Promoting rural economic diversification where small scale agriculture predominates

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While the majority of OECD countries have shed labour in agriculture through productivity gains, some countries continue to have a higher labour share in agriculture and low productivity. Such is the case in Poland where the agricultural sector is also the most labour intensive in the European Union. Agriculture as a share of total employment stands at 11% while its total value added to the economy stands at only 2.4% (2015). This is in part due to limited land consolidation and the dominance of small farms, as well as hidden unemployment in agriculture. While agriculture is a key economic activity for rural dwellers, it is not highly remunerative and farm households face high poverty rates. In 2016, approximately one in four farmers lived in relative poverty, and 11% of farmers lived in extreme poverty.

Tackling this issue is of high priority. But it presents a complex policy challenge related to such factors as the structure of social supports, connections, local labour markets and more fundamentally, ways of life—with many having a preference for small farm living. The Rural Policy Review of Poland (released March 2018) examines these issues and recommends a number of policy options to support economic diversification.  One of the many strengths that Poland has to draw on in meeting this challenge is its settlement structure, which includes a large number of small and medium sized cities. In almost all rural regions of Poland, at least half of the regional population can reach a regional centre with a population larger than 50 000 inhabitants in less than 45 minutes.  As such, rural urban linkages are one part of the broader solution.

For more information on this work please contact Tamara Krawchenko, Policy Analyst, on tamara.krawchenko@oecd.org

Rural urban partnerships for coordinated spatial development

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Rural-urban partnerships have been used by the OECD to identify ways in which urban and rural local governments are linked to each other and can develop co‑operation (see Rural Urban Partnerships, 2013). While some of the linkages take place through market exchanges, for example purchases of goods and services, a large share are not market-based relationships and have no price. These include but are not limited to the amenity benefits of rural scenery, congestion on roads caused by commuting, the ability of rural residents to access cultural services funded by urban residents, and scale economies that arise from combing demand from urban and rural customers. These unpriced linkages result in various combinations of externality effects, public goods and free-riding behavior (where people would be willing to pay if they had to but are able to avoid paying). The result is an inefficient production and allocation of the various services subject to these effects. That is, too much congestion, too few natural and cultural amenities or under-provision of goods and services, because demand was wrongly estimated. Importantly, these problems are almost always local in nature so there is little incentive for national or even regional/state governments to engage in their solution.

A recent study of the governance of land use in Prague highlights some of the fundamental challenges in structuring rural-urban partnerships. Prague’s Functional Urban Area spans 435 municipalities. Prague stands as the tenth most fragmented FUA in the OECD, with approximately 23 municipalities per 100 000 inhabitants. The interconnectedness of large and small municipalities across this urban system has obvious implications for spatial planning and land use – it raises the importance of a co-ordinated approach across the functional territory. Prague co-operates with the region of Central Bohemia as well as the municipalities in its FUA on transportation issues and there are a few nascent projects to pursue co-ordinated development in a few other areas as well. Still, there is no metropolitan governance body and there is no legal or regulatory mechanism to co-ordinate on spatial development. The right frameworks simply don’t exist at present to purpose meaningful longer term partnerships in order to tackle some of the most pressing issues—such as growing road congestion.

Incentives need to be in place to encourage ongoing partnership – and the national government has a critical role to play in this regard\. There are a range of options for how this could be structured. Read The Governance of Land Use in the Czech Republic: The Case of Prague to find out more.

For more information on this work please contact Tamara Krawchenko, Policy Analyst, on tamara.krawchenko@oecd.org

Enabling regions to make the most of a specialisation in mining and extractive activities

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Several OECD countries specialise in mining and extractive activities (minerals, metals, oil and gas) such as Canada, Australia, Chile, Finland, Sweden and Norway. A large number of low and middle income countries also have a heavy bias towards these economic activities. Mining and extractive industries have particular effects because of the relative volatility in prices over time, and the levels of investment required in order to take advantage of new market opportunities. While specialisation in the mining and extractive sector can stifle the competiveness of non-extractive tradeable activities, these types of regions also exploit an area of comparative or absolute advantage, which is desirable from an economic standpoint. Diversification of economic activity into related areas and fostering the growth of other traded activities is a strategy for mining regions and their cities to manage these risks. This requires a careful assessment and support of local strengths and weaknesses that can be leveraged to support growth. A key issue for mining regions is how to promote quality of life in these regions and to ensure that growth is inclusive (for example the inclusion of Indigenous communities). This requires partnerships between governments, the industry players themselves and the communities they work in to come up with place based solutions.

