic development activities will rest with local governments - especially in rural areas. The long-term effects of these developments on states and localities are analyzed, and suggestions are made for economic development initiatives that local governments can undertake.