Territorial Approach to FSN Policies

Vito Cistulli – Stefano Marta

TCI Investment Days

15 December 2014 – Rome

Structure

1. What is not Territorial Approach

2. What is Territorial Approach: main principles

3. Why territorial approach in FAO

4. How can Territorial Approach support better investment policies

5. Examples: Al Ghab (Syria), Oman

What is Not Territorial Approach

• Not synonymous with – Local development– Community development – Rural development – Integrated rural development

• But can be applied to all of them as well as to other areas such as urban areas, industrial areas, etc.

What is Territorial Approach (TA):Main Principles

Place-Based Policies

Theoretical foundations NEG + Institutional and Evolutionary Economic Geography + Endogenous Growth Theory

Policy Objective Primarily efficiency, with equity concerns

Agglomeration for economies of scale Yes (but also the potential cons – backwash effects – have to be considered)

Environmental concerns To be mainstreamed in public policy

Social concerns To be mainstreamed in public policy

Territorial targeted policies Needed to address market failures

Institutions Formal + InformalHistory and development processes Development processes are highly heterogeneous

Migration Economic, social and political costs

Pathways to Economic Development Multiple possible pathways and multiple spatial arrangements

Approach to Development All regions have a development potential

Inter-regional Convergence May result from a more efficient use of local potential in peripheral areas

Decision making Bottom-up (within a multi-level governance system)

Moreover• TA recognizes the interlinkages of all the dimensions of sustainable

development: social, economic, environmental, institutional. One perspective is not enough

• TA takes into consideration tensions and trade offs between – the dimensions – the actors – the policy choices– the local preferences and national priorities (i.e., infrastructures)

• Hence the 4I model based on four prerequisites:– Information: transparency– Inclusion: participation, ownership, cohesion– Innovation: technological, social processes– Institutions and governance: accountability

Why Territorial Approach in FAO1. Exclusive growth: most excluded living in rural areas2. Strong correlation between poverty and rural population 3. and between inequality and agricultural employment4. FAO has gradually shifted from sectoral priorities to multi-dimensional

priorities (food security & nutrition, rural poverty reduction)5. In developing countries poverty = hunger = inequality = rural areas6. Rural areas are therefore at greatest risk and require special attention

The policy response and the role of territorial approach

Need to CONNECT People, Places and Markets

People: more inclusive policy making processes and redistributive policies

Places: recognize the diversity of local socio-economic dynamics and understand opportunities that would be missed with one-size-fits-all policies

Markets: diversification and integration

Hence Investments in local

Markets + infrastructures + institutions + transfers

How this approach can support investments

• Tailored to real local needs and “endogenous” opportunities and challenges – higher returns – increased environmental sustainability (if standards are well defined and

enforced)– increased climate resilience for livelihoods as investments tailored to local

climate conditions – increased resilience of local livelihoods if appropriate mix of investments in

markets, infrastructures, institutions, transfers

• Targeted as opposed to “across the board” expensive investments i.e., sectors where a territory has a comparative advantage, education, etc.)– budget savings

• Inclusive as opposed to exclusive – higher probability to trigger private investments (should not forget that rural

households are by far the most important investors in the rural areas)– ownership and accountability– private/public partnerships– hence long term resilience of local livelihoods

Examples of Application

Al Ghab (Syria)Oman

Example: Al-Ghab Rural Development (1/3)

Objective: resolve the paradox of a resource rich area with a poor and

food insecure population

Analysis of root causes with a territorial approach (Chart below)

Main drivers of food insecurity: Education, Labour Market Efficiency,

Sectoral DiversificationCorrelation

0.96

0.20

0.79

0.99

-0.39

0.96 0.94

0.72

0.88

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

1.2

The investment plan was identified and designed in a way to be aligned to the above mentioned drivers.

Example: Al-Ghab Rural Development (2/3)

• Labour market efficiency: preparation of a Legal Framework for a Special Economic Zone in Al Ghab

• Education and institutional development: Capacity Building (2012-2014): incubators, vocational training, strengthening of local institutions, establishment of a AL Ghab Development Agency

• Sectoral diversification: agriculture remains the engine of growth of the region but its development is triggered by investments in other sectors

Example: Al-Ghab Rural Development (3/3)

Capacity building 2012-14

Investment 2015-19

Consolidation and streaming

2020-24

0 100,000 200,000 300,000

24 470

294 428

205 212

Financial requirements by Phase('000 US$)

AgricultureAgro-industryEnvironmentGovernance

InfrastructuresLivelihood

Tourism

0 40,000 80,000 120,000 160,000 200,000

53,640

140,300

199,16017,960

81,300

30,4001,350

Financial requirements by Sector ('000 US$)

80%

20%

Share of Investments, Equipments Technical assistance

The T

err

itori

al C

apit

al In

dex

of

Om

an

TERRITORIAL ASSETS VARIABLE

SOCIAL CONDITIONS

Poverty: less than 300 RO - HH IncomeFood Cash Expenditure (%)

Economic Dependency Ratio (Av. per cons. unit)Recipients of social welfare/populationGini Index

INFRASTRUCTURESource of drinking water (con. network, public + private)Telephone lines/popRoad Lengths

Main Source of Water Supply (Non - Drinking) Networks p+p

HUMAN CAPITALGender ratio (male/female) for public school studentTeacher student ratioAverage study years per adults

HEALTH

Low Birth Weight (% of Children registered )Anemia (at 9 months)

Diarrhea among Children below 5 Years (Rate/1000 children) Malaria Case (% of Plasmodium)

MOH Hospital Death Rate (Infectious and Parasitic Diseases)Life Expectancy at Birth (in Years)

Under-five Mortality Rate (for 1000 living births)

WEALTHGDP per capitaAverage monthly Household income% of rural income in Gov.

LABOUR MARKET Civil service employmentPrivate sector employment

DEMOGRAPHYForeign pop. (%)Population densityAverage Household Size

PRODUCTIVE CAPITAL

N. Registered Bus. Ent. with Less Than 50 Empl/pop (*100000)

N. of firms / Pop. Less than 50,000 RO (*100000)

N. of firms / Pop. More than 1000,000 RO (*100000)Added value of firms/pop

ENVIRONMENT Exposure to environmental problems

Example: Oman SARD Strategy 2040

• Only three regions have a Territorial Capital Index (TCI) above the national average:

• Muscat, Al-Batinah (N and S) and Al-Dakhliyah.

Example Oman: The Agricultural Potential Index

• Only in Dhofar and Al-Batinah improvements in agriculture have the potential to yield significant changes to trigger a dynamism that will be able to percolate to other sectors

Thank you