Reinventing rural: How can rural areas seize the initiative?

Populations in rural regions are ageing and declining faster than in urban areas in OECD countries, especially in remote rural areas. While these shifts bring clear challenges, they also bring somewhat unexpected opportunities. How can governments make the most of them to boost prospects for rural communities?

The silver lining

Most OECD countries have ageing populations, with the elderly increasingly concentrated in rural areas. Elderly dependency ratios are now 6 percentage points higher in remote regions than in metropolitan regions, and in Denmark, France, Japan and Korea, all non-metropolitan regions have elderly dependency rates above 40%. Population ageing in these areas can increase the burden on public services and finances and leave skills gaps and labour shortages in key areas.

But rather than shying away from the influx of the elderly, we should embrace the opportunities they create. The goods and services they require, including healthcare, leisure activities and care facilities can give rise to new markets, dubbed “the silver economy”. The elderly have money to spend – according to the European Commission, those over 65 in the EU have a combined spending capacity of EUR 3,000 billion.

Some places are setting out to attract retirees as they choose peaceful places to settle down. In the United States, the Hometown Mississippi Retirement project identifies and promotes towns that have adequate support services for the elderly. According to a 2005 study by Mississippi State University, this programme alone led to USD 194 million per year in additional tax revenue and 2,320 jobs per year.

And we shouldn’t overlook the entrepreneurship potential of older residents. While older people are less likely to take on entrepreneurial risk, research finds that older entrepreneurs are more likely to be successful, not least because they have more developed networks, more experience and, in many cases higher skills and more financial resources. They can also lend their skills and experience to younger entrepreneurs as mentors.

This silver economy also provides opportunities for innovation.

Rural areas can become potential testbeds for health care innovation, including expanding e-health services, assistive technologies, wearables, and robotics.

Health wearables – think Fitbits or Apple watches – can track key health metrics to help prevent lifestyle diseases. Happitech, an Amsterdam-based start-up, is skipping the hardware altogether and created a mobile phone application that can monitor heart rate and warn of atrial fibrillation all through AI software and a phone flashlight. With the appropriate digital infrastructure, these innovations could change the game for rural healthcare – making it far more accessible and helping to preemptively catch preventable illnesses and diseases.

In with the new

While rural economies can flourish by catering to the needs of ageing populations, many will still need to find ways of attracting the young – to fill gaps in the workforce and drive growth.

One way rural communities can tackle this is by investing in the services and amenities younger workers need. These include boosting digital and physical connectivity. Opportunities for professional development have shifted since the onset of the pandemic, with firms everywhere opening up remote work opportunities. This means people and firms have more flexibility in where they choose to live and locate, creating potential for rural areas to attract young people who are looking for more affordable housing and office spaces than what they can find in cities.

Many rural areas will also need to improve their broader offer to younger households, including by improving childcare services and the quality of education. They can also include efforts to attract migrants. In 2019, 5 million new permanent migrants settled in OECD countries. However, 80% of migrants live in metropolitan regions. Rural regions would benefit by devoting resources toward creating places where migrants want to come and stay, through developing integration services and providing opportunities for personal and professional development.

Altena, Germany is a prime example of a town in a rural area welcoming refugees with integration services almost entirely driven by volunteers. The town assigns each refugee family a volunteer as a contact person dubbed a Kümmerer or “caretaker,” while other volunteers teach them German. These services help facilitate a smooth integration process as well as create community building between long-time residents and newcomers.

The race for rural development

Too many rural areas are at risk of falling behind as they age. Policy makers must instead think outside the box to seize new opportunities – embracing ageing and supporting migrants and youth as newcomers into rural communities.

Read more on the OECD Work on Rural here.

The OECD is also lanching its Biannual Rural Development Conference. Check the live stream in our Youtube channel.

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Nina Trouvé is working at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities. She is specialising in communications engagement and impact. She is currently an undergraduate student at Brown University, pursuing degrees in Economics and International & Public Affairs focussing on public policy and development. She is interested in pursuing matters in international development, gender equality and environmental equity.

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Jose Enrique Garcilazo is the Head of the Regional and Rural Policy Unit within the Regional Development and Tourism Division at OECD’s Centre for Entrepreneurship SME’s, Regions and Cities. His work mainly focuses on analysing the key drivers for growth and bottlenecks among different types of regions and their impact to aggregate growth. Current projects aim at redefining modern rural development policies that can support inclusive growth and maximize the growth potential of rural areas by valorising their assets and resources. He was the former Head of Unit for Regional Growth and Policies. Author of three books and a variety of articles, Jose Enrique has been at the OECD for the last 13 years. He occasionally teaches at Science Po in the Masters of Public Affairs and in the Masters of International Relations program. Prior to the OECD, he obtained a PhD degree from the University of Texas at Austin at the LBJ School of Public Affairs.