Presentation on Future policy for rural areas made at the 2ème Rencontre d’Automne des Nouvelles Ruralités on 26 October 2017, Valence, France More information: http://www.oecd.org/cfe/regional-policy/

1. Future Policy for Rural Areas
Guillaume Lecaros de Cossio
OECD Regional Development Division
2ème Rencontre d’Automne des Nouvelles Ruralités
26 Octobre 2017, Valence

2. 1. Performance rural regions
• Research methods, data and definitions
• Trends and diagnosis
2. Policy considerations and framework for
action
Outline

3. Environment
Sustainability
Economic
Efficiency
Social
Equity
Regions
Better Policies for Better Lives:
“Productive Economies, Inclusive Societies”
Global Financial
Crisis
Well-being
“How live “
Green growth Inclusive growth,
Inclusive productivity

4. Global Outlook
Global GDP growth 3%
• ¾ pp weaker than av.
in the two decades
prior to the crisis
• OECD GDP growth
close to 2%
Slowdown in productivity
growth in the wake of the crisis
• skills mismatches, sluggish
investment, and declining
business dynamism
Hits wages  this may
exacerbate income , wealth
inequalities and wellbeing

5. Labour Productivity Growth G7
Productivity paradox:
• ↑technology
• ↑skills
• ↑integration (GVC)

6. Rising labour productivity gap between
global frontier and laggards
Frontier firms
forge ahead on
productivity
• Disseminating
innovation
• Adoption and
absorption
• Networks
Regions are key
in this process

7. Regional and Rural Policy in OECD
Regional
Development Policy
Committee (RDPC)
WP Urban Policies WP Rural Policies WP Territorial Indicators
The OECD Working Party on Rural Policy is a unique committee that
discusses rural development policies at an international level.

8. OECD Territorial Reviews:
A series of case studies of regional policy
In OECD member countries :
 20 National Territorial Reviews
 8 Regional Territorial Reviews (NSPA)
 5 Reviews on Regional Innovation Systems
 23 Metropolitan Reviews
 5 National Urban Policy Reviews
12 National Rural Policy Reviews
Alemania, Mexico (2006)
Finlandia, Holanda, Escocia (2007)
China, Italia, España (2008)
Quebec, Canadá (2009)
Inglaterra (2010)

9. Thematic Reviews
 Factors of regional competitiveness
(1) Empirical evidence
-- General trends
(2) Case studies
– Field analysis
– Questionnaires,
– Peer reviewers, experts
• Policy implications:
(3) Implementation
Governance
Promoting growth
in all regions (15)
RURAL-URBAN
Partnerships (16)
Linking RE Energy
to Rural Dev. (15)
The new Rural
Paradigm
Service delivery in
rural regions
Territorial
Approach to FSN

10. Low density economies what are they?
Source: Global Monitoring Report 2013, IMF/World Bank

11. … three types of rural areas present different
challenges

12. OECD Regional Database and Rural Definition

13. Source: Bartolini, D., S. Stossberg and H. Blöchliger (2016), "Fiscal Decentralisation and Regional Disparities", OECD Economics
Department Working Papers, No. 1330, http://dx.doi.org/10.1787/5jlpq7v3j237-en.
Convergence of countries vs. divergence
of regions in the OECD
GDP per capita dispersion is
now greater within countries
than between countries
13

14. There is no clear pattern on regional performance
 Oportunidades y posibilidades de crecimiento existen
en todo tipo de regiones.

15. Convergence forces in low density regions…

16. … driven primarily by rural close to cities.
Convergence forces in low density regions…

17. Convergence forces drive by rural close to cities…
88%
89%
90%
91%
92%
93%
94%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PR PRC PRR

18. The Rural Paradox
The majority of rural regions close to cities and rural remote are not
driven by the paradox: 69% of rural close to cities and 58% of rural
remote experienced both employment and productivity growth

19. What are the key drivers of productivity growth?
 Tradable activities are key for rural close to cities and remote rural
 A minimum level of density is key for economies of scale/scope and delivery of
goods and services.

20. Key drivers for catching-up regions
Initial GDP pc
<75% national av.
A
B
C

21. Summary of trends
 Low density regions display convergence trend:
 there is growth potential
 No systematic evidence of rural paradox
 sustainability is possible
 Rural close to cities particularly dynamic
 Growth of rural regions and low density economies matter for national growth
 Tradable activities are key
 Agglomeration benefits can occur at different scales
 Enabling factors are key (skills, accessibility)
 Demographic challenges and service provision

22. 1. Performance rural and urban regions
• Research methods, data and definitions
• Trends and diagnosis
2. Policy considerations and framework for
action
Outline

23. Links between regional and aggregate
Where growth actually occurs is also critical:
 Contributions to growth
 Implications for national policy makers
Contribution to growth over the a given period (n, n+t):
 Initial size of a given territory  GDP share (n)
 Its growth rate between (n, n+t)
23

