Policy Context: Rural development in a European perspective

This chapter describes the focus of EU policy in general (2.1), the focus of EU rural development policy (2.2), the future of rural development policy (2.3) and trends in rural development (2.4).

2.1 EU 2020: strengthening economic, social, and territorial cohesion

The main policy objectives and priorities of the European Commission are laid out in its Europe2020 strategy, namely to strive for smart, sustainable, and inclusive growth.

Investing in R&D and innovation, in resource-efficient and low-carbon technologies, education and employment will benefit traditional sectors as well as high skills and service economies in both urban and rural areas. This will reinforce economic, social, and territorial cohesion throughout the Union.

More specifically, Europe2020 lays out the following mutually reinforcing priorities:

Smart growth:  

  • Education and its match with the job market
  • Research/innovation, mainly on climate change, energy, resource efficiency, health, and demographic change
  • The digital society

Sustainable growth:

  • Promoting a low-carbon economy, environmental protection, new green technologies
  • Building efficient electricity grids
  • Improving business environments
  • Helping consumers make will-informed decisions

Inclusive growth:

Fostering a high-employment economy, delivering social and territorial cohesion, which ensures:

  • More and better jobs
  • Investment in skills
  • The modernisation of labour markets
  • Benefits of growth reaching all parts of the EU
Table 2.1 Main objectives of the Europe 2020 strategy

 Table 2.1 Main objectives of the Europe 2020 strategy
Source: Ecorys on basis of information from European Commission

These priorities are supported by seven flagship initiatives:

  • Smart: Innovation Union, Youth on the Move, a Digital Agenda for Europe;
  • Sustainable: A resource-efficient Europe, an industrial policy for the globalisation era;
  • Inclusive: An agenda for new skills and jobs, the European platform against poverty.

Each of the flagship initiatives also has specific relevance for rural areas, which can contribute in their own way to reaching the objectives:

Smart growth

R&D & innovation on climate change, energy and resource efficiency have specific significance for rural areas. The effects of climate change and environmental degradation are especially being felt in rural areas and its main sector: agriculture. Yet, at the same time, it offers great potential to deal with these challenges through a green and bio-based economy. Moreover, non-technological innovation and diversification can play an important role in rural areas, as demonstrated by the INTERREG IVC projects ICER and RURALAND.

Improving the accessibility and connectivity of rural economies through ICT is an important means to unlocking this potential. The INTERREG IVC projects DANTE, e-CREATE and GRISI+ focus directly on this goal.

Furthermore, rural areas face large demographic challenges, a relatively low educated population, and mismatches between the education offer and demand in the local economy. The flagship initiative ‘Youth on the Move’ aims at improving education facilities and their linkage with the labour market.

Sustainable growth

The Europe 2020 sustainable growth priority aims at re-strengthening the economy, particularly industry, while promoting resource efficiency and protecting the environment. One of the objectives identified under this priority is to develop more sustainable agriculture.

Improving the competitiveness of agriculture and related sectors can also be included in the new industrial policy. Furthermore, supporting SME development in new ‘rural’ sectors can contribute to the Europe 2020 goals, as many rural businesses are SMEs. The INTERREG IVC projects Robinwood Plus and B2N both focus on increasing sustainability.

Moreover, rural areas can be a potentially strong supplier of renewable energies (water, wind, sun, biomass, etc.) for themselves and for other territories. Yet, at the same time, rural & agricultural areas themselves have specific energy needs, and sometimes have difficulty accessing the right, clean energy mix.

Inclusive growth

One of the main pre-conditions for rural areas to be able to unlock their full potential with regard to sustainable and smart growth is the development of human capital. Micropol is one of the INTERREG IVC projects that contribute to this.

Rural Europe includes many of the most remote territories in Europe, with their sometimes impoverished populations and marginalised communities, with insufficient public services and economic opportunities. Therefore, specific investments in this area are necessary, as can be seen in the INTERREG IVC project CesR.

Through such investments, rural areas can prove themselves as true life and work alternatives for people from metropolitan areas suffering from the economic crisis, looking for a quieter, cleaner, more pleasant and more community-based living environment.

2.2 Current EU policy on rural development

More than half of the population of the European Union lives in predominantly or intermediate rural areas. These regions produce 45% of the Gross Value Added and provide 53% of the employment in the EU27. In terms of land use, rural areas represent 93% of the EU27 territory, with 20% of the population living in predominantly rural areas and 38% in significantly rural areas.