The OECD is exploring these issues and bringing key actors together. The first OECD Meeting on Mining Regions and their Cities was held in Antofagasta on 5th and 6th October 2017. The event was a starting point for the creation of a platform to share lessons and develop a strategic framework among mining regions and their cities with the goals of enhancing co-operation and increasing productivity and well-being. There were approximately 275 participants representing government (national, regional, local), mining firms and suppliers and NGOs from 14 countries, which included member countries (e.g. Australia, Canada, Finland, Spain and Sweden), and non-member countries (Argentina, Columbia, Peru, and China).

We will be continuing our work in this area to tackle such challenges as: the localised environmental externalities; conflicts with other land users – residents, food producers, tourism operators; innovation and value-chains; skills mismatches and the local workforce; regional infrastructure networks; and mining closure and transition.

For more information on this work please contact Chris McDonald, Policy Analyst, on chris.mcdonald@oecd.org

Linking Indigenous Communities with Regional Development

Hôtel-musée des Premières nations, WendakeIn Quebec City, Canada in September the OECD Rural Policy team participated in a launched of a thematic project on Linking Indigenous Communities with Regional Development . Indigenous communities play a key role in OECD national and regional economies. There are 24.5 million Indigenous people who make an important contribution to the culture, land stewardship, heritage, and economic development of one-third of the OECD members. In addition to this, Indigenous peoples are important to a number of non-member countries that participation in the Regional Development Policy Committee (e.g. Colombia, Costa Rica, Morocco, and Peru).

Better addressing the needs of Indigenous peoples is critical to achieving the Sustainable Development Goals (SDGs) including the commitment to “leave no one behind”. Indigenous peoples generally experience poorer socio-economic outcomes. Indigenous peoples make up only 5 per cent of the global population; however they make up 15 per cent of the world’s poor and about one-third of the world’s 900 million extremely poor rural people. Indigenous communities also have an important role in the stewardship of natural and cultural assets. They tend to have a strong attachment to place, and this is often an appropriate scale to deliver policies for them. Indigenous communities are part of the dynamics of regional economies but are often disconnected from efforts to promote regional development. This disconnect contributes to continued disparities in socio-economic outcomes experienced by Indigenous peoples.

The Linking Indigenous Communities with Regional Development Project is designed to bring countries together to identify good practices and policy recommendations that improve economic development outcomes for indigenous people by better linking them with regional and rural development efforts. It will address four key themes:
Trends and statistics: Role and contribution of indigenous peoples to regional/national economies, and which factors constrain/enable their economic participation at a regional level.
Land and economic development: Key features of governance arrangements that enable indigenous communities to realise the development potential of land and related natural resources, including negotiating benefits with investors to create sustainable business and employment opportunities.
Business growth: Policies that help promote the growth and innovation of Indigenous businesses in rural areas, particularly in the tradeable sector.
Governance and capacity: Incentives and mechanisms that support an integrated place-based approach to development that is inclusive of, and empowers, indigenous communities.

Policy makers and Indigenous leaders from Australia, Canada, Colombia, the European Commission, Peru, Sweden, and the United States participated in the launch of this project, which is now in an implementation phase. There is a strong emphasis in this work on capacity building and learning, particularly for Indigenous leaders. If your country or region would like to join this community, please contact Chris McDonald, Policy Analyst: chris.mcdonald@oecd.org

Photo Hôtel-musée des Premières nations, Wendake @ Flickr creative commons 7452892394

Rural development at the OECD: a brief history and overview

The Organisation for Economic Cooperation and Development (OECD) has been engaged in rural development work for almost forty years. Indeed, the OECD’s interest in rural development pre-dates our work on urban policy! The work has evolved over time to develop a coherent framework of rural development.

