Growth Trends and Characteristics of OECD Rural Regions

Abstract

This paper benchmarks the performance of OECD rural regions with other types of OECD regions over the period 1995-2010. OECD regions are classified into three types according to the OECD regional typology and into four types according to the extended OECD typology. The latter classifies rural regions into rural regions close to cities and rural remote regions. The analysis focuses on two time-periods: the first prior to the global financial crisis covering 1995 to 2007 and the second capturing the effects of the crisis from 2007- 2010. The results display a relative stable trend in settlement patterns among urban and rural regions over the last 15 years. Level comparisons reveal important differences between urban and rural regions. The latter are characterised with low density, long distances and lack of critical mass in comparison to other OECD regions. Notable differences are also present within rural regions. In terms of performance, rural regions record the highest average growth in GDP per capita and in productivity but also the highest volatility in growth rates during the pre-crises period. Within countries, rural regions record the fastest rate of growth in GDP per capita in 40% of OECD countries considered. Among rural regions, those close to a city are the most dynamic in GDP per capita, productivity and population growth during 1995-2007. The effects of the crisis have been more severe in urban regions in GDP, GDP per-capita and employment rates. Rural regions in contrast have suffered a higher increase in unemployment rates. Overall the effects of the crisis will likely have a more lasting effect on rural regions, particularly in remote rural regions, due to their thinner and less diversified economic base. In sum this paper finds stark difference between rural and urban regions and between rural regions close to cities and remote rural regions which suggests the need for a differentiated policy approach capable of addressing the different types of challenge.