Figure 2.2 Urban-rural typology as used by the European Commission

Figure 2.2 Urban-rural typology as used by the European Commission

According to predictions made by the European Commission, 5 million rural jobs will disappear by 2014. The diversification of economic activity and improvement of the quality of life in rural areas is a mission shared by the European Union’s rural development policy and its Cohesion Policy.

Moreover, the Common Agricultural Policy (CAP) consists of two pillars: direct payments and market measures under the EAGF, and rural development under the European agricultural fund for rural development (EAFRD). This next section focuses on rural development under the EAFRD.

Since its inception, rural development policy has focused on strengthening the competitiveness of the agricultural sector. Its emphasis on investment to boost competiveness has enabled many farmers to learn new techniques, upgrade facilities, and carry out essential restructuring, thereby sharpening their competitive edge.

In addition, rural development policy pays particular attention to protecting and improving the natural environment, helping to counter challenges with regard to biodiversity, greenhouse gas emissions, soil and water quality, and landscape preservation.

Finally, rural development policy also incorporates structural support for different types of job creation, as well as the provision of basic services in the countryside and the physical upgrade of local community facilities. These help to promote quality of life, which is acknowledged as an important factor for sustaining thriving rural communities.

European rural policy is making a real difference in Europe’s countryside, yet considerable development challenges do persist. Such concerns must be firmly addressed if rural Europe is to fully share in the ‘smart’, ‘sustainable’ and ‘inclusive’ growth advocated by the EU’s Europe 2020 strategy.  A few of the main challenges are:

  • Supporting the EU farm sector, which is still under immense pressure, enabling it to hold its ground in competitive global markets and remain one of the central props of the EU’s long-term food security.
  • Helping to give economic gains in rural areas a sound environmental dimension. Even better care for natural heritage is needed to combat the development and impact of climate change.
  • Sustaining the essential conditions for successful living in the countryside. Rolling out broadband internet access and setting up basic social services are just two examples of the many conditions that need to be addressed so that priority groups like young people, families, and businesses can have a viable and attractive alternative to living in towns and cities.

For the period 2007-2013, it is true to say that rural policy was completely separate from Cohesion Policy, and the ERDF did not directly aim to strengthen rural regions, but as the ERDF covers all European regions, rural areas in Europe did benefit from EU Cohesion Policy Funds (ERDF/ESF, etc.).

2.3 Future EU policy on rural development

In light of the needs, challenges and opportunities that still exist throughout Member States’ rural areas, the European Commission has developed proposals for the operation of rural development policy from 2014 to 2020. The new EAFRD proposal builds on the rural development policy’s CAP foundations and is closely aligned with the Europe 2020 strategy for growth (see the figure below).

A few key elements from the new proposals are :

  • Improved coordination between CSF funds in view of meeting Europe 2020 objectives, through (1) a Common Strategic Framework (CSF) for these EU funds; (2) a common Regulation for CSF funds, standardising certain rules and provisions, and (3) Partnership Contracts (PCs), assisting coordination at national level (see table 2.2). The separate focus on rural development is reduced somewhat, as all objectives are considered relevant for the rural areas as well.
  • A new framework for assisting the smooth and effective operation of all rural development programmes, through national ‘ex-ante conditionalities’ for rural development support and provisions for a performance reserve for each programme to reward good progress made in relation to selected targets.
  • A simplified menu of measures (see table 2.2, last line) with improved visibility, scope and conditions, offering more possibilities in fields such as knowledge transfer, risk management and various forms of co-operation (e.g. commercial, environmental).
  • Improved strategic programming through quantified targets set against clear EU priorities and objectives for rural development policy, and a more flexible relationship between measures combinations of measures and objectives / priorities.
  • The possibility of taking part in ‘Integrated Territorial Investments’ (ITI), in which the  ERDF, ESF and EAFRD can be integrated into one separate programme to be implemented in one targeted functional territory. Initially designed for cities, this tool could be applied to any kind of region. Interestingly, (a part of) the implementation has to be delegated to decentralized authorities (provinces, municipalities, etc.)
  • An extension of the LEADER approach to all types of territories (including urban) and all CSF funds through ‘Community-led local development’ (CLLD): therefore, local action groups (LAGs) that have designed a local development strategy could apply for funding under the different schemes. For rural stakeholders, this provides opportunities to establish links between urban LAGs and rural LAGs and strengthen rural-urban relationships;
  • The possibility to design thematic sub-programmes to address more closely the needs of particular types of area (e.g. mountain areas) or particular groups (e.g. young farmers) more closely within a national or regional programme.
  • More potential for local development, with a ‘start-up’ kit for Leaders, the possibility to combine different funds for an integrated local development strategy, and clear provision for capacity building.
  • Support for the European Innovation Partnership (EIP) for Agricultural Productivity and Sustainability, to help bridge the gap between cutting-edge research and practical farming with the purpose of creating a stronger and more sustainable farm sector.
  • A reinforced networking approach, including the ‘European Network for Rural Development’ and two specialist networks (the ‘Evaluation Expert Network’ and the new ‘European Innovation Partnership Network’).
Figure 2.3 Rural development in a new framework for 2014-2020

