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.

Useful links

GFD

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?

World Food Day 2015: Building Resilient Societies and Breaking the Cycle of Rural Poverty in the Sahel and West Africa Region

WFDOusman Tall, Sahel and West Africa Club (SWAC) Secretariat

The official programme marking World Food Day takes place today at the Universal Exposition in Milan, under the theme, “Social Protection and Agriculture: Breaking the Cycle of Rural Poverty”. This theme underscores the role of social protection in ensuring that food and other basic needs of the most vulnerable individuals and households are addressed. Furthermore, embedded in this theme is the assertion that social protection programmes tied to productive activities, such as agriculture, are the most sustainable approach to eradicating poverty and achieving food and nutrition security. This has considerable implications for Sub-Saharan Africa, where poverty is pervasive in rural areas.

Sub-Saharan Africa, especially the Sahel and West Africa region, is one of the poorest and most food-insecure regions in the world. Out of the 25 poorest countries in the world, 23 are in Sub-Saharan Africa with 11 of them in the Sahel and West Africa Region. It has the world’s fastest growing population, where 65% of countries are classified as low-income countries and over half of the population is living below the poverty line.[1] To address the high levels of food insecurity and poverty, a number of social protection initiatives have been put in place, including national social protection strategies in some countries. In 2014, the European Union alone assisted 1.7 million food-insecure people and 580 000 malnourished children in the Sahel.[2] This has provided a strong argument and a basis for a pro-smallholder agricultural intervention in rural areas in the Sahel and West Africa region.

Most Recent Food Insecurity Situations in the Sahel and West Africa Region (click for full size)

food-insecurity-sahel-west-africa

© Map produced by CILSS/Agrhymet. Source: Regional analysis of the Cadré harmonisé (CH), Bamako, 22-23 June 2015.

Linking social protection programmes with economic activities, productivity, ownership and long-term sustainability is important. Tackling risk and vulnerability and at the same time ensuring pro-poor growth through investments in social protection programmes lead to greater inclusive growth.[3] These should be the guiding principles in the design and implementation of social protection programmes. However, most social protection initiatives and interventions in the region are project-oriented, mainly addressing poverty and food insecurity during times of crisis. With the persistent nature and recurrence of crises in the region, there is a need to go beyond interventions during crises, to build the resilience of the most vulnerable populations in adapting – in a sustainable manner – to these emerging and recurrent crises.

Cognisant of this and at the invitation of the EU, stakeholders of the Sahel and West Africa region and their Technical and Financial Partners (TFPs) met in Brussels on 18 June 2012 to discuss the root causes of the recurrent food and nutrition crises in the region, which were weakening the livelihoods of the most vulnerable households. To tackle these problems, which are multiple and complex, the stakeholders agreed on a long-term collaborative effort that gave birth to the establishment of the Global Alliance for Resilience (AGIR) – Sahel and West Africa. AGIR is not a new policy or program, but a kind of framework or approach that seeks to channel the efforts of stakeholders in the region towards a common results-focused framework based on a shared definition of resilience: “The capacity of vulnerable households, families and communities and systems to face uncertainties and risk of shocks as well as to recover and adapt in a sustainable manner”.

Just ten days after the World Food Day Programme, the Sahel and West Africa Week will be celebrated at the 2015 Universal Exposition in Milan from 26-30 October. Organised by the Sahel and West Africa Club and its Members and partners, the Week will provide an opportunity for stakeholders to exchange best practices and shared solutions on issues such as food insecurity, malnutrition, poverty and resilience. AGIR stakeholders will meet to assess progress made since 2013 when 17 countries adopted the AGIR Regional Roadmap and committed themselves to its implementation. Consistent with the Roadmap, countries have organised national inclusive dialogues and are developing their own National Resilience Priorities (NRP-AGIR).

Through the NRP-AGIR, countries are fostering the improvement of social protection for the most vulnerable by strengthening food and nutrition programmes and improving their governance systems. They are also targeting income generating activities, especially through the agricultural value chains, in order to increase productivity and access to food for vulnerable segments of the population. These interventions are in recognition of the fact that the rural sector in the region is dominated by poor agricultural households that are faced with uncertainties as a result of numerous factors, ranging from socio-economic and political factors to natural disasters, such as flood, drought and pest infestation.

It is obvious that with the many uncertainties and the recurrent nature of crises in the region, livelihoods will continue to be affected, with individuals, households and communities becoming more vulnerable. To break this cycle, strengthening the resilience of the most vulnerable segments of the population should be at the core of every social protection programme in the region. This is a fundamental priority of the Alliance. AGIR recognises that the state has an essential obligation in providing a framework to build resilience, and that this requires long term strategic planning based on existing national policies and programmes.

