Rural-urban linkages, peri-urban, intermediate and remote rural

The NRP, by combining bottom-up and top-down approaches, can better adapt policy to the needs of different types of rural regions. This flexibility is important given the differences in the types of rural regions, each with their particular urban and the rural interactions. Chapter 1 of the report displays the importance of the choice of a rural definition in determining how much of a country is characterised for policy purposes as urban or rural. In all three general types of rural regions, whenever administrative boundaries are drawn, unless they are tightly drawn around population centres, there will be some incorporation of rural territory into what are defined as urban areas.

The RURBAN project shows that there are significant complementarities between urban and rural regions. Each produces goods and services that are difficult to produce in the other. Because of this there are strong benefits in better coordination between urban and rural to ensure that the best mix of goods and services is provided. One of the important roles of the rural population is the management of the natural environment both to produce important goods including food, energy, minerals and water, but also to maintain a high quality environment that protects wildlife, minimizes pollution and provides opportunities for urban people to experience nature. In an advanced economy environment sustainability is a major social concern and populations are often willing to accept more expensive commodities if it provides greater environmental protection.

The needs and characteristics of remote rural regions, rural regions close to cities, and rural regions integrated into functional city regions are very different, despite the existence of strong urban and rural interactions in the three cases.

  • • There is rural territory that is strongly integrated into an urban context as part of a metropolitan region. In this territory, the development process of the rural territory cannot be decoupled from the larger urban development process. Furthermore many green, natural and ecological areas provide important social, environmental and economic benefits to urban citizens and therefore the need to integrate these assets to the metropolitan region.
  • • There is rural territory that is adjacent to a metropolitan centre but not strongly attached to it. This territory may be incorporated into an administrative region that is considered to be urban, but the territory and its population are, in reality, still rural. In these regions, while there are some important connections between urban and rural territory, mainly through the flow of goods and services, the two types of territory follow different development paths.
  • • The third type of rural territory has very weak urban links and is distant from any major urban concentrations. While there are urban places in these remote rural regions, they are small and exert only limited influence on the rural population and landscape.

Functional urban areas, or metropolitan regions, contain a strong degree of symbiosis between the urban and rural parts. This is especially true when urban regions are defined as metropolitan areas that include an urban core and a related hinterland (OECD, 2013e and Box 2.6). These functional regions are based on commuting patterns that attach a rural zone that extends beyond the formal boundary of a city to create a hybrid rural and urban territory. Within this territory, the urban function is dominant but there is a strong degree of symbiosis between the urban and rural parts (OECD, 2013f). These urban and rural territories are linked through flows of people, economic exchanges, shared infrastructure, environmental services and government interaction.

Box 2.6. Proximity to cities and economic growth

Large metropolitan areas are important drivers of economic activity within countries and typically have the highest per capita GDP of all regions within a country. However, the economic effects of large metropolitan areas are not confined to their borders. They also play important roles for economic activity in surrounding regions. Their size and economic strength implies that they are key markets for many firms in rural areas. Even firms that do not directly sell to metropolitan areas rely on them due to their function as hubs for long-distance travel or because providers of highly specialised business-to- business services can predominantly be found within them. Therefore, large metropolitan areas form the geographical focal point of economic activity, even for regions that are a considerable distance away.

Ahrend and Schumann (2014) estimate the relation between distance to metropolitan areas and economic growth. It turns out that the actual travel time required to reach a metropolitan area is a better predictor of economic growth than aerial distance. Travel time indicates the time required to travel by car from the centre of a region to the centre of the closest large metropolitan area and is obtained from Google Maps. In contrast to aerial distance, travel time also accounts for factors such as the state of transport infrastructure and geographical characteristics that affect car traffic.

Box 2.6. Proximity to cities and economic growth (cent.)

Between 1995 and 2010, longer travel time to metropolitan areas has been associated with a significantly lower growth of per capita GDP at the regional level. The effect is most pronounced when it comes to distance to very large metropolitan areas with more than 2 million inhabitants. However, it is also visible for distance to smaller metropolitan areas.