Figure 2.3 Rural development in a new framework for 2014-2020
Source: EC, legal proposals for the CAP after 2013 (12 October 2011)

2.4 Trends in rural development

This section stems from a study performed by Ecorys for EC DG Agriculture on ‘Employment, Growth and Innovation in Rural Areas (SEGIRA)’ in 2010-2011. The text below is part of the summary of this study.  It is one of the first studies to analyse trends at a NUTS3 level for the whole of the EU, using a variety of sources, mostly Eurostat data but also literature reviews. All the figures referred to below are taken from sources used within the SEGIRA study.

Higher GDP growth in rural areas than in urban areas

“From the mid-1990s, both GDP/capita and the employment rate in rural regions have shown a positive trend. The growth of GDP/capita in rural regions has been higher than in urban regions since 2001, due to a strong growth in New Member States especially from 2006 onwards. However, despite the positive trend, the gap between rural and urban regions is widening. Additionally, the fact that rural regions are catching up on GDP/capita is not reflected in employment rates: although the employment rate in 2007 in rural regions was much higher than in the period 1995-2004, the growth in the employment rate in rural regions for the period 2005-2007 was on average lower than the growth for all EU27-regions. A striking and very positive trend was the decline of unemployment rates in rural regions in the period 1999-2008 (before the economic crisis of 2008-2012).”

Figure 2.4 Employment rate (15-64 years old) in the EU27 by type of area (2007-2011)

Figure 2.4 Employment rate
Source: DG AGRI, Statistics 2012

Fast transition of rural economies

The economic structure of rural regions is changing: the share of the primary sector in GVA is declining continuously, while the share of the tertiary sector is growing. This is a general trend in all regions, but it is more pronounced in rural regions. The growth in tourism is a good example of the growth of the tertiary sector. It is increasing in all regions (especially in Southern European countries) and is seen as a main driver for growth and employment. Rural areas across the EU have undergone profound changes in the last few decades. One of the most pervasive changes is the sectoral shift and the decline of the relative importance of agriculture in the rural economies of Europe, driven largely by productivity increases across the sector.

Figure 2.5 Change in economic development in the non-agricultural sector 2004-2009

Figure 2.5 Change in economic development in the non-agricultural sector 2004-2009
In the EU27, while 96% of rural land use is agricultural (including forestry) only approximately 13% of employment is in agriculture, producing only 6% of gross value added in rural regions. While the employment from the primary sector declined from 18% in 2000 to 12% in 2006, the key activities (agriculture, forestry, and fishing) remain important rural activities. In rural regions across the EU27, the share of primary sector employment is more than twice the share of primary sector gross value added. It has been observed that there is a tendency for fewer but larger farms (in ha and €) and that the average age of farmers is increasing. Critically, primary sector activities also act as a platform for many kinds of diversification activities. The tertiary sector has become a more important job creator in rural regions. In terms of both employment and GVA, the tertiary sector is increasing. It was found that the expansion of the secondary and tertiary sector is one of the main drivers of economic growth in rural regions. New activities have sprouted up and grown, including tourism, small scale, niche manufacturing and food production and business services. The number of bed places (accommodation capacity) per NUTS3 region in rural regions is lower than for EU27-regions in general, and the trend in rural regions is lagging behind compared with all EU27 regions.

