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How to boost rural development and whether to do it at all?

Andra Miglava Runājums Eiropas Ekonomikas un Sociālās komitejas Dažādo interešu grupas ārkārtas sanāksmē (Extraordinary meeting of the Various Interests Group) Ekonomiskā augsme un Sociālais Progress Lauku un pilsētu apvidos (Economic Growth and Social Progress in Rural and Urban Areas) 2015.gada 25.martā. ### Pievienots PDF fails ar runājuma bilžugrāmatu lasāmā formātā, kā arī saite uz tās publicēšanas vietni.

How to boost rural development 
and 
whether to do it at all?
Andris Miglavs – Dr.oec., andris@lvaei.lv
Researcher, LATVIAN STATE INSTITUTE OF AGRARIAN ECONOMICS
2015/03/24
Extraordinary meeting of the Various Interests Group in Riga – 25 March 2015. 
Economic Growth and Social Progress in Rural and Urban Areas
2
Rural development –
meaning and interpretation
 Rural territories -
 Alternative to urban
 predominant employment in agribusiness
 sparsely populated – (OECD- 50% of territory with less then 150 
persons per sq.km)
 Without cities or towns 
 Development
 increasing?
 In fact - generally decreasing population and jobs in rural areas
 Improving
 Infrastructure?
 Quality of life?
3
Land (AGRO) resource- dependent sectors
Territory maintaining
industries
Agriculturecrop and livestock production;
(food and fibre, bioresource)
Environment 
related 
recreation
Forestry
Agro –
Downstream Other 
industrial
industries
Social
services
Communal
Spatial
Rural territory –
object of rural development policy
Infrastructure
Transport Tele- communications Health care Education
Other producing ”industries
Services
Mining
Agriculture related rural policies
4
Employment structure in rural 
municipalities: 2010 and 2025? 
16
7
24 24
8
11
4
35
12 16 16
15 15
6 6 14 14
7 7
3 3
51 51
62 62
44 44
3 3 5 5 4 3
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2025 2010 2025 2010 2025
Rural municipalities with regional
towns
Riga nearby municipalities Rural municipalities without
regional towns
Pushed out of agriulture Agriculture, forestry, fishery Industry Construction Services Others
5
Rural development and population: erosion of 
funktions
 Population = place + people
 Populated place of full value 
= includes 3 basic functions 
in common area
 Job, 
 Home
 Community (public life)
 There may be 
 Living places 
 Working (economic activity) 
places
 Service areas
Place + people
Home
Job
Community
(Public life)
Traditional to ruraldisappearing
Concentration of 
service centres 
(moving away)
Why to stay??
6
A Common Agricultural Policy for 
European Public Good
 The Declaration 
 was signed in 2009 
 by a Group of Leading Agricultural Economists (80 experts, 
among them 42 professors)
 http://www.reformthecap.eu/declaration-2009
 Amongst the classes of objectives: 
 Economic efficiency and competitiveness
 Food security
 Income distribution
 Rural public goods was named
7
Rural development as the public good 
and the CAP
 When a country wishes to subsidize a more decentralized settlement 
structure, this is a national choice rather than a European public 
good. Nonetheless, the principle of cohesion has given the EU a role to 
help lagging regions develop their full potential. This is best achieved 
through the EU’s regional policy, which is not limited to agriculture, 
and can adopt a more integrated approach to the rural economy. 
 Rural development may form part of such policies in remote and 
sparsely populated areas, but 
 current CAP rural development programs are not targeted at the 
areas most in need and 
 single out farmers without a comprehensive view of local development
 The CAP is not the right policy framework to enhance the efficiency of 
agriculture, change income distributions in the EU and abroad, 
promote world food security, or encourage rural development. 
8
The proposed shape of the future CAP 
and the adopted one
 The 1
st pillar – the Single Farm Payment should be 
phased out, and new schemes designed in which aids are 
granted not on past, but on future behaviour
 The same basic principles kept with minor adjustments
 the 2
nd pillar should be thoroughly reassessed - only 
those policies that promote genuine European public 
goods, are efficiently targeted at their objectives, and 
avoid excessive payments, should be retained
 The same basic principles kept with minor adjustments
 The CAP still not a tool for comprehensive rural 
development
9
Where does EU money go?
EU budget: 2014-2020=1011,9 BEUR
CAP: Rural 
development
9%
CAP: DP and 
markets 
The rest 31%
(beside 
administration)
60%
10
Land use rights and – where the DP 
goes to? 
 UAA structure by land use 
rights: 
Latvia in 2012
 To whom the DP will go?
in 
ownership
; 53,6%
leased; 
46,4%
375,9000
485,5000
-
200,0000
400,0000
600,0000
800,0000
1 000,0000
1 200,0000
1 400,0000
1 600,0000
Basic scheme scen. Redistributive payment
scen.
BEUR of DP
Land owners Producers
11
The idea of rural development is 
appealing at first sight
 Helping poorer regions seems fair and reasonable. 
 But the reasons given for rural development turn out to 
be wanting. 
 Income disparities should be addressed at the household level
 Land abandonment can be better avoided through targeted agrienvironmental payments. 
 And more decentralized settlement structures are not 
necessarily preferable. 
 In any case, rural development should not be promoted 
through agricultural policies but through growth policies 
that are not biased in favor of any sector. 
12
What have we got? 
 At European level
 1 st pillar kept 
 EU rural development policy still does not really exist
 A substantial part or CAP budget goes to outside the 
countryside economy
 At national level 
13
Still a question -
 To be asked 
 Wether to have specific policies to promote rural development?
 If “YES” -
 Not agriculture is the major choice
 Other jobs are urgently needed
 Appropriate infrastructure – adjusted to increasing sparselity of 
population outside the major cities
 Probably additionally subsidised 
 Education
 Health care
 Communication networks
 Public life 
14
Do we wish to redisign 
our understanding of 
“rural dvelopment”? 
And-WHY