The Geography of Choice

1. Introduction

Abstract

Rural regions face diverse pressures and opportunities that national averages and administrative boundaries do not always capture. This chapter explains how functional areas can complement existing territorial classifications by grouping interconnected places according to how people live, work and access services. It identifies a gap in internationally comparable functional analysis for territories beyond cities and introduces the report’s empirical comparison of three approaches: Labour Market Areas, France’s Bassins de Vie and Functional Rural Areas. Each approach reflects a different dimension of everyday life. The analysis is exploratory and aims to support international statistical comparison, while complementing - not replacing - national rural definitions used for policy design and implementation.

Rural regions across the OECD are navigating a period of significant transformations, but the impacts are uneven across different types of rural places. Digitalisation, environmental transitions, shifting geopolitical priorities and demographic change are reshaping the geography of challenges and opportunities facing rural areas. As OECD sets out in Reinforcing Rural Resilience (OECD, 2025[1]), rural regions are not monolithic: areas close to cities face different pressures, and hold different assets, than remote rural regions. Effective policy needs to recognise this diversity rather than treat "rural" as a single category. Often data considers all rural areas together at the scale of a country, or refers to administrative boundaries of rural municipalities or regions but not how their residents interact with their surrounding areas. More evidence is needed on how these megatrends are shaping rural areas, and how countries are responding to them, at a functional scale suited to rural areas, one that reflects how people actually live, work and access services day to day. Robust and internationally comparable evidence can underpin these policy efforts.

The appropriate geographical scale depends on the policy question. Administrative boundaries are essential for governance and policy implementation, but do not always correspond to the territories within which people conduct their daily activities. Functional areas provide a complementary perspective by grouping interconnected local areas. More than a decade ago, the OECD and the European Commission jointly, developed the Functional Urban Area (FUA) (Dijkstra, Poelman and Veneri, 2019[2]) definition, an internationally comparable geography that has since helped track trends in the performance of metropolitan areas. Comparable functional analysis is less developed for territories beyond FUAs.

Existing OECD typologies already provide valuable and internationally comparable perspectives on rural territories. The OECD regional typology distinguishes metropolitan and non-metropolitan small regions (at TL3 level, a scale closer to a functional area) and classifies the latter according to their access to FUAs1. The Degree of Urbanisation (DEGURBA) identifies cities, towns, semi-dense areas and rural areas, using population grids and local administrative units. Both frameworks serve different purposes and operate at different scales: the regional typology supports comparisons across subnational regions, while the Degree of Urbanisation describes settlement patterns at a more detailed level. Neither is designed to group all local areas outside FUAs into functionally connected daily systems.

This report addresses that gap by comparing alternative approaches to delineating functional areas across national territories, with particular attention to areas beyond cities. It builds on previous OECD work on functional territories (OECD, 2002[3]) and (OECD, 2020[4]) and recognises that rural and urban places are connected through flows of people, goods and services (OECD, 2013[5]). A functional perspective can help identify which local areas form part of the same daily system and how these systems relate to nearby cities and other territories. This is also consistent with wider OECD work on rural-urban linkages, including recent analysis of intermediary cities and their surrounding areas (OECD, 2026[6]).

Different approaches to functionality serve different, equally valid purposes. Some methods define rural daily systems around access to services, capturing the geography of daily life as shaped by where people travel for healthcare, retail or education. Labour-market approaches use commuting flows to identify the territories within which people live and work. Accessibility-based methods use travel times and the location of population centres to approximate a wider range of relationships. Each provides a legitimate perspective; its suitability depends on the analytical or policy question being addressed.

The report considers three types of internationally comparable functional areas that are built on common methodologies applicable across OECD member countries. In doing so, it is intended to complement, not replace, the wide range of national definitions of rural areas and functional definitions already in use, many of which are tailored to specific national administrative structures, funding mechanisms, or policy purposes, and which remain the most appropriate tool for those purposes. The objective for this work is comparability across countries for statistical and analytical purposes. It is therefore exploratory in nature, and not a recommended or required geography for national rural policy design.

The analysis in this paper tests different functional area approaches empirically and compares on a descriptive basis. Chapter 2 reviews the range of existing methods used to define functional areas and, on this basis, selects three for closer examination: Functional Rural Areas (FRA), Labour Market Areas (LMA) and France's Bassins de Vie. Chapter 3 compares these three approaches against a common, pre-defined set of criteria regarding the commuting flows within and beyond the functional area boundaries, the size of functional areas and their balance between workers and jobs, to assess which offers the strongest basis for an internationally comparable definition.

Chapter 4 tests the three methodologies further, applying them to detailed mobile phone and grid-cell data across several countries to assess their practical performance. Building on the advantages identified through this process, Chapter 5 applies the FRA methodology to examine territorial trends and patterns across OECD member countries, across the range of indicators for which comparable data are available. The FRA delineation applied in Chapter 5 was selected for practical reasons specific to that exercise, not as an implicit ranking of the three approaches. Finally, Chapter 6 concludes.

References

[2] Dijkstra, L., H. Poelman and P. Veneri (2019), “The EU-OECD definition of a functional urban area”, OECD Regional Development Working Papers, No. 2019/11, OECD Publishing, Paris, https://doi.org/10.1787/d58cb34d-en.

[8] OECD (2026), https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwebfs-cfe.oecd.org%2Ffiles%2F.Stat%2Fregion%2FOECD%2520Territorial%2520correspondence%2520-%2520TL2024c.xlsx&wdOrigin=BROWSELINK.

[7] OECD (2026), https://www.oecd.org/en/data/datasets/oecd-geographical-definitions.html.

[6] OECD (2026), Unlocking the Potential of Intermediary Cities for Regional Development, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/55b14922-en.

[1] OECD (2025), Reinforcing Rural Resilience, OECD Publishing, https://doi.org/10.1787/7cd485e3-en.

[4] OECD (2020), Delineating Functional Areas in All Territories, OECD Territorial Reviews, OECD Publishing, Paris, https://doi.org/10.1787/07970966-en.

[5] OECD (2013), Rural-Urban Partnerships: An Integrated Approach to Economic Development, OECD Rural Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264204812-en.

[3] OECD (2002), Redefining Territories: The Functional Regions, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264196179-en.

Note

← 1.  TL3 can be classified according to their access to FUAs as: Metropolitan region - large (Region with a FUA >1.5M inhabitants), Metropolitan region - midsize (Region with a FUA between 250K and 1.5M inhabitants), Non-metropolitan region - Near a midsize/large FUA (Region near a FUA >250K inhabitants), Non-metropolitan region - Near a small FUA (Region near a FUA between 50K and 250K inhabitants) and Non-metropolitan region - Remote (Remote from a FUA). For details see (OECD, 2026[7]) and (OECD, 2026[8]).