OECD Rural Development Background Report

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The Organisation for Economic Co-operation and Development – OECD had their 10th annual Rural Development Conference in May in Memphis, Tennessee. The background report released in conjunction with this conference analyses the success of the New Rural Paradigm policy from 10 years ago and looks at directions to take going forward to improve rural economies and well-being.

To provide some context here is some information about the OECD. The OECD promotes policies that improve economic and social well-being of people across the world. Canada is a member of this organization. They help members to adapt policies and programmes that are in line with their principles. OECD provides comparative data analysis and benchmarks for countries to assess their economic and social development.

The following statement taken from the New Rural Policy report outlines the importance of rural regions on national economic growth:

Our empirical work on the determinants of regional growth in recent years has highlighted the growth potential of rural regions. The widespread perception that “rural” is somehow synonymous with “decline” is simply wrong. Indeed, rural regions in the OECD area recorded an average annual rate of growth of GDP per capita of around 1.7% over the period 1995-2011 – higher than the average growth rates of urban and intermediate regions growing at 1.5% and 1.4%, respectively. This is evidence that rural regions are converging. (OECD, 2015, p.13)

The numbers clearly show the importance of rural region economies in the past and potentially more so in the future. To maintain these rural regions as a positive contribution to national economies going forward, essential services need to be available ubiquitously without restriction.

The limiting factor for why this hasn’t happened everywhere is typically due to high cost of rural servicing compared to urban areas. The table below from p.29 of the report lists factors that affect the delivery costs of services to rural areas:

pg 29 of OECD report on new rural policy

These factors limit the ability of governments to direct investments where they will be most effective. In the past governments limited themselves to investing in economic sectors or infrastructure as a means to promote rural business. That standard is no longer applicable as there has been no measurable impact of rural accessibility on rural economic growth in most cases. Governments are having to find different strategies to support rural economic growth.

This report offers up some practices that have helped OECD Countries in improving rural services. Those practices include consolidation, co-location or merging of services, mobile services, community based services, technology improvements, alternative energy, and innovations. Adoption and integration of these practices can bring new opportunities enjoyed in urban areas to less populated communities.

An underlying aspect of rural economic improvement that is often mentioned is broadband internet. Access to high speed internet is often a catalyst for other changes. This can be access to markets beyond the rural communities, access to new technologies and education, a source for innovative changes, and a way of connecting businesses to their clients.

Ubiquitous high speed internet access is viewed by OECD as a game-changer in rural economies. The potential benefit can be difficult to measure at the onset, but the cost of providing services to smaller communities need to be considered against the overall benefit to the economy and to society.

Source: Organisation for Economic Co-operation and Development OECD. New Rural Policy: Linking Up For Growth. OECD, 2015. Web. 23 June 2015.