This blog was first posted on 8 October 2014.
A new OECD report, Regions and Cities: Where policies and people meet, makes the point that regional disparities in income are widening. It calls for a place-sensitive approach to policy making, in other words it recognises that policies need to be tuned to specific characteristics of places, rather than being uniform.
The more sparsely populated it is, the more growth in a region will depend on features specific to the region – such as its landscapes, settlement structure, communications network or culture.
The report addresses the challenges of rural regions. It argues that agriculture is less and less the key economic base of rural areas. However, at national level rural policy making usually remains the responsibility of an agriculture ministry. Rural development needs a different approach, policies more focused on investment and growth, and at delivering more integrated public policies.
Opportunities not problems
In line with the thinking that OECD has led for a decade now, it argues that we need to “reframe the narrative on rural areas”. Instead of talking about their problems we are invited to focus on the opportunities that they can offer. Some of these have become familiar – e.g. tourism, forestry, local food and culture or even renewable energy.
However, this report goes further and highlights the potential that lies in small markets which make it easier for local businesses to work together. In addition, rural areas have led the way in developing non-traditional means for delivery of public services, a challenge that is growing everywhere as austerity budgets put strains on the maintenance of services.
Entrepreneurship can play a key role, and innovation is also important. “Innovation is as vital for rural economies as for urban economies” says the report. However, often innovation in a rural context is not recognised or capitalised upon. It rarely takes the form of a scientist in a white coat holding a test tube up in a laboratory. It is more likely to be a new approach to marketing local produce or a new organisation to promote youth participation in governance.
Another theme is the need to see urban and rural as mutually supporting, not as rivals. This builds on another recent OECD study, published last year, which looks at urban-rural partnerships.
Reforms of sub-national government
The austerity measures are forcing governments to review the number and responsibilities of municipalities and other levels of local and regional government. In Sweden the number of counties is almost the same as it was in 1634. In the late 1990s there were mergers to create Skåne and Västra Götaland, but there has been no systematic reform across the whole country. In Norway, the counties (Fylker) are based on the Amts that were established in the 1660s. The merger of Bergen with Hordaland in 1972 reduced the number of counties from 20 to 19, and that is how it has remained. Sweden has 290 municipalities, Norway 428, Estonia 215. The Norwegian government proposed a significant reduction n the number of municipalities back in 2003, but it proved unpopular, and change was limited.
There is a marked contrast with Scotland where the absence of any written constitution allowed central government to seep away the historic structures of local government back in the 1970s, and then to tamper with it again in 1996. The result is that Scotland, which has a population total similar to Norway’s, has only 32 sub-national elected local governments, each of them all-purpose. Meanwhile the police were centralised into one all-Scotland force.
The OECD report argues that “excessive” local government fragmentation hinders economic growth. While this is a self-confirming statement (what is “excessive”?) and narrow-minded thinking can certainly hinder growth, the OECD might have looked at the miserable growth rates in many of the UK regions outside of London, whose economy skews all UK economic data. GDP per capita in several UK regions has been falling relative to the EU average since 2003.
Alternatives to a growth model
Throughout the OECD report the emphasis is on achieving economic growth. However, there is less discussion about the forms and acceptability of such growth. Rural regions are often more aware of the importance of a balance with nature and of quality of community lie than are the cities and the regional policy analysts who reside there.
The challenge is not to adapt to austerity policies so as to restore the previous growth path. Rather it is to find different, more sustainable and more inclusive ways to develop the places where we live. Retaining local democracy and accountability should be part of that.