presented to the prosperous places: building economic

Presented to the Prosperous Places: Building Economic Competitiveness in Rural Regions and Small Communities Conference

Salt Lake City, Utah March 26, 2013

Charles W. Fluharty President & CEO

Rural Policy Research Institute

I. Recalibrating the rural/urban dialogue and paradigm

II. The global rationale for a “Regional Rural Innovation” strategy

III. Is there a “rural” commitment in current U.S. domestic policy?

IV. Rural imperatives, and signs of hope and progress!

V. Final reflections: Why your work is so critical

I. Recalibrating the rural/urban dialogue and paradigm

U.S. Census Bureau

Urban and Rural Areas

Office of Management and Budget

Core Based Statistical Areas – Metropolitan and Nonmetropolitan Areas

The U.S. Census Bureau defines urban areas: Core blocks and block groups with population density

of 1,000 people per square mile.

Surrounding blocks with overall density of 500 ppmi2

Range in size from 2,500 people to nearly 2 million people.

Rural is everything that is not urban.

Based on the 2010 Decennial Census: 59 million people live in rural areas (19%)

249 million people live in urban areas (81%)

5

Hermann, MO Population 2,515

New York-Newark Population 1.8 million

These boundaries are only defined every 10 years.

Urban area boundaries don’t align with boundaries of cities and towns.

There is no governmental jurisdiction over Census defined urban areas.

Very limited sub-county data challenges more granular understanding, and resource targeting.

The most comprehensive data is at the county level.

All would agree that some “urban” places are really much more rural in character.

Defined by the Office of Management and Budget.

Designed to be functional regions around urban centers.

Classification is based on counties.

Three classifications of counties:

Metropolitan, Micropolitan, Noncore

Based on size of urbanized area/urban cluster in central counties and commuting ties in outlying counties.

Core Based Statistical Areas Metropolitan Micropolitan Noncore

Usually, metropolitan is equated with urban and nonmetropolitan is

equated with rural.

So, if metropolitan is urban, then…

This is urban:

Los Angeles, California Population 1.2 million

And so is this:

Armstrong County, Texas Population 2,071 Part of the Amarillo Texas Metropolitan Area

And if nonmetropolitan is rural, then…

This is rural:

Loving County, Texas Population 55

And so is this:

Paducah, Kentucky Population 48,035

Most Counties are Both Urban and Rural!

Coconino County, Arizona Population 127,450 Flagstaff Metro Area

Most metropolitan areas contain rural territory and rural people.

In fact…

54% of all rural people live in metropolitan counties!

Distribution of U.S. Population by Urban and Rural Areas, and Core Based Statistical Areas, 2010

Urbanized Area

Urban Cluster

Rural Total

Metropolitan

219,677,256

10,766,879

32,007,997

262,452,132

Micropolitan

228,950

13,852,786

13,072,477

27,154,213

Noncore

15,917

4,711,483

14,411,793

19,139,193

Total

219,922,123

29,331,148

59,492,267

308,745,538

Urbanized Area

Urban Cluster

Rural Total

Metropolitan 99.9% 36.7% 53.8% 85.0%

Micropolitan 0.1% 47.2% 22.0% 8.8%

Noncore 0.0% 16.1% 24.2% 6.2%

II. The global rationale for a “Regional Rural Innovation”

strategy

The OECD New Rural Paradigm (2006)

Old Paradigm

New Paradigm

Objectives Equalization. Focus on farm

income

Competitiveness of rural areas

Key target

sector

Sector based Holistic approach to include

various sectors of rural economies

Main tools Subsidies

Investments

Key actors National governments, farmers Multilevel-governance

Guarantee an adequate attention to rural issues And empower local communities and governments

Rural is not synonymous with agriculture Rural is not synonymous with economic decline

Modernising the rural economy

• NRP and ahead: – Identification toward a set of principles

• Differentiation based on rural characteristics – Low density – sparsely populated

– Long distances

– Lack of critical mass

• Need to enhance competitiveness – Rural areas integrated in global world

• Differentiated but integrated – Rural regions are complex territories

– Non-core urban areas

Promoting Growth in all Regions

Urban to Rural Linkages Project

“Innovation and Modernising the Rural Economy “

Enrique Garcilazo

Regional Development Policy Division Directorate for Public Governance and Territorial Development OECD

