Download Connecting Cohesion Policy With Rural Development

Connecting
Cohesion Policy
With Rural
Development?
EU Workshop On Cohesion Policy
and Rural Development
Brussels, Sep. 30, 2009
David Freshwater, OECD Rural
Development Programme
OECD Position
• OECD broadly endorses economic flexibility
and economic growth through:
• Strong competition
• More open markets
• Technological innovation
• Rural Development policy follows the New
Rural Paradigm
•
•
•
•
Investment based approach
All regions have growth potential
Bottom-up process
Variety of sectors
Cohesion Policy
• Fundamentally cohesion policy is about
strengthening the bonds among the people
in a community.
– But what do we mean by community?, and
– What types of bonds are we interested in
strengthening?
Two Meanings of Community
• Community of Place
•
•
•
•
Whole world – global village
European Union
Nation
Region
– Administrative
– Functional
• Locality
• Community of Interest
Types of Bonding
• Economic Linkages
• Trade flows
• Access to technology
• Capital Markets
• Shared Social Values
•
•
•
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Willingness to help disadvantaged
Desire to protect environment
Belief in democratic political system
Trust in members of the community
EU Cohesion Policy
• Historically defined in terms of the EU as the
community and with a strong emphasis on
improving the economic well-being of people
in those sub-national administrative regions
which are furthest from the EU average in
terms of GDP per person.
• Cohesion Policy can be seen as a response to
the adverse distributional consequences of
enlargement and the shift to a more
globalized economy that is driven by finance
and technological change
Two Interpretations of EU
Cohesion Policy
• Redistributive
• Grew out of the European Social Model where
government taxes the “winners” to compensate the
“losers”.
• Part of the bargain in each round of enlargement to
“buy-off” opposition.
• Encourages rent-seeking behavior.
• Efficiency Enhancing
• Response to market failures that provides lagging
regions with resources to enhance growth, thereby
adding to aggregate output.
What Distinguishes Rural
Places
• Low density, prevalence of distance, and lack of
critical mass.
• The most crucial problem in rural areas is low
density networks. Markets work best in dense
networks (high connectivity, multiple pathways,
low connection costs).
• As a result of low connectivity, community in rural
areas is almost exclusively community of place.
• Distance makes it more difficult to get to critical
mass – as you add more people the average
distance among people goes up.
What We Know About
Successful Rural Localities
• Bottom-up process is key – people have to build
local trust and local social capital.
• There are capital gaps, but more commonly there
are idea gaps and entrepreneurship gaps.
• Not all rural places will be successful, but some
rural regions can grow faster than most urban
regions.
• Average income in rural areas is rarely as high as
in urban areas because the occupational
composition does not include as many high skill
jobs.
Can Coherence Policy Make a
Difference in Rural Regions?
• Coherence policy is mainly about bonding to
the EU, but for rural development we need
bonding at the locality or functional region.
• Coherence policy seems focused on per capita
GDP and convergence, but many rural areas
are specialized in lower value, but necessary,
functions.
• Social cohesion may be a prerequisite for
stronger economic cooperation.
• Coherence policy is an inherently top down
process, but rural development is bottom-up.