OECD Rural Policy Reviews

1990-9284 (online)
1990-9276 (print)
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This series presents comprehensive reviews of rural policy in individual countries as well as analytical reports on various aspects of rural policy.
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Innovation and Modernising the Rural Economy

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29 Apr 2014
9789264205390 (PDF) ;9789264205383(print)

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This publication is a result of the discussions from the OECD 8th Rural Development Policy Conference: "Innovation and modernising the rural economy" which took place in Krasnoyarsk, Russia on 3-5 October 2012. It provides an overview of the two themes of modernisation and innovation, focusing on identifying the attributes of the modern rural economy and showing how it differs from the traditional rural economy and from metropolitan economies. It also shows how rural innovation is a key driver of rural economic growth using patents as a measure.

The second part of the book consists of four chapters that offer evidence of rural regions’ potential to contribute to national economic growth. In addition, each provides useful context for Part I by outlining four different perspectives on the process of modernisation and innovation, and specifically, how they can take place in the rural territories of OECD countries. In each paper, the authors explore the opportunities and impediments to these twin processes and how government policy can help or hinder them.

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  • Foreword and Acknowledgements

    With gains in agricultural productivity leading to a dramatic reduction in farm employment, rural regions across the OECD now depend on a wide range of economic engines for growth. Increasing globalisation, improved communications and reduced transportation costs are additional drivers of economic change in rural areas. Traditional policies to subsidise farming have not been able to harness the potential of these economic engines. In 2006, the OECD published a thematic report The New Rural Paradigm: Policies and Governance, which seeks to explain the shift in rural development policies to account for these important economic changes and the need for a new approach to governance.

  • Executive summary

    The topics of "innovation" and "modernising the rural economy" are closely related. OECD rural regions are highly connected to global markets and open to trade. Their growth potential depends on their capacity to modernise their economic base and to innovate, in other words to produce goods and services that can be sold at a profit in local and in international markets, and to introduce new sectors and new products. However, this exposure to greater competition from domestic and international markets sometimes comes without complementary policies that can help strengthen the capacity of rural areas to adapt. The focus on innovation and modernisation represents an important next step in the evolution of the OECD rural policy dialogue. The fact that it is widely believed that the future prosperity of rural regions will be driven by enterprise, innovation and new technologies, tailored to specific markets and applied to new and old industries, makes this discussion timely. Furthermore, focusing on the two pillars critical to revitalising rural areas – innovation and modernisation – is one way to identify factors that can trigger or facilitate improved economic performance and identify those that tend to weaken it.

  • Modernising the rural economy

    This chapter sets out a framework for thinking about modernising the rural economy. It begins with an overview of why this approach is important for rural development. The concept of the "modern economy" and its relationship to the urban economy is unpacked and explored. There is also an assessment of the key elements associated with the traditional rural economy, answering the key question: How does rural stack up? Finally, areas for targeted policy focus are introduced (as for example, enterprise, skills development and competition) that can help modernise the rural economy, as well as some examples of attempts at modernisation in OECD and non-OECD countries.

  • Innovation in the context of rural areas

    This chapter explores several aspects of the debate on rural innovation and offers some important considerations for policy makers. It begins with an overview of the link between innovation and rural areas, with a focus on rural innovations that are either overlooked or not recognised as innovation, or are not acknowledged as having emerged from a rural area. This is followed by a discussion of regional innovation systems and smart specialisation and the scope for applying them in the rural context. The third section explores the need for more adaptive and flexible governance strategies to better recognise and support innovation in rural areas. In the final section, the role of entrepreneurship as a critical stimulus of innovation in rural areas is discussed.

  • A new rationale for rural cohesion policy

    Rural areas are increasingly affected by a wide set of drivers arising from very different fields. Consequently, in most industrialised countries, rural regions can no longer be referred to simply as "underdeveloped" or weakly developed, but should rather be viewed as areas of significant opportunities and emerging perspectives. Such new perspectives particularly demand an evidence-based assessment of contemporary rural regions’ development options.

    This chapter focuses on the rationale for a re-oriented rural policy that takes into account these substantial changes. It draws on the findings of the European Development Opportunities in Rural Areas (ESPON EDORA) project, which emphasises the need to overcome entrenched stereotypes that can misinform policy concepts. The complexity of spatial connections can be elucidated by a new view of rural development. A synthesis of "meta-narratives" of rural change (an agricentric narrative, an urban-rural narrative and narratives of globalisation and capitalist penetration) provide more realistic guidance for assessing rural challenges and opportunities. They take into account the increasing inter-relation of rural and urban regions, as well as connectivity of spaces and the need for differentiation of rural areas.