NACO WEBINAR

Washington, 15th January 2013

Promoting Growth in all Regions and Rural Development

OECD Territorial Reviews: A series of case studies of regional policy

Among 34 member countries :

18 National Territorial Reviews ( +2 in process)

22 Metropolitan Reviews (+1 in process)

2 National Urban Policy Reviews (+1 in process)

6 Regional reviews (+2 in process)

5 review s on regional innovation systems 9+2 National rural Policy Reviews(+1 in process)

24

Alemania, Mexico (2006) Finlandia, Holanda, Escocia (2007) China, Italia, España (2008) Quebec, Canadá (2009) Inglaterra (2010)

Thematic Reviews -- Rural

Factors of regional competitiveness

(1) Empirical evidence

-- General trends

(2) Case studies

– Field analysis

– Questionnaires,

– Peer reviewers, experts

• Policy implications:

(3) Implementation

Governance

Linking Renewable Energy to Rural

Development (15)

RURAL-URBAN Partnerships Project (16)

OECD Regional Data-Base (RDB)

The RDB includes regional statistics on 5 major topics:

– Demographic , Regional accounts , Labour ,

– Social and environmental indicators , Innovation

To facilitate comparability, regions are:

Classified in 2 Territorial Levels (TLs):

• TL2 Territorial Level 2 (337 regions)

• TL3 Territorial Level 3 (1708 regions)

• New regions: China, Brazil, South-Africa, Chile etc..

Classified by regional type OECD definition: (PU, I, PR)

Extended regional classification (PU, INC, INR, PRC,PRR)

Database can be directly accessed from the OECD

Statistical portal: http://stats.oecd.org

OECD eXplorer: http://stats.oecd.org/OECDregionalstatistics

OECD MDB: www.oecd.org/gov/regional/statisticsindicators

Promoting growth in all regions

Is broader based growth economically viable?

Does growth potential exist in some regions?

Does it matter for national and aggregate growth ?

There is no single/unique path to growth…

Convergence forces in rural regions

Convergence forces in intermediate regions

The most dynamic OECD regions over 1995-2007..

31

140

150

160

170

180

190

200

210

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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

pop and GDP growth pop density and GDP growth pop and GDPpc growth

average rank (1== highest) population pop density

Dynamism in rural regions and population trends

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21% 79%

Only 45% of metro--regions grow

faster than the national average.

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Average annual growth rates in GDP per capita 1995-2005

III IVBudapest

Warsaw

Naples

Izmir

Istanbul

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DublinPrague

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WashingtonSan Francisco

San DiegoDetroit

Atlanta

Phoenix

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Metro-regions appear to have

entered in a process of convergence.

…signs of inefficiencies appear in significant number of metro-regions…

…but not necessarily faster growth

Contributions to aggregate growth depend on few hub regions…

…the fat tail is equally important -- if not more -- to aggregate growth… 35

Contributions to growth OECD TL3 regions

36

y = 0.5031x-1.201

0%

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5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75 % 80% 85% 90% 95%

Tokyo

London West

Gyeonggi-do

SeoulMadrid

RomaMilanoAichiBarcelona

AttikiMiasto Warszaw

Dublin

Chungcheongnam-doGyeonsangbuk-do

Paris

München

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Inner London -- East

27% of growth driven by 2.4% (or 20) regions...

...and 73% of growth by the remaining

Lagging regions contribute to national growth

Lagging Regions Contribution to Aggregate Growth

Overall, they contributed to 44% of aggregate OECD growth in 1995-2007.

Austra l ia 29% 71%

Austria 53% 47%

Canada 26% 74%

Czech Republ ic 62% 38%

Finland 35% 65%

France 68% 32%

Germany 27% 73%

Greece -16% 116%

Hungary 34% 66%

Ita ly 26% 74%

Japan 27% 73%

Korea 23% 77%

Mexico 44% 56%

Netherlands 49% 51%

Norway 61% 39%

Poland 44% 56%

Portugal 54% 46%

Slovak Republ ic 67% 33%

Spain 48% 52%

Sweden 58% 42%

Turkey 47% 53%

United Kingdom 57% 43%

United States 51% 49%

average unweighted 43% 57%

average weighted 44% 56%

lagging leading

In eight OECD countries lagging regions contributed more to national growth

than leading regions.

