The role of schooling in the economic development process has been targeted as essential in both human capital theory and modernization theories. Research into the nature of underdevelopment in Central Appalachia has provided a basis for debate among regional scholars as to its causes and consequences, yet serious discussion of pre-modern structural conditions of many rural and Appalachian schools is almost non-existent. This paper briefly reviews the themes and theories surrounding the underdevelopment issue, and provides an illustrative case study on the economics and politics of underdevelopment in the East Tennessee school district of "Clinch County." The results suggest that: (1) historically, schooling was largely controlled by local families, churches or "outside" missionary forces, and contemporary public education is still influenced by this tradition; (2) the school system has been poorly financed and lacks facility and staff; (3) many modern and professional educational characteristics are visibly lacking, reflected in poor administrative policies and leadership; and (4) modernization models that posit schools as an independent force in the development process should take more factors into consideration, such as historical, cultural, economic, and political circumstances surrounding public education. This paper includes a list of 58 references. (ALL)