    While classifications of rural regions are considered an important tool for supporting a comparative assessment of spatial dynamics, their actual value only becomes plain when addressing their various dimensions. The intensifying relationships between spatial units and actors do not favour clear-cut divisions between rural and urban spaces, but rather demand a flexible spatial assessment. The focus of a new rural Cohesion Policy should reflect this shift in perspective. Rather than hew to a fixed policy programme, interventions should be attempted at two levels: a macro-level, to address broad, systematic spatial patterns of differentiation, and a micro-level, to respond to localised, aspatial variations in territorial capital. In this respect, it is crucial for each rural region to find place-specific approaches to develop its specific local (intangible) assets, making use of the translocal networks that play a key role in innovation and development.

  • Unlocking rural innovation in the North East of England

    Recent academic studies and UK policy documents have recognised the increasing role of innovation as a key driver of economic growth, both regionally and nationally. However, there is an assumption in policy making that successful innovation requires concentration of scientific and technological expertise and proximity to knowledge resources, particularly universities, hence the designation of six science cities in England in 2005. Moreover, innovation is generally regarded as a one-directional linear process, involving the translation of knowledge and information generated by high-tech science to end users.

    "Rural" per se has largely been missing from national and regional innovation debates. This is not to say that policy makers actively exclude the rural, rather that the characteristics that make rural areas and rural actors (such as businesses) different, and the extent to which they engage with urban-based actors, are largely unrecognised. This raises important questions regarding the role of rural areas and actors in generating and implementing innovation.

    This chapter investigates the extent to which rural businesses in the North East of England (United Kingdom) are engaged with key regional innovation actors, including seven "innovation connectors". These are sites highlighted as having the greatest potential for using innovation to stimulate economic regeneration across the North East region. Based on a review of relevant literature and policy, an analysis of findings from a large-scale rural business survey and a series of interviews and focus groups with key actors in the innovation system, the chapter discusses the innovative potential of rural businesses and the likely benefits of engaging with knowledge institutions, including the designated innovation connectors, in the region. However, the chapter also highlights several challenges faced by rural firms in seeking support to develop their innovative potential. The chapter concludes by drawing some implications for future strategies and policies to promote rural innovation.

  • A new paradigm of rural innovation

    In current discussions of innovation, rural people are typically excluded from the creative class. However, the history of Quebec’s rural communities shows that they have been and still are very creative, and that we can learn from them. Their innovation is manifested in three basic dimensions of sustainable development: managing natural environments, building instruments or institutions for economic development, and facilitating social life. Under this new paradigm of rural innovation, these innovations are studied as they emerge from within rural communities, as demonstrated by the Quebec Rural University initiative. Rural communities should also be seen as living examples (or living labs) of innovation, as illustrated by the Quebec government’s "Rural Laboratory" programme. "Rural clusters" are additional models for rural innovation.

  • Evaluation tools for integrated EU rural development initiatives

    The objective of this chapter is to study the utilisation of European Union resources and to evaluate the effectiveness and efficiency of the assistance and its impact, which are becoming increasingly relevant as Common Agricultural Policy (CAP) budget constraints increase. Although the LEADER Initiative absorbs a relatively small percentage of EU Rural Development Policy funds, its innovative characteristics, combined with its Rural Development Policy (RDP) mainstreaming, are well-suited to a framework of formal evaluation procedures. Local action groups (LAGs), as the main actors in the design, monitoring and implementation of integrated local development plans, deserve special attention in this context. This chapter discusses the application of a model for evaluating the performance of the LAGs in designing and implementing the EU LEADER+ Community Initiative. The special characteristics of the initiative, such as the emphasis on territorial rural development, together with its "bottom-up" approach, lends itself to a Shift-Share Analysis (SSA) approach, a method that was initially applied in a regional analysis context. The degree of impact on the funds’ absorptive capacity by each LAG is parameterised in a regional analysis quantitative framework of the SSA, applied for the first time in the case of LEADER+, highlighting aspects relating to both internal (i.e. managerial ability) and external factors (i.e. the national planning framework of the LEADER programme). A classification of the LAGs into regional "LEADER types" is also developed, according to the estimated degree of impact of these factors.

    The case of all 40 Greek LAGs operating under the third programming period was examined as soon as data became available from the national Integrated Data System, right after the completion of the LEADER+ Community Initiative implementation period (2009). Since the discussion of rural policy impacts and the fourth generation of evaluation methods are well under way, the suggested approach can also be combined with other qualitative and qualitative approaches in order to better understand the impact of the EU Rural Development Policy.

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