The marginal effect of an additional minute in travel time is greatest at short distances to metropolitan areas. It becomes continuously weaker for larger travel times. Beyond 300 minutes, the correlation between travel time and per capita GDP growth disappears. However, this is well beyond the travel times encountered in the Netherlands. There, the average travel time to the centre of a metropolitan area above 2 million inhabitants varies from just 18 minutes to 106 minutes. This is below the average of European OECD regions and implies that most regions are at a distance to metropolitan areas at which the correlation between travel time and economic growth is strongest.

The figure below shows the results of a regression of yearly growth rates on a set of dummy variables for the respective travel time brackets (including initial per capita GDP levels and a set of country fixed-effects as control variables). The data covers TL3 regions from 18 OECD countries over the 1995-2010 period. The figure shows average yearly growth rates for each group of regions conditional on the control variables. It illustrates that regions within 45 minutes of a metropolitan area with more than 2 million inhabitants grew on average by 1.8% per year. The growth rate is almost half a percentage point higher than the growth rate of regions within 45 to 90 minutes of metropolitan areas of the same size. See Ahrend and Schumann (2014) for further details.

Source: Ahrend, R. and A. Schumann, “Does Regional Economic Growth Depend on Proximity to Urban Centres?”, OECD Regional Development Working Papers, No. 2014/07, OECD Publishing, Paris,

In the case of the Nuremburg Metropolitan Region, there was a conscious effort to extend public transport out into the rural territory to create easy opportunities for rural residents to take advantage of retail opportunities and more advanced services in the core, but also to encourage urban residents to take short trips to the countryside to experience nature. Conversely, because the city of Prague and the adjacent rural territory had uncooperative relations, there were constraints on Prague’s growth and uncoordinated housing and transport development.

An important share of rural areas (and population) is contained in FUAs. Particularly when larger administrative regions are used in defining functional areas, as in the case of the United States, the share of rural territory that is embedded within the functional areas is quite large. Indeed, the share of rural population found in metropolitan statistical areas (MSAs) in the United States is larger than the share of rural in non MSAs.

Figure 2.5. The official definitions of “rural” concept in the United States

Source: USDA Economic Research Service, based on Bureau of the Census, 2010 Census of Population data files and 2013 metropolitan area definitions table.

In intermediate regions, there is typically more balance between urban and rural populations. This balance carries over into the economy where there are often very strong synergies between urban and rural specialisations. In the Lexington, Kentucky MSA, the main city, Lexington, hosts the major financial, retail, health and education functions, but manufacturing tends to be found in adjacent counties, as does a large share of moderate income housing. Similarly, the Geelong region of Australia consists of a city and a large rural area that is divided into several autonomous local governments. The traditional economic manufacturing base of the city is declining, but the high amenity and agricultural production value in the surrounding rural territory is being used to help restructure the regional economy around advanced services. With a high quality of life, largely based on high-quality rural amenities, it is easier to attract the high-skilled professionals that Geelong needs to transform its economy.

Remote rural regions also display strong urban and rural interactions. In many OECD countries, the majority of the rural territory, but not the majority of the rural population, is found in territory that is only weakly connected to a large urban place. Nevertheless, within these predominantly rural territories, there are urban places and some of them can be large towns. Importantly, though, the urban places in these regions almost always derive their economic function from the surrounding rural territory. In these more remote rural regions, urban places follow a more traditional urban rile of being market points for the export of rural production and the import of inputs needed for rural production.

In small remote regions such as Central Finland, there are considerable problems in providing high-quality public services at a reasonable cost. Individual communities are too small to provide them individually and often they can be too far apart to have a single central site for a region. In this case, not only are shared services required among small communities, but attention has to be paid to finding innovative ways to deliver them. Central Poland represents another highly rural region with only small urban settlements. Here, too, the challenge is to organise dispersed local governments to deliver better public services. In the case of Poland, there is not a strong tradition of local co-operation and historically local governments were very weak and made few independent decisions. This has complicated efforts to form effective partnerships among urban and rural areas despite the highly interconnected local economy.

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