There are strong input-output-interrelations in the food chain between the agricultural sector and the food industry. Based on an analysis of the performance of the food sector, it can be concluded that the food sector in EU15 seems to have been a rather stable industrial sector.

Population: counter urbanisation and the declining share of the active population

Alongside such changes to the economic base of many rural areas, demographic shifts have occurred, with many accessible rural areas across Europe experiencing counter urbanisation as more affluent, mobile people have chosen to move out of urban centres into rural locations to commute, to start new enterprises or to retire. Not all rural areas have seen population increases, however, and in many remote, mountainous parts of central and northern Europe and across much of southern Europe, depopulation remains the dominant demographic trend, particularly amongst the younger and economically active groups in the population. Population growth in rural regions is limited, and has fallen below the growth in population of urban and intermediate regions. This is due to a lower birth rate in rural areas and a higher death rate. While population density is relatively stable in all types of EU27 regions, the population of rural regions is older and ageing: the share of people over 65 years old is increasing in rural regions and currently exceeds the share in urban and intermediate regions. The analysis shows that the share of the active population is declining in rural areas, and this is considered to be an important barrier for future economic growth.

NMS versus EU15: GDP/capita in New Member States on 45% of EU15

There is a higher growth of the GDP/capita in rural regions of New Member States than of the EU15 average, but the GDP/capita level of the New Member States stands at only 45% of the EU15 average. The employment rate is lower in rural regions of New Member States (59%) than in rural EU15 (64%), and New Member States are not really catching up, even after 2004-integration. However, the trend in unemployment rates in New Member States’ rural regions is positive: unemployment rates have fallen in general, for men and women, and for young people, to levels below those of EU15 rural regions. In addition, the share of the primary sector in terms of GVA in rural regions of New Member States (9.3%) is more than double that of rural EU15 (4.7%). For the tertiary sector, it is the opposite picture. The share of tertiary employment in rural regions of the EU15 (64%) is much higher compared with the New Member States (50%). There is still a divide in agricultural dynamics and structure between New Member States and the EU15: agriculture in the New Member States typically employs more people, on a higher number of farms, which are on average smaller (in terms of area size and economically speaking). Semi-subsistence farming is much more a feature of the New Member States (60% of farms are between 1 and 8 ESU) compared to EU15 (24%).

2.5 The added value of interregional cooperation on rural development

The added value of the INTERREG IVC programme compared to other EU initiatives lies in the exchange throughout Europe of good practices and experiences which enable regions to improve the effectiveness of regional policy in the field of rural development.

Without INTERREG IVC funding, the 95 partners of the nine projects would not have been able to improve their own rural development policies by learning from their partners’ good practices. Through these projects, a large number of good practices have become available, some of which can be found at http://interreg4c.eu/findGoodpractices.html. See also section 3 and the annexe for more details on the nine projects.

More specifically, INTERREG IVC distinguishes itself from other programmes related to rural development by:

  • Disseminating best practices between local authorities on an international level - and the fact that these local authorities (the civil servants) receive the budgetary means to travel and to understand better what can be done in rural development (for example by stimulating rural tourism) - without IVC this exchange would most likely not be possible.
  • Bringing local and regional politicians together in an international arena - we know that having an active policy for rural development at local, regional and national  policy level will actually enable them to increase the know-how and interest regarding regional and local policy and will thereby stimulate the rural development of regions.
  • Improving the effectiveness of regional policies. Exchanging on rural development and discussing common issues helps regional and local authorities to overcome the barriers in rural development and to strengthen their own policies by learning from other regions. The cooperation between regions and experts often continues after the INTERREG IVC projects.
  • Enabling transferability. Regions and local entities start working together on rural development policies thanks to INTERREG IVC. They actually start transferring good practices to other regions. For example in the RURALAND project, Pazardhzik (BG) is cooperating with Andalusia on optimising the Spa Potential of Pazardhzik. Regions are at varying stages of progress, so it is important to reflect this and let each region have its own plan for implementation.
  • Supporting all levels of uptake. What is innovative for one region can already be commonplace for another. INTERREG IVC enables regions to learn from each other. This is a key strength of the INTERREG IVC programme in comparison to other EC programmes as it is designed to engage and support all levels of take up, from the cutting edge to the replication of what is common practice to some. For example, having a support model for improving tourism accommodation (Natitude in Auvergne, France) might not be new in France but it will be very helpful for other regions.

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