Promoting Growth in all Regions and the New Rural Policy 3.0

Enrique Garcilazo, OECD Directorate for Public Governance and Territorial Development

Bratislava, 22nd February

1. Performance urban & low density regions • Research methods, data and definitions

• Trends and diagnosis

2. Policy considerations

3. Framework for action

Outline

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.

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)

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

Low density economies what are they?

Source: Global Monitoring Report 2013, IMF/World Bank

A functional approach makes it possible to highlight two main discrepancies between the administrative structure and the actual organization of the territory

Functional vs. administrative regions

Core cities vs. administrative cities

OECD functional urban area

TL3 administrative region

Rennes, France

Policies need reflect the reality of where people live and work (FUAs), as do the institutions that design and implement such policies (an example is the provision of public services).

Matching Policies to at the right scale

The OECD FUA’s reveals…

Under a generous definition (above 50,000 inhabitants), roughly 2/3 of OECD population lives in cities. For the US, this share is up to 70% and it reaches 90% for Korea. Thus, a large share of the “rural” population actually lives in the proximity of cities

total share total population number FUA

Korea 41,222,071 85% 45

Luxembourg 388,217 80% 1

Japan 98,116,294 77% 76

United Kingdom 44,117,424 73% 101

Canada 24,178,509 73% 34

Chile 12,168,828 73% 26

Netherlands 11,859,874 72% 35

United States 206,115,837 68% 262

OECD 29 (total) 726,714,805 66% 1,206

Germany 52,775,331 64% 109

France 39,144,694 63% 83

Spain 28,577,745 63% 76

Belgium 6,305,913 59% 11

OECD 29 (average) 25,059,131 59% 41

Mexico 61,957,569 58% 75

Austria 4,708,403 57% 6

Switzerland 4,252,585 56% 10

Estonia 741,999 55% 3

Poland 21,043,827 55% 58

Portugal 5,722,920 54% 13

Denmark 2,950,389 54% 4

Sweden 4,858,646 53% 12

Italy 30,392,931 51% 74

Ireland 2,225,274 50% 5

Greece 5,599,938 50% 9

Finland 2,638,535 50% 7

Hungary 4,985,582 50% 10

Czech Republic 4,759,624 46% 16

Norway 2,123,840 45% 6

Slovenia 786,964 39% 2

Slovak Republic 1,995,042 37% 8

… three types of rural areas present different challenges

Rural within FUA – part of the catchment area • Challenges with service delivery, matching of skills, land use policies

Rural close to cities – attract new residents, tend to have good industrial mix • Challenges to balance economic and social diversity and competition for land and landscape

Rural Remote – primary activities play a relevant role in the regional economy • Challenges to mobilise areas of absolute advantage, improving provision of essential services

OECD Regional Data-Base (RDB)

OECD regional typology – statistical definition (1994)

The RDB includes regional statistics on 5 major topics: – Demographic, Regional accounts, Labour , social and environmental indicators, Innovation

For comparability, regions are classified in 2 levels • TL2 Territorial Level 2 (337 regions)

• TL3 Territorial Level 3 (1708 regions)

Defining rural

Recognising linkages between rural and urban Urban and rural areas have both growth potential and often complementary assets Urban and rural areas are increasingly integrated in functional regions (self-organising spaces) Integration between urban and rural areas is important for socio-economic performance

Definition Building blocks Types

OECD typology Rural communities PU, IN, PR

Extended OECD typology Rural communities PU, IN, PRC, PRR

FUA Grid cells FUA, and rest

Urban and rural regions are increasingly integrated

In OECD countries, 26% of population live in PR regions (297 million) 20% in rural regions close to an urban area (235 million) 6% in remote rural regions (62 million)

Convergence forces in low density regions…

… driven primarily by rural close to cities.

Convergence forces in low density regions…

Rural regions amongst the top performers

Amongst top performers 54% were rural (pre-crisis): 33% rural close to cities 21% rural remote

Declined to 41% (post crisis) 31% rural close to cites 9% rural remote

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

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.

Key drivers for catching-up regions

Initial GDP pc

<75% national av.

A

B

C

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

Tradable activities are key

Agglomeration benefits can occur at different scales

Enabling factors are key (skills, accessibility)

Demographic challenges and service provision

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)

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Contributions to aggregate growth depend on few hub regions…

…the fat tail is equally important -- if not more -- to aggregate growth… 20

1. Performance rural and urban regions • Research methods, data and definitions

• Trends and diagnosis

2. Policy considerations

3. Framework for action

Outline

Three Types of Rural Areas

Definitions can help better tailor policy responses Rural areas face different challenges, opportunities and policy responses

Countries defining different types of rural regions (FI, FR, MX, SW)

Context matters: different countries have different definitions

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

Rural – Urban partnerships can help reach common development objectives

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

The main governance approaches to rural-urban partnerships

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)

2. How to add value in these domains

– Policy focus on enabling factors: skills, accessibility, market

intelligence, institutions, innovation

3. Demographic trends and forward looking policies

– Address long term cost enhancing efficiency in service provision

(planning, ICT)

– Mitigation and adaptation to climate change

4. Address spatial pockets of poverty in low density areas

– Beyond transfers, identify bottlenecks of enabling factors, better

target national. Regional and local interventions

Persistence of inequality

Infrastructure

provision

Leaking by linking

The policy headache: isolated sectoral action may have unintended outcomes.

Problem: lack of connectivity

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with labour mobility

Persistence of inequality

Policy

responses

Human capital formation

Brain drain

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The policy headache: isolated sectoral action may have unintended outcomes.

Infrastructure provision

Policy responses

Human capital formation

Business environment

Innovation

Regional growth and convergence

Towards a Multidimensional Response

At the regional scale

Many countries are reforming in this direction, but implementation is still difficult.

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-Horizontal evidence? -Policies ? -Institutions ?

OECD Key principles for place-based policies

I. Use of regional specific assets and smart specialisation (or to create absolute advantages to stimulate competition & experimentation across regions) tradables

II. Create complementarities among sectoral policies at the regional (or local) level

III. Use of multi-level governance mechanisms for aligning objectives & implementation

An Evolving OECD Rural Paradigm

Rural Policy Responses in OECD Countries

Narrow vs. broad policy responses Europe: European Commission CAP pillar II (DG Agri), DGRegio (smart

specialisation) and LEADER Urban rural linkages through ITI, CLLD

United States: USDA and White House Rural Council

Italy: Inner Area Strategy

Japan: National Spatial Strategy (compact and networked), rural

revitalisation (multifunctionality, 6th industry, rural urban linkages)

Chile: building synergies amongst a wide range of national ministries => national rural policy

thank you

JoseEnrique.Garcilazo@oecd.org