Bottom line: support for lagging regions need not be merely a “social” policy. They contribute a large share of national growth.

37

Analytical approach:

Compare indicators relevant for regional growth b/w

“growing” and “underperforming” group

•Population density •GDP density

•Employment rate •Unemployment rate •Youth unemployment rate •Patent applications •Patent intensity •Business R&D to GDP •Government R&D to GDP •Higher education R&D to GDP

•Primary attainment rate •Tertiary attainment rate •Connectivity in global network

•Productivity

•Infrastructure

Economic mass/thickness of market economies of agglomeration Labour utilisation Innovation related indicators Human capital Geography/NEG

Performance of all “growing” regions associated …

Productivity Human capital Density

Productivity Productivity (GDP per employee) 31,612 29,728 55,832 50,728 72,551 59,824

Infrastucture Motorway density 0.15 0.13 0.26 0.18 0.19 0.24

Primary educational attainment (% of LF) 42% 46% 26% 22% 25% 29%

Teritiary attainment (% of LF) 21% 19% 26% 25% 31% 26%

PISA score mathematics 443 405 476 487 484 478

PISA score reading 459 436 482 485 490 465

Employment rate 57% 55% 71% 68% 71% 66%

Unemployment rate 9% 8% 5% 7% 5% 6%

Long-term unemployment rate 4% 5% 2% 2% 2% 2%

Youth unemployment rate 21% 22% 13% 16% 12% 15%

Participation rate 62% 60% 73% 72% 74% 69%

ln (patent application) 1.7 1.8 4.4 4.1 5.0 4.0

Patent applications per million 20 16 91 74 158 82

ln (patent application copatents) 1.1 1.6 4.0 3.6 4.6 3.6

Co-invention within region 124 90 673 536 2932 1256

Co-inventions within ctry 105 71 294 261 759 466

Co-inventions foreign 16 53 126 112 314 206

R&D expenditure total (as % of GDP) 1.06% 1.03% 1.50% 1.41% 2.21% 1.51%

BERD % GDP 0.35% 0.42% 0.90% 0.86% 1.35% 1.00%

GERD % GDP 0.33% 0.22% 0.23% 0.20% 0.42% 0.16%

High and medium HTM % empl. 3.3% 4.8% 5.2% 6.1% 5.3% 6.4%

KIS (as % of total employment) 22.5% 28.2% 33.3% 32.8% 36.7% 32.2%

Population density 17.51 18.38 19.40 18.63 29.47 23.41

GDP density 1.10 0.99 4.29 3.38 29.14 24.19

Degree of openness 14 15 40 40 65 44

Clustering coefficient 0.034 0.038 0.089 0.093 0.123 0.084

Centrality 0.001 0.001 0.002 0.002 0.007 0.005

Growth factor Indicator

Agglomeration and

connectivity

Innovation

Labour market

Human capital

Regions with large

catching up potential

Regions with catching

up potentialAdvanced regions

Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

Performance of regions with low levels of development…

…infrastructure and innovation related activities (co-invention within regions and with other regions within countries) are critical, in addition to human capital .







Employment rate 57% 55% 71% 68% 71% 66%












BERD % GDP 0.35% 0.42% 0.90% 0.86% 1.35% 1.00%

GERD % GDP 0.33% 0.22% 0.23% 0.20% 0.42% 0.16%




GDP density 1.10 0.99 4.29 3.38 29.14 24.19



Centrality 0.001 0.001 0.002 0.002 0.007 0.005


Agglomeration and

connectivity

Innovation

Labour market

Human capital

Regions with large




Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

As regions move into higher levels of development…

…human capital but in addition to adequate infrastructure, efficient labour markets and innovative activity are critical to enhance their performance .







Employment rate 57% 55% 71% 68% 71% 66%












BERD % GDP 0.35% 0.42% 0.90% 0.86% 1.35% 1.00%

GERD % GDP 0.33% 0.22% 0.23% 0.20% 0.42% 0.16%




GDP density 1.10 0.99 4.29 3.38 29.14 24.19



Centrality 0.001 0.001 0.002 0.002 0.007 0.005


Agglomeration and

connectivity

Innovation

Labour market

Human capital

Regions with large




Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

As regions approach the production possibility frontier…

…in addition to human capital dynamism is mainly associated with innovation-related activities and their connectivity within the global network of regions and agglomeration forces.