The strength of the Alliance lies in the fact that it is co-ordinated through the Food Crisis Prevention Network (RPCA). Created in 1984, the RPCA has acquired remarkable experience in not only managing but preventing crises in the region. The Network benefits from a strong level of regional ownership, operating under the political leadership of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA), with the co-facilitation of the Permanent Inter-State Committee for Drought Control in the Sahel (CILSS) and the SWAC Secretariat, and brings together all stakeholders working in the region. Through the Network, there is now broader co-operation among technical and financial partners, especially those working on food and nutrition security, poverty, social protection and resilience. At the occasion of World Food Day, the SWAC Secretariat, in collaboration with ECOWAS, UEMOA and CILSS, is launching today a film dedicated to the RPCA which raises awareness about the Network’s achievements and future challenges.

Finally, the AGIR objective of “zero hunger” (to completely eradicate hunger and malnutrition in the region) in 20 years is consistent with the 2030 Sustainable Development Goal 2: “End hunger, achieve food security and improved nutrition and promote sustainable agriculture.” To achieve this objective, there is a need for all stakeholders to reaffirm their commitment to the implementation of the AGIR Regional Roadmap, especially at a time when the Sustainable Development Agenda has been endorsed by Heads of States at the United Nations General Assembly. There is no better place for AGIR stakeholders to reaffirm their commitments than at the Universal Exposition in Milan during the Sahel and West Africa Week.

Useful links

[1] Food security in focus: Sub-Saharan Africa 2014. The Economist Intelligence Unit 2014

[2] ECHO Factsheet – Sahel: Food & Nutrition Crisis – May 2015

[3] Promoting Pro-Poor Growth: Social Protection-OECD 2009,

Cow power!

Click to learn more about Cow Power

Today’s post is from Kate Lancaster, editor in charge of publications on regional development at the OECD.

They say a picture is worth a thousand words, but what about its worth in cows? Behind this simple photo of a jolly tourist trolley stand a herd of 16 proud Vermont dairy cows, happily producing waste to help power this trolley. To be clear, their manure isn’t shoveled directly into an onboard furnace. Rather, the cows and the vehicle represent start and end points in a renewable energy success story.

This trolley runs thanks to “Cow Power”, a Vermont programme that gets dairy farmers to convert bovine waste into fuel, through the use of bio digesters. The digester produces methane gas, which fuels a modified natural gas engine, which in turn powers a generator to create electricity. Heat generated from this process keeps the digester warm, offsetting the farm’s fuel purchases. And the electricity generated is fed into the local energy utility’s system for distribution to customers.

To date, the programme has generated $1.8 million per year for Vermont farms, supporting a sector that has struggled, but which is of economic, cultural and historic value to the state. There are environmental payoffs too: Converting cow manure into methane biogas instead of letting it decompose reduces greenhouse gases. And together, eight Vermont cow power farms have the potential to eliminate 24 000 metric tons of carbon dioxide per year. The programme also benefits the electric utility, as consumers agree to pay a higher rate when they choose to use cow power. A final bonus? The processing of the waste makes the final solid byproduct a whole lot less smelly than manure straight from the source, something that the farmers and their neighbors alike appreciate.

But “cow power” is only one of the myriad renewable energy options being deployed in rural areas around the world.  Many OECD governments have invested large amounts of public money to support renewable energy development and are requiring significant quantities of such energy to be sold by energy providers, deriving from biogas, wind, hydropower, solar power, or other natural sources. A new OECD report, Linking Renewable Energy to Rural Development, asks what the true economic impact of these policies and investments is, based on case studies in 16 regions across Europe and North America. Can renewable energy really help develop rural economies?

Renewable energy is being championed as potentially significant new sources of jobs and rural growth, and as a means of addressing environmental and energy security concerns. However, there can be significant trade-offs among these three goals. For instance, large biomass heat and power plants can generate employment in rural communities, but may increase CO2 emissions due to changes in land use and the transportation of feed or livestock. Or consider that small-scale renewable energy installations typically use labour and equipment from international suppliers, thus limiting local job creation.

Can such trade-offs be mitigated? The authors think so, if renewable energy policy is well-thought out, flexible and carefully adapted to local conditions, cultures and opportunities. Renewable energy strategies should not be imposed from above, they suggest, but rather embedded in local economic development plans and undertaken with community involvement. Programmes such as the Community and Renewable Energy Scheme (CARES) – overseen by Community Energy Scotland (CES) – not only help provide greener sources of energy, but also build community cohesion, develop local confidence and skills, and support local economic regeneration.  

