This presentation was featured at the 11th OECD Rural Development Conference held on 9-12 April 2018 in Edinburgh, Scotland (UK). More information: www.oecd.org/rural/rural-development-conference/

1. The Green Economy – Useful,
But Only Part of the Solution
11th OECD Rural Development Conference
Edinburgh, Scotland
April 9-12, 2018
David Freshwater, University of Kentucky

2. The Evolution of “The Next Best Thing” in
Economic Development Strategies
• 1970s – inward investment by relocating large industrial plants
• 1980s – retaining and attracting small and medium businesses
• 1990s – fostering clusters of small and medium size businesses
• 2000s – New Economy – strengthening ICT
• 2010s – Green Economy
Each of the previous approaches was sensible in certain places and in
specific conditions, but none proved to be a general success. We
should probably expect the Green Economy to be similar to its
predecessors.

3. renewable resources
sustainable
innovative
carbon neutral
Some Common Attributes of Green Growth
The larger the number of attributes the smaller the
union set.

4. What conditions does the Green Economy
require? Can rural areas provide them?
Needs
• Open land
• Good connectivity – roads,
internet, transmission lines
• General purpose workers, but also
some specialized skills
• Specialized support services in
scientific and business activity
• Stable funding for research,
prototyping and implementation
Capabilities
• Open land
• Connectivity is limited in many
rural regions
• General purpose workers are
available, but skills are narrow
• Specialized support not available
locally
• Local sources of funding for
anything other than consumer
finance is limited

5. Some local negative impacts from green economy
in rural regions – nationally beneficial, but perhaps
not locally.
• High incidence of respiratory problems in regions where sugar cane is
harvested for bio-fuel.
• Loss of visual amenities for tourists in regions where large scale wind
farms are located.
• Reforestation in regions that have been permanent pasture for
centuries alters local ecosystem and alters traditional landscape.
• Loss of jobs in regions that specialize in fossil fuel production leading
to economic and social decline.

6. Aquaculture - Norway
Wind Power – Prince Edward Island Rock Climbing – Red River Gorge, KY
Cow Power - Vermont
Precision Agriculture

7. When has green growth been successful?
• Strong initial endowment of useful resources – land, climate, sufficient
remoteness to allow a new opportunity to be tried.
• Focus on viable business model, not on maximizing subsidies or job creation.
• Able to build on existing local capabilities in a complementary way.
• Ability to use subsidies in early stages to figure out how to: reduce cost, increase
market demand, and improve product and technology to achieve profitability.
• Activities that are not subject to large scale economies – hard to achieve in rural
areas due to small labor force and distance from markets
• Capacity to use local skills where possible and to attract or train additional
workers to provide missing skills.
• Sensitivity to local culture and values leads to projects that gain local support.

8. Smart specialization is the best current rural
development strategy
• Smart specialization argues for identifying current or potential
comparative advantages, investing in strengthening these sectors and
encouraging entrepreneurial activity to support innovation.
• Rural areas:
• can only be competitive in a few activities because they are small economies,
• have an advantage in resource based sectors,
• have to be low cost producers to capture distant export markets,
• rely on small firms (< 250 employees), and,
• depend on local entrepreneurs as the best source of innovation.