Current rural policy in Chile and its potential

Much of the Chilean countryside has been, for at least 20 years, under a process of depopulation, especially in smaller (in terms of population) and less densely populated rural municipalities (see Chapter 1) and socio-economic desertification. Rural population leaves for regional centres, since the structure of rural population is scattered and weak, and it is difficult to retain emigration pulses in small market towns insufficiently equipped with necessary services and amenities. A relevant percentage of rural exodus goes to Santiago, while international migration is not relevant.

Despite these emigration pulses, the Chilean countryside is far from being irrelevant from the territorial point of view. On the one hand, the diversity of rural areas contains and retains significant competitive advantages that need to be properly assessed and included in the regional strategy and policy; on the other hand, what can be considered “rural” in Chile accounts for the vast majority of the country in terms of territory, and is the place where a critical part of the economic activity of the country happens.

Much of the economic activity that develops and depends on the Chilean countryside ignores the reality of rural communities. The peculiar geographical configuration of the country does not help much, because constraints imposed by geomorphology become major impediments to suitable access to services of general interest (SGI), in particular those that depend on market rules. In any case, multiple sources interviewed during the mission agree that there is a strong, but insufficient, institutional action by the central government in favour of rural services, as essential to securing population and economic activity in the rural mechanism.

Without coming back to the question of the definition of “rural”, it is important to note that there is not a clear definition, and that rural, in most cases and for most actors and institutions, is “what is not urban”. Each ministry holds its own definition of “rural”. The National Statistical Institute (INE) has the most used definition, focused on total population in each municipality. Although this definition responds to a traditional concept of rurality, it does not appear at all adjusted to the current dynamism and functional links of the territory (see Chapter 1).

Public institutional action in rural areas is mostly segmented and fragmented. The traditional dominance of agriculture and mining as the fundamental “rural” economic activities in the Chilean countryside explains the predominance of the respective Ministries of Agriculture and Mining. These ministries exert a sectoral and biased action where rural areas become relevant in terms of raw materials and food for domestic consumption and exporting. However, there is no co-ordinated action on rural areas that could pay attention to the needs of rural communities in the perspective of sustainable development, to ensure the ability of rural areas to continue to offer wealth while working towards the overall sustainability of rural.

The traditional concept of “rural” as residual, second-rate, unimportant in terms of population, etc. explains the widespread opinion that it is “not worth it” to establish an inter-ministerial committee that develops co-ordinated policy and action in rural areas in order to meet the needs and goals of rural Chile. There is also a fundamental issue of governance here, which begins at the level of ministries and requires transfer of a share of power or ostentatious competition for the benefit of a horizontally and vertically integrated action.

At present, Chile lacks a formal rural policy in the sense used by the OECD - that is, an integrated territorial approach to the development of the rural regions in a country. Chile has a complement of sectoral policies for those sectors most common in rural areas - natural resource-based activities - and it has specific policies for the delivery of public services in rural areas. This suggests that Chile has most of the components for a rural policy already in place. However, the integration of sectoral policy into rural policy is complicated by the distinction drawn in Chile between firms that are of a commercial size and that are fully integrated into national and international markets and small, possibly semi-subsistence firms that are only weakly integrated into markets.

Chile currently identifies its rural policy as dealing with these smaller firms and with households in small and remote settlements. Because Chile adopts an extensive definition of rural that is based upon a settlement size with a cut-off of 2 000 inhabitants and then includes a buffer area of adjacent rural land as part of the settlement, the role of rural in the economy and society is marginalized. Consequently, only the smallest settlements in sparsely populated regions are considered rural. Not surprisingly, poverty in rural areas according to this official definition is significantly higher than under a revised definition that considers a broader aspect of rurality (see Chapter 1).

This results in Chile adopting a conceptual definition of rural as being only those places, firms and households requiring specific interventions to better connect them to markets and the urban territory. Rural policy is currently focused on providing the resources for the targeted firms and households to improve their capabilities and become better integrated. In the case of firms, this involves making investments to increase output to achieve minimum commercial size and in the case of households, improving skills to either improve their local employment opportunities or to make relocation to another region where jobs are more plentiful more attractive.

Given the fact that there is still a significant share of the national population not fully integrated into the national economy and society, this focus is appropriate. But it is a policy approach that implicitly implies that the need for rural policy will disappear once the integration is complete. However, the experience of other OECD countries is that full integration of the population into the national economy does not eliminate the need for a distinct rural policy. The issue of rural development remains, but it has a different focus.

The current approach in Chile of focusing on specific sectors raises the problem of coordination. Clearly sectors are interrelated. A current pressing example is competition in the northern regions between mining and agriculture and in the southern between energy and agriculture, for water. This also involves both the General Directorate of Water of Public Works Ministry and the environment ministry. While Chile has adopted inter-ministerial committees to deal with cross-cutting issues like this, these important problems are harder to resolve in the absence of an integrated rural development policy that creates a framework for managing conflicts.

In addition to becoming better integration in rural polices, implementing a modern rural development policy approach in the Chilean context can help its rural regions realise their growth potential (see subsequent section), alleviate inequalities, better integrate rural and urban regions, and help achieve national goals. A modern rural development policy approach, based on the three frameworks described in the previous section, contains ten key pillars (Table 2.3). The next section describes the main rural sectors in Chile and identifies possible areas for growth potential. A modern rural development policy approach can be an effective tool to realise the growth potential of Chilean regions.

Table 2.3. Pillars of modern rural development polices

Frameworks

Main pillars

Promoting growth:

1. Innovation

Regions have the potential

2. Human capital

for growth

  • 3. Infrastructure/connectivity
  • 4. Business creation and expansion

New Rural Paradigm

  • 5. Competitiveness and valorisation of rural assets
  • 6. Economic diversity, involving sectors of the rural economy beyond agriculture
  • 7. Investment focus over a subsidy approach
  • 8. Integrated approach

Urban-rural linkages

  • 9. Rural regions that are close to urban regions, think about an integrated development
  • 10. Managing natural resources in a sustainable way is important to both rural and urban populations, both for commodity production and environmental services.
 
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