CERTAIN key components can be identified as underpinning strategies for rural economic change and innovation, finds Brian Wilson.

CERTAIN key components can be identified as underpinning strategies for rural economic change and innovation, finds Brian Wilson.

The Paris-based Organisation for Economic Co-operation and Development (OECD) put out a publication on Innovation and Modernising the Rural Economy to coincide with its eighth conference on rural development.

Country membership of the OECD is broad and, in spanning that breadth, it is inevitable some of its output does not describe well rural conditions as found in England. In particular, few rural areas in England can truly be described as remote. By extreme contrast the venue for the eighth conference, the Russian region of Krasnoyarsk Krai, stretches north-to-south across seven climate zones.

However, there can be little disagreement with this report's opening statement that most rural workers in OECD countries are now employed in services sectors, including tourism, health care, education, finance and public administration.

Its starting premise is that the future prosperity of rural economies will be driven by enterprise, innovation and new technologies, applied to new and old businesses alike.

The report identifies a set of opportunities and a set of vulnerabilities for rural areas. Four opportunities cited are tourism, renewable energy, local foods and forestry. Moreover, these are so often inextricably linked, as when local foods are a selling point for tourism.

The report says that for some "renewable energy is rural energy". For example, bio-fuels rely on agricultural feed stocks and onshore wind power depends on rural sites. It is tempting to add that traditional power plants – coal, gas or nuclear fired – have also been mainly in rural locations.

Rural vulnerabilities include the impacts of demographic change – an ageing population – and the impacts of climate change. They also include the disproportionate rural effect that cutbacks in public expenditure may have on service availability, as Rural Service Network members will be only too aware.

The OECD finds that there is no unique rural recipe for economic success, but there are some common strategies for improving the competitiveness of rural regions. Supporting the creation of efficient local supply chains is one such.

Workforce skills are another and rural regions are said to face two related issues. The first is a typically quite narrow existing skills set (at least, compared to urban areas) by virtue of having relatively fewer businesses and a smaller workforce. The second is the relatively high cost of augmenting that existing skills set, if there are not locally accessible universities or training institutions.

Moreover, whilst new skills may be needed, the rural market for them will frequently be 'thin', requiring just a few individuals to fill a few posts. The opportunities for those individuals to recoup the costs of their training are much greater in larger urban labour markets.

Entrepreneurship is considered a driving force for modernising local economies. New firms can drive innovation and (in the economic jargon) erode the monopoly profits of entrenched businesses. They are also a means of widening the sectoral base of the local economy and making it less vulnerable to future economic shocks. Put another way, entrepreneurship can both increase competition and reduce risk.

Supporting innovation is a further key concern featured in the report, which states that it is hard to imagine an area engaging on a sustained path of technological upgrading without an abundant supply of skilled labour.

It is easy to view innovation narrowly, as relying on investment in science or technological breakthroughs and the work of research institutes or corporate R&D teams. The OECD notes that rural areas may always tend to fall behind by this definition, as they are unlikely to be home to major research laboratories or corporate headquarters.

However, innovation should not be seen as restricted to new practices or behaviours: it can also be about upgrading and improving the way that existing things are done. Innovation may take many forms, including applying new techniques, tapping into new markets, working with new partners and adapting proven approaches, as well as developing new products and services.

When a broader understanding of innovation is used it is much more apparent that it should be a core feature in rural areas and for rural economic development.

In short, the OECD suggest that strategies to enhance the performance of rural economies should focus on four types of issue – markets or supply chains, the skills of the labour force, entrepreneurship and innovation. Whilst that may be easier said than done, it is surely simpler in rural England than in Krasnoyarsk Krai.

This article was written by Brian Wilson whose consultancy, Brian Wilson Associates, can be contacted at [email protected]. Brian also acts as the RSN Research Director.