A New Paradigm for Rural Development

Rural paradigmCarl Dahlman, Special Advisor to the Director of the OECD Development Centre

Three billion people in developing countries live in rural areas. They include the majority of the world’s poor, and their number will continue to grow for the next decade and a half  until 2030. Conditions for them are worse than for their urban counterparts when measured by almost any development indicator, from extreme poverty, to child mortality and access to electricity and sanitation. And the gulf is widening, contributing to large-scale migration to urban areas. They are constrained by a lack of productive employment opportunities, poor education and infrastructure, and limited access to markets and services. This situation exists despite half a century of rural development theories and approaches, and despite the global momentum built around the Millennium Development Goals between 2000 and 2015. Without a new framework for rural development in developing countries, it is unlikely that the new Sustainable Development Goals will be met.

Rural areas versus urban areas multidimensional poverty index (MPI) late 2000s

Fig 2
Note: MPI ranges from 0 to 1 with 1 as the highest level of multidimensional poverty. The MPI reflects poverty in three dimensions (education, health and living standards)
using 10 indicators: nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, water, electricity, floor and assets.
Source: Oxford Poverty and Human Development Initiative (2015), Global MPI Data Tables for 2015, database.

Although building on the experience of early developers is useful, rural regions in less developed parts of the world today face new challenges and opportunities that developed countries did not face before. Challenges include a more demanding competitive international environment, rapidly growing rural populations, increased pressure on limited environmental resources and climate change. Opportunities include advances in information and communications, agricultural, energy, and health technologies that can help address some of these challenges.

A new paradigm for rural development is needed to move forward. It needs to incorporate the lessons of past experience but also needs to meet the challenges and harness the opportunities of the 21st century – including climate change, demographic shifts, international competition and fast-moving technological change.

Based on the lessons drawn from previous approaches and theories on rural development, the experience of OECD countries and lessons from case studies of developing countries adapted to the reality of developing countries, the OECD Development Centre proposes a new rural development paradigm (NRDP) for developing countries in the 21st Century

The NRDP is founded on eight components that need to be included for successful rural development strategies.

  1. Governance. A consistent and robust strategy is not enough if implementation capacity is weak. It is thus important for an effective strategy to build governance capacity and integrity at all levels.
  2. Multiple sectors. Although agriculture remains a fundamental sector in developing countries and should be targeted by rural policy, rural development strategies should also promote off-farm activities and employment generation in the industrial and service sectors.
  3. Infrastructure. Improving both soft and hard infrastructure to reduce transaction costs, strengthen rural-urban linkages, and build capability is a key part of any strategy in developing countries. It includes improvements in connectivity across rural areas and with secondary cities, as well as in access to education and health services.
  4. Urban-rural linkages. Rural livelihoods are highly dependent on the performance of urban centres for their labour markets; access to goods, services and new technologies; as well as exposure to new ideas. Successful rural development strategies do not treat rural areas as isolated entities, but rather as part of a system made up of both rural and urban areas.
  5. Inclusiveness. Rural development strategies should not only aim at tackling poverty and inequality, but also account for the importance of facilitating the demographic transition.
  6. Gender. Improving rural livelihoods should take into account the critical role of women in rural development, including their property rights and their ability to control and deploy resources.
  7. Demography. High fertility rates and rapidly ageing populations are two of the most relevant challenges faced by rural areas in developing countries today. Although the policy implications of these two issues are different, addressing these challenges will imply good co-ordination across education, health and social protection policies, as well as family planning.
  8. Sustainability. Taking into account environmental sustainability in rural development strategies should not be limited to addressing the high dependence of rural populations on natural resources for livelihoods and growth, but also their vulnerability to climate change and threats from energy, food and water scarcity.

The Sustainable Development Goals (SDGs) are closely linked to addressing the new challenges for rural areas, such as demographic pressure, ecological side-effects and climate change, and poor governance, along with negative consequences imposed by lagging rural areas such as polarised regional development and rural migration into urban slums. Since the SDGs and rural development are closely interconnected, investment in both areas will have mutually beneficial impacts. Thus rural development should be put at the heart of national development strategies in all countries at all development stages to ensure equal, inclusive and sustainable development

The challenge is that urban areas in most developing economies with fast growing populations are not able to productively absorb their growing urban populations, let alone migrants from rural areas. The result is an increase in urban slums, informal employment, underemployment, falling labour force participation rates and persistent poor livelihoods in rural areas. Furthermore, with the slowdown of China’s growth and its changing economic structure toward services, the fall in commodity prices is not a cyclical but a structural change. Combined with the expected rise in global interest rates there is likely to lead to slower economic growth in developing countries which will further complicate prospects for rural development.

The challenge is particularly large for South Asia and Sub-Saharan Africa because their populations are largely rural and they also have high population growth rates (Figure 3) and the lack of productive jobs to absorb the rapid increase in the labour force. There is already vast growth of urban slums and the informal labour force, underemployment in rural areas, and falling labour force participation rates. While most other developing regions have already had the demographic transition and seen their population growth rates fall starting in the 1980s, in Sub-Saharan Africa population growth rates have been around 2.8 % per year for the last 35 years. They are only now starting to decline, but are more than twice the average for the world. They are expected to remain about 1.5 percentage points higher per year than the world average for the next three decades (Figure 3). The increase in the labour force (population 15-64 year olds) by 2030 from people that have already been born is 300 million workers, which is roughly the current labour force of the EU. In addition many Sub-Saharan countries are fragile states and many are also very environmentally fragile. As a result there are likely to be large humanitarian challenges as well as increased pressure for people to migrate out of Africa to Europe and other regions.

Unless effective rural development policies can be put in place it will not be possible to meet the SDG because rural areas tend to be left behind. Addressing the challenge of rural development is going to require innovative approaches at the local, national and international level. These include developing multi-sectoral and multi-level and multi-agent strategies that further economic and social development and are also environmentally sustainable. Innovative approaches to urbanization and the development of intermediary cities that are economically and environmentally sustainable will be needed, which will require bringing to bear the best global knowledge on how to achieve this in a cost-effective way and also addressing the difficult governance and financial challenges for achieving this.

In addition the challenges are not only at the country or regional level but at the global level because in our currently very interconnected world lack of productive jobs, increasing inequality and population pressures in the developing world can lead to social unrest, political instability, conflict and increased migration flows which will impact other parts of the world as we are seeing with the spread of global terrorism and the refugee crisis.

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The 2016 OECD Global Forum on Development on 31 March in Paris will discuss how national policies and strategies for achieving the SDGs can be optimised. It will also look at approaches to scale up rural initiatives and leverage the data revolution to track progress toward achieving the SDGs and maximising resources through innovative partnerships.

  • How will global trends, including migration, affect the implementation of the SDGs?
  • Why is rural development still critical and how can rural strategies be strengthened in international and national agendas to further support the SDGs?
  • How can a smarter use of data better prioritise and facilitate SDG implementation?
  • Is it possible to secure adequate and predictable financing in support of developing and emerging countries’ development strategies?
  • How can policy dialogue and peer learning be further leveraged to support the implementation of the 2030 Agenda?

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