24. Contributions to aggregate growth depend on few hub regions…
…the fat tail is equally important -- if not more -- to
aggregate growth… 24

25. Rural: Capitalise on Rural Urban Linkages
• Labour market flows are key, but there are other crucial Rural-
Urban interactions
 The spatial scale to consider depends on the purpose of the partnership
 The spatial scale of cooperation should be flexible

26. Rural-urban partnerships can allow attaining
common development objectives
Category Objective of the cooperation
Economic Development
Territorial development: ex: BrabanStad (Netherlands), Lexington (United
States)
Logistics: ex: Forli-Cesena (Italy), Nuremberg (Germany)
Urban agriculture: ex: Rennes (France)
Natural Asset
management
Water management: ex: Forli-Cesena (Italy)
Biodiversity: ex: Rennes (France)
Land Use manangement: ex: Rennes (France)
Landscape and environment preservation: ex: Rennes (France)
Public service provision
Transports: ex: Castelo Branco (Portugal)
Health, social programs and education: ex: Central Finland (Finland)
Waste management: ex: Rennes (France)
Political visibility and
access to financial
resources
Political visibility: ex: BrabanStad (Netherlands), Nuremberg (Germnay)
Financial resource mobilisation: ex: Extremadura (Spain)

27. Matching
…the appropriate scale
Engagement
…including relevant stakeholder
Learning
…to be more effective
Building effective and sustainable rural-urban
partnerships: a strategy
1. Better understanding of Rural-
Urban conditions and interactions
2. Addressing territorial challenges
through a functional approach
3. Working towards a common
agenda for urban and rural policy
4. Building an enabling environment
for Rural-urban partnerships
5. Clarifying the partnership
objectives and related measures

28. Persistence of inequality
Infrastructure
provision
Leaking by linking
The policy headache: isolated sectoral
action may have unintended outcomes.
Problem: lack
of connectivity
28

29. with labour mobility
Persistence of inequality
Policy
responses
Human capital
formation
Brain drain
29
The policy headache: isolated sectoral
action may have unintended outcomes.

30. Infrastructure
provision
Policy
responses
Human capital
formation
Business
environment
Innovation
Regional growth
and convergence
Bottom-up Approaches are Key
At the regional scale
Many countries are reforming in this direction, but
implementation is still difficult.
30
What are rural needs:
• Business innovation
• Skills
• Accessibility/ICT

31. Compensating lagging regions does not work:
• Creates dependency, not development
• Richer regions may become reluctant to support lagging regions
OECD promotes ‘place-based’ policies focusing on:
• Use of regional specific assets (or create absolute advantages to
stimulate competition and experimentation across regions)
• Create complementarities among sectoral polices at the
regional (or local) level
• Use of multi-level governance mechanisms for aligning
objectives and implementation.
Bottom up Approaches are key in the OECD
Regional Development Policy Paradigm

32. Further Policy Considerations
1. Identifying drivers in rural areas
 Tradables (manufacturing), renewable energy, natural resources,
services, fisheries, forestry, agriculture, tourism, natural
amenities
 Finding the niche (smart specialisation)
 Comparative and absolute advantages
 Smart specialisation are particularly important for rural areas
(against more diversified economies in urban areas)
2. How to add value in these domains
 Policy focus on enabling factors: skills, accessibility, market
intelligence, institutions, business-innovation
 Strong synergies between digitalization and transforming
comparative/absolute advantages
 Support entrepreneurs to business innovators

33. Further Policy Considerations (cont.)
3. Demographic trends and forward looking policies
 Address long term cost enhancing efficiency in service provision
(planning, ICT)
 Spatial planning for rural development
 Computing returns to investments
4. Address spatial pockets of poverty in low density areas
 Beyond transfers, identify bottlenecks of enabling factors, better
target national. Regional and local interventions
5. Environmental agenda
 Mitigation and adaptation to climate change

34. An Evolving OECD Rural Paradigm

35. Rural Policy 3.0
3.0
R-U Linkages
1. National
2. Regional
3. Local
Actors
1. Private
2. Public
3. Third
Types
1. Inside FUA
2. Close to cities
3. Remote
Wellbeing
1. Economic
2. Social
3. Environment

36. Rural Policy Responses in OECD Countries
 Europe: European Commission CAP pillar II (DG Agri), DGRegio
(smart specialisation) and LEADER
 Urban rural linkages
 Strong alignment between Rural Policy 3.0 and Cork
Declaration
 United States: Uplift America Program to mitigate persistent
poverty (20% county residents are poor over 30 years)
 Italy: Inner Area Strategy
 Japan: National Spatial Strategy (compact and networked),
rural revitalisation (multifunctionality, 6th industry, rural-urban
linkages)

37. Thank you
guillaume.lecarosdecossio@oecd.org