It is equally important to be realistic about what projects will work in a given place and economy, particularly if subsidies are limited or removed from the equation. Investment should be in those projects that are appropriate for their setting and viable on the market, or close to being so. Choosing relatively mature technologies such as heat from biomass, small-scale hydropower, and wind, is advisable. The Italian region of Puglia, for example, although long a producer of coal energy, has also invested in mature solar and wind technologies, and is seeing economic and environmental benefits.

Will cows soon be powering your buses? Will sheep be mowing your lawn? Such ideas are charming – and working, in certain communities. But the wider reality is that viable renewable energy policy is complex, and there are no shortcuts to rural development.

Useful links

OECD work on regional, rural and urban development

OECD work on green growth and sustainable development

Sell the farm: agriculture and poverty reduction

Click to see the book on OECD iLibrary

In 1972, French film maker Louis Malle spent several days interviewing people he met in a large square in Paris. The resulting documentary, Place de la République, provides a snapshot of a country undergoing profound changes as a result of the postwar boom. Then, as now, a significant number of Parisians were not born in the city but “came up” from the provinces.

One of them was a road mender. Malle asks him what it’s like to do such a tiring, dirty, dangerous job. He agrees that it’s hard, but, he points out, it’s much better than working on a farm. He describes his life as a farmboy back in Normandy in the 1940s – the endless chores, the poverty, the lack of opportunity. He left as soon as he could, and never regretted it.

Across the world, millions would do the same in the search for a better life, and the process is continuing. It can be surprising to see how keen people are to quit farming and life in the country for the city. Author Fred Pearce interviewed women working in sweatshops in Bangladesh. Like Louis Malle’s road mender, they had no illusions about their present jobs, but they still preferred having some money and better prospects for their children than the alternative in rural villages. Nazma Akter, a campaigner for garment workers’ rights told Pearce that, poor as they were, “women are becoming an economic force here. This is the first time they have had jobs. They are independent now. They can come and go; nobody stops them. Don’t take that away from them.”

Today, it may be more difficult for unskilled farm labour in poor agriculture-dependent economies to be absorbed by other sectors than it was for, say, European farmers to move into industrial jobs a century earlier. But once the change starts – and, crucially, once people have the relevant skills – the pace is invariably more rapid than in the past. In Korea, agriculture’s share of employment fell from 40% to 16% in just 14 years – a transition which took 53 years in the US and 68 years in the UK.

One way of looking at this process and what governments can do to help is outlined in a new OECD publication  Agricultural Policies for Poverty Reduction, edited by Jonathan Brooks. Change can be seen as a four-phase process for the agricultural sector.

In the early stages of development, agriculture dominates output and employment, and the priority is to “get agriculture moving”.

The subsequent generation of a surplus within agriculture leads to a second period in which agriculture makes a key contribution to growth both directly and via a variety of linkages to other sectors. These linkages range from small-scale local arrangements such as farm households having another source of income off the farm, to participation in global value chains through selling produce to international food processors.

In the third phase, agriculture’s share of national income declines and agricultural incomes fall behind those in other sectors, so the priority lies in helping the adjustment to succeed.

The fourth and final phase is one in which the agricultural sector, including agricultural labour markets, is integrated into the rest of the economy.

Policy requirements vary at each stage, and many of the policies required to improve farmers’ opportunities are not agricultural. Education and health for example may be better investments for rural populations than spending on agriculture.

A number of poor countries, mostly in Africa, are at the first two stages of this development process, and agriculture can account for up to half of GDP and 80% of employment. The book argues that while there may be plausible reasons for governments to intervene in agricultural markets in poorer economies, any short-term benefits from these expenditures should be balanced against those from investments to support long-term agricultural development.

If this development is successful, it will lead to many farmers quitting the sector, so a strategy for strengthening rural incomes should emphasise three development pathways for farm households: improving competitiveness within agriculture; diversifying income sources among farm household members; and, finally, leaving the sector for a better paid job.

This approach is relevant for countries at all stages of development, even if the opportunities vary. Smallholder farming dominates agriculture in most poor countries, and while some smallholders will be able to establish commercially viable operations, others won’t. Every country that has made the transition to a modern economy has seen agriculture’s share of GDP and employment shrink, not because agriculture has become poorer (on the contrary, farmers have become richer), but because other sectors offer far greater prospects. Agriculture can contribute to development and the fight against poverty, but there is no evidence that it can win on its own.

There may be a price to pay in terms of traditional lifestyles and culture, but not all aspects of these traditions are positive. This is one reason why the experience of Louis Malle’s road mender in France or the garment workers in Bangladesh suggests that given the chance, many people living in poor rural areas will leave the farm.

Useful links

OECD work on agriculture

OECD work on poverty reduction