Work by the OECD on rural development in the 1980s was essentially a scoping exercise to understand how member countries were approaching rural development issues. This work aided in the formation of a modern rural policy framework which many of you would recognise today. In 1991 the Group of the Council on Rural Development was created and shortly after, in 1999, the Territorial Development Policy Committee (now Regional Development Policy Committee, RDPC) was established with working parties on urban and rural policies, and territorial indicators.

The work undertaken since the early 2000s largely reflects the interests of the countries that have been active in the RDPC at a particular time. The ‘bread and butter’ of the OECD rural work programme has been:

  • 13 National Rural Policy Reviews (focusing on a diagnosis of rural development issues, and the role of national governments in addressing them), and;
  • Territorial Reviews involving 33 countries and regions which have a rural focus or component (including a macro-economic and regional diagnosis, assessment of key policies and multi-level governance issues).
  • Thematic reviews to develop a common pool of knowledge about factors contributing to growth and policies to enhance rural growth potential. These include studies on promoting growth in all regions (2012), renewable energy (2012), urban-rural linkages (2013), innovation and modernising the rural economy, food security (2016), land use (2017).

We continue to build on this history and look forward to working with our member and partner countries to build shared knowledge about how to improve the prosperity and wellbeing of rural places.

Promoting growth in rural remote economies: the launch of the Territorial Review of the Northern Sparsely Populated Areas (NSPA)

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Sparsely populated areas face unique challenges. Lower population density and long distances between communities can make it more difficult and costly to provide infrastructure and services. The economies of sparsely populated areas are also unique and have great potential. Low density isn’t an impediment to wellbeing and productivity.

The OECD’s recent review of Northern Sparsely Populated Areas examined these and other issues and provided an opportunity to share policy learning. The review involved 14 regions across the northern areas of Norway, Finland and Sweden. The NSPA review was launched March 13th 2017 at the Committee for Regions

The NSPA review finds that these regions are of increasing economic and geopolitical importance to Norway, Finland and Sweden, and the Europe Union (e.g. supply of food, energy, adapting to climate change, and relations with Russia). Although these regions face challenges associated with demographic change, distance and low population densities they have significant growth potential in areas such as renewable energy, mining, aquaculture, and tourism. Low distance and low densities are not an impediment to competitiveness with the right policy settings, particularly through identifying areas of absolute advantage, facilitating value-adding to them, and increasing access to international markets. This report can provide lessons for other countries and regions facing similar challenges (e.g. Australia, Canada, and Chile).

Contact: chris.mcdonald@oecd.org

Adopting a holistic approach to rural policy in Poland

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Rural policy is important for Poland. Approximately one third of Poland’s population lives in predominantly rural regions (by OECD definition) and rural regions contribute about one fourth of the total Gross Domestic Product (GDP). While Poland’s economy shows a very strong performance as a whole, there are diverging trends within the country. Some rural regions have low income levels and fail to catch up to the average GDP per capita level of rural regions, while others register relatively high incomes and are growing strongly. Over time, there is a risk that the gap between successful and lagging rural regions will increase. This points to the importance of place-based policies for rural development.

The OECD’s Rural Policy Review of Poland is focussed on providing holistic approaches to rural development. It looks at how policies can better support development opportunities in rural areas including non-agricultural employment and the diversification of rural economies. Rural areas of Poland differ considerably—from the small farms dotting Malopolsie in southern Poland to Zachodniopomorskie on the Baltic Sea, historic Wielkopolskie in the northwest and Podlaskie in the east. On our research missions to Poland we’ve encountered dynamic and growing rural communities that, together with strong leadership and a vision of the future, are providing their residents with a good quality of life.

In April we held a seminar together with the Polish Ministry of Economic Development on Linking rural definitions and policy for coordinated rural development (7 April 2017, Warsaw) which explored how different rural definitions have been used to structure policy responses and also how they have combined EU policies for coordinated approaches to rural development. It is anticipated that the Rural Policy Review of Poland will be discussed at the December 2017 meeting of the Rural Working Party.

Contact: Tamara.Krawchenko@oecd.org