Regional Development

The New Rural Paradigm: Policies and Governance


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The New Rural Paradigm

ISBN Number: 9264023917
Publication Date: June 2006


The New Rural Paradigm: Policies and Governance

Rapid change in the international economy – globalisation, improved communications and reduced transportation costs, changing trade patterns for commodities, and the emergence of important non farm activities in rural regions – confront rural regions with some obvious threats but also with significant opportunities. Against this background, policy makers increasingly recognise that traditional sectoral policies need to be upgraded and, in some cases, phased out and substituted with more appropriate instruments. Particular concerns are raised by the modest positive impact that agricultural subsidies have on general economic performance even in the most farming dependent communities. Indeed, with farm families relying increasingly on off-farm employment, the economic success of rural communities will depend on the development of new economic engines.

In this context, OECD governments are showing increasing interest in a more place-based approach to rural policy that emphasises investments rather than subsidies and that is able to integrate different sectoral policies and improve the coherence and effectiveness of public expenditure in rural areas.

This report focuses on the reorientation of policy that has been observed through a series of reviews of territorial policy at the national level and a number of case studies of policy strategies in rural regions. The evidence suggests that the shift in policy towards a "new rural paradigm" concerns both 1) changes in the policy focus and 2) adjustments to the governance structure, most notably:

  • a shift from an approach based on subsidising declining sectors to one based on strategic investments to develop the area's most productive activities;
  • a focus on local specificities as a means of generating new competitive advantages, such as amenities (environmental or cultural) or local products (traditional or labelled);
  • more attention to quasi public goods or “framework conditions” which support enterprise indirectly;
  • a shift from a sectoral to a territorial policy approach, including attempts to integrate the various sectoral policies at regional and local levels and to improve co-ordination of sectoral policies at the central government level;
  • decentralisation of policy administration and, within limits, policy design to those levels; and
  • increased use of partnerships between public, private and voluntary sectors in the development and implementation of local and regional policies.

How are rural regions coping with economic change? What is the weight of agriculture and agriculture subsidies in rural economies? Why and how is the approach to rural policy evolving? Who implements policy for rural regions? Do integrated rural policies work? These are the questions that this cross-OECD study addresses, building on the findings of the conferences held in Warrenton, Virginia (US) and Oaxaca (Mexico), and on several case studies on rural regions perfomed in the past years and contributed by member countries.

Chapter 1 The State of Rural Regions

Chapter 1 provides an overview of the main socio-economic trends affecting rural areas across the OECD. This chapter highlights the important and diverse challenges facing rural areas, their unused potential and the inability of sectoral policy to address this. The chapter analyses and provides meaningful comparisons of rural regions across OECD Countries, stating some of the main shared challenges and highlighting evidence of heterogeneity that are driving the reconsideration of rural policy in OECD countries. The chapter then addresses the specific place of agriculture in the rural economy, and discusses the role of agricultural policy, in particular the support to commodity production, in developing rural regions. Some of the most relevant findings are the following facts:

  • Although it is clear that rural areas are lagging in general in terms of GDP per capita, “rural” is by no means synonymous with decline. According to the most recent data available, in more than one out of three OECD countries, the region with the highest rate of employment creation was a rural region.
  • Easier commuting across longer distances has expanded the sphere of influence of major urban areas enabling people to live in rural regions while working in cities contributing to a reversal of the rural out-migration trend, as has been observed in France, England and the Netherlands for example.
  • Agriculture is no longer the backbone of rural economies. Although it still has an important role in shaping rural landscapes in many OECD countries, its weight in rural economies is often low and declining.


Chapter 2 Rural Policy: New Approaches

The tools and policies focused on agriculture address only a subset of the wide array of issues relevant to the development of rural regions and the well-being of their inhabitants. A cross-sectoral approach to rural policy encompasses a wider range of objectives and a different set of tools. These objectives include equity, competitiveness and the stewardship of rural resources. In this context, the justification for public intervention in rural areas tends to be similar across OECD countries: overcoming market failures and ensuring provision of certain public goods; either those that are considered as “rights” (e.g., basic public services) or those that can trigger development (e.g., amenities, collective services for businesses, etc.).

Chapter 2 discusses the most defining characteristics of a “new rural paradigm”, that is the place-based approach to rural policy that is being developed in several OECD countries. The chapter discusses factors driving reforms in rural policy making and presents some of the key areas for rural development. It then explores through several case studies, how OECD countries have developed a number of policy initiatives with an integrated approach to meet the needs and opportunities of their rural regions:

  • Canada's "rural lens" initiative
  • Finland’s multi-year Rural Policy Programme
  • Germany’s “REGIONEN AKTIV” programme
  • UK’s Rural Strategy
  • Mexico’s Micro-regions strategy
  • Netherlands’ “Agenda for a Vital Countryside”
  • EU’s LEADER Community Initiative

Chapter 3 Governance Strategies to Support Rural Policy

The “new rural paradigm” requires important changes in how policies are conceived and implemented to include a cross-cutting and multi-level governance approach. Traditional hierarchical administrative structures are likely to be inadequate to administer these policies effectively and adjustments are thus needed along three key governance dimensions: horizontally at both the central and the local levels and vertically across levels of government.

Chapter 3 addresses the governance requirements of the new cross-sectoral approach to rural policy. The chapter underlines the importance of more and better co-ordination across and within levels of government and highlights major knowledge gaps and methodological challenges that need to be addressed by future research. This chapter seeks to highlight the ways in which OECD countries may promote governance structures that support rural policy goals.



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