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The article presents a discussion on the impact of new state prisons on rural economic development in the United States. The decade of the 1980s was devastating to rural towns in the U.S. The plunge in agricultural revenue and the need to repay expensive loans taken out during the booming 1970s sent many farmers into bankruptcy. Rural towns lost population, businesses, and tax revenue. State, federal, and non-profit agencies encouraged rural communities to diversify their economies by developing non-agriculture based industry. Many followed this advice and eagerly pursued manufacturers--viewed as the industry with the highest multiplier effect and hence the industry likely to have the greatest positive impact on the local economy. At the same time, another major change occurred in the United States--a dramatic increase in rates of incarceration. From 1980 until 1995, the number of inmates in prisons and jails grew by 5 to 6 percent per year. Prior to the 1980s, prisons were generally built in metropolitan areas. The logic was that it was convenient and economical to locate prisons where most of the crime was committed. Many rural communities desperate for economic development have turned to formerly resisted options, such as influencing the state locate prisons in their area to revitalize their local economies.