This paper discusses a paper presented by Steven Smith at the 1995 annual meeting of the Northeastern Agricultural and Resource Economics Association. Smith presented key issues that have changed the context for rural development policy in the United States. We propose that the induced innovation model of economic development can be used to identify a variety of ways that LGU's can contribute to developing and delivering appropriate rural economic development programs. These ways include assisting rural communities in identifying comparative advantage, identifying and/or providing relevant resource persons, delivering appropriate educational programs and conducting research on important issues. The success of LGU's in these areas will depend on their willingness to undertake these activities and their ability to recognize and adapt to current to future economic and social realities affecting rural America.