Rural Well-being

Executive summary

Rural Well-being: Geography of Opportunities presents the latest iteration of the OECD’s policy framework on rural development. This newly updated framework reflects several important changes in rural development in recent years and takes advantage of the organisation’s latest evidence-based analysis to improve understanding of the diverse and complex socio-economic systems that exist in rural places along with their connection to cities.

The analysis finds that rural places are facing stronger demographic pressures, with many countries experiencing population decline in rural regions. Rural regions also face challenges raised by an ageing population, with higher elderly dependency ratios than metropolitan regions in almost all OECD countries. The analysis also finds that the “penalty of distance” in rural economies can be quite substantial, despite the fact that most of the OECD’s rural population lives within reach of cities. In 2017, GDP per capita in rural regions was 13 percentage points (p.p.) below the average, 16 p.p. lower in labour productivity levels and 8 p.p. lower in employment rates. Rural regions, especially those far from cities, have felt the effects of the 2008 global financial crisis more strongly, leaving many of them in a vulnerable position.

Looking forward, the new framework comes at a time when the shock of COVID-19 is still developing, while the impacts of the megatrends of globalisation, digitalisation, climate change and demographic change continue to shape the economic landscape of rural economies and expose the inadequacy of traditional place-insensitive policy solutions. At a time when the distance between “winners” and “losers” feels wider than ever, Rural Well-being offers governments timely policy advice to mitigate the challenges presented by these trends. Yet, as the subtitle Geography of Opportunities suggests, the framework is predominantly focused on the untapped potential of rural places and how to capitalise on the opportunities that change will bring, while remaining centred on the well-being of citizens.

Table 1. Challenges and opportunities by type of rural

Type of region	Challenges	Opportunities
Rural inside a functional urban area (FUA)	loss of control over the future activities concentrate in the urban core managing land value pressures matching of skills	more stable future potential to capture urban benefits while avoiding the drawbacks
Rural outside, but in close proximity to a FUA	conflicts between new residents and locals avoiding sprawl competition for land and landscape preservation	potential to attract high-income households seeking a better quality of life relatively easy access to advanced services and urban culture good access to transport
Rural remote	highly specialised economies subject to booms and busts limited connectivity and large distances between settlements high per capita costs of services	absolute advantage in production of natural resource-based outputs attractive for firms that need access to an urban area, but not on a daily basis can offer unique environments that can be attractive to firms and individuals

The new framework extends and refines the OECD’s earlier work, replacing the urban-rural dichotomy with a continuum recognising three distinct types of rural places, each with stark structural differences, challenges and opportunities (Table 1): i) rural inside FUAs; ii) rural close to cities; and, iii) remote rural. Understanding each of the three types of rural leads to the possibility for shared action and more effectively targeted policy responses.

Rural Well-being also broadens the scope of analysis. Looking beyond the usual economic factors such as productivity and income, it encompasses the environmental and social dimensions of well-being to deliver a more holistic, people-centred approach of rural development.

Recognising that effective rural policies necessitate strong engagement of the private sector and civil society, as well as effective multi-level governance mechanisms to support collaboration between all levels of government, the new framework provides tools on how to better engage with relevant stakeholders, promote rural-urban partnerships and embrace multi-level governance. Recognising that rural people and businesses know their own needs best, the new framework suggests the use of new technologies to facilitate participation, and underlines the need for meaningful engagement. Furthermore, it acknowledges urban areas as key partners in increasing rural well-being and highlights ways for effective partnership and collaboration between policy makers from different levels of government.

Finally, Rural Well-being stresses the importance of designing rural policies through a place-based approach. This is a step beyond “rural proofing” (i.e. the application of a rural lens to adapt sectoral or national policies to rural places) that recognises the inefficiency of non-coordinated policy-making. Instead, policy design must be conducted with specific places in mind, considering the assets and leading industries for each, limits to labour mobility, and linkages to cities that make each place unique.

In sum, Rural Well-being shifts from a one-dimensional to a multi-dimensional view of rural policies with:

• Three types of rural – rural inside FUAs, rural close to cities, and remote rural, along with the interactions between rural places and cities.

• Three objectives – economic, social and environmental objectives and their interdependence

• Three different stakeholders – the government, the private sector and civil society.

The resulting framework (Table 2) is people-centred, placing the well-being of citizens at the forefront, while providing a greater understanding of rural regions and their diverse and complex socio-economic systems.

Table 2. Rural Well-being: Geography of opportunities

	Rural Well-being: Geography of opportunities
Objectives	Well-being considering multiple dimensions of: i) the economy, ii) society and iii) the environment
Policy focus	Low-density economies differentiated by type of rural area
Tools	Integrated rural development approach – spectrum of support to public sector, firms and civil society
Key actors & stakeholders	Involvement of: i) public sector – multi-level governance, ii) private sector – for-profit firms and social enterprise, and iii) civil society – non-governmental organisations and civil society
Policy approach	Integrated approach with multiple policy domains
Rural definition	Three types of rural: i) within a functional urban area, ii) close to a functional urban area, and iii) far from a functional urban area