Question

Define rural development and its policies and which of the policy is important and why

Answer 1

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.

Answer 2

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