Employment rate 57% 55% 71% 68% 71% 66%












BERD % GDP 0.35% 0.42% 0.90% 0.86% 1.35% 1.00%

GERD % GDP 0.33% 0.22% 0.23% 0.20% 0.42% 0.16%




GDP density 1.10 0.99 4.29 3.38 29.14 24.19



Centrality 0.001 0.001 0.002 0.002 0.007 0.005


Agglomeration and

connectivity

Innovation

Labour market

Human capital

Regions with large




Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

Growing

above av.Growing

below av.

Persistence of inequality

Infrastructure

provision

Leaking by linking

The policy headache: isolated sectoral action may have unintended outcomes.

Problem: lack of connectivity

43

with labour mobility

Persistence of inequality

Policy

responses

Human capital formation

Brain drain

44

The policy headache: isolated sectoral action may have unintended outcomes.

The need for a differentiated approach

• Place based polices in the new regional paradigm are

best suited for this task

Integrated approach – diagnosis is critical

Right level of intervention – local labour markets

A match between bottom and top down information

and initiative is critical

Policy design and multilevel governance are key for a

successful implementation

45

Infrastructure provision

Policy responses

Human capital formation

Business environment

Innovation

Regional growth and convergence

Towards a Multidimensional Response

At the regional scale

Many countries are reforming in this direction, but implementation is still difficult.

46

-Horizontal evidence? -Policies ? -Institutions ?

III. Is there a “rural” commitment in current U.S. domestic policy?

“ What policy framework will best integrate rural and urban initiatives and programs, to advantage both ag and non-ag rural constituencies, their communities and regions, and enhance their children’s potential to thrive there in the 21st century?”

1. Greater attention to asset-based development, much more broadly

defined. Placemaking, married to economic development, must be

the new paradigm.

2. The building of regional frameworks, appropriately configured, of

sufficient scale to leverage these geographies and bridge these

constituencies. (While we need rural and urban responses, their

intersection is the future of enlightened public policy.)

3. As the Federal role reduces over time, greater attention to new

governance / new intermediary support by the public sector.

4. Regional innovation policies which specifically target mutually

beneficial competitive advantage, that rural and urban areas share.

(i.e., Regional food systems, bio-energy compacts, natural resource-

based / sustainability assets, “workshed” / “watershed”

approaches, etc.)

5. Attention to the importance of working landscapes:

Arts / heritage / culture

Natural resources / tourism

Bio-energy / biofuels, entrepreneurial agriculture

6. Incentives to bridge innovation / entrepreneurship support

systems, from urban to rural expression

7. Opportunities to address spatial mismatch issues in

workforce / training across broader geographies, via

“place-based” community / technical college

collaborations, both sister schools and research universities.

8. Innovative funding approaches which enhance

collaboration across state and local governments,

particularly in cross-sectoral, regional experimentation.

IV. Rural imperatives, and signs of hope and progress!

Critical Internal Considerations

Wealth Creation and Intergenerational Wealth Retention

Youth Engagement and Retention

Social Inclusion and Social Equity

New Narratives &

Networks

Knowledge Networks & Workforce

Quality of Place

Entrepreneur-ship &

Innovation

Collaborative Leadership

V. Final

Reflections:

Why your work is so critical

Distribution of U.S. Population by Urban and Rural Areas, and Core Based Statistical Areas, 2010

Urbanized Area

Urban Cluster

Rural Total

Metropolitan

219,677,256

10,766,879

32,007,997

262,452,132

Micropolitan

228,950

13,852,786

13,072,477

27,154,213

Noncore

15,917

4,711,483

14,411,793

19,139,193

Total

219,922,123

29,331,148

59,492,267

308,745,538

Urbanized Area

Urban Cluster

Rural Total

Metropolitan 99.9% 36.7% 53.8% 85.0%

Micropolitan 0.1% 47.2% 22.0% 8.8%

Noncore 0.0% 16.1% 24.2% 6.2%

“What lies behind us,

and what lies before us

are tiny matters

compared to what lies within us.”

--Ralph Waldo Emerson

Charles W. Fluharty [email protected] President and CEO

Rural Policy Research Institute 214 Middlebush Hall

University of Missouri Columbia, MO 65211

(573) 882-0316 http://www.rupri.org/

mailto:[email protected]

http://www.rupri.org/

presented to the prosperous places: building economic

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