5. Rural regions of the future: Seizing technological change
This chapter outlines the importance of digitalisation for rural development and the well-being of rural citizens and policy responses needed to make the most of future opportunities that may emerge. The first section describes the trends and impacts of digitalisation in rural communities and examines the policies needed to harness the benefits brought by technological change. The second section maps a number of disruptive technologies and how governments may seize their benefits for rural regions. The last section outlines how the emerging opportunities for rural development can be used as a tool to reach countrywide and global Sustainable Development Goals in the rapidly approaching 2030 Agenda.
The Rural Well-being Policy Framework stresses the need to be forward-looking and embrace technology to ensure rural regions can take advantage of opportunities brought by technological change and contribute to global agendas, including SDGs and climate change.
Megatrends such as digitalisation, demography and climate change are bringing new challenges and opportunities to rural communities. Innovation and technological change can bring new solutions for rural regions to overcome their remoteness to markets, higher transportation costs and lack of critical mass, and increase rural resilience.
Digitalisation can reduce the cost of moving people and goods, which in turn reduces the relevance of location for workers and businesses. These changes might lead to more distributed production structures and working methods, making rural environments more competitive internationally and attractive for people and firms. Technological progress can also improve quality and access to services, and political participation, enhance entrepreneurship and local labour markets and help regions transition to a low-carbon economy.
Nevertheless, without a forward-looking approach, technological change can negatively impact growth opportunities in rural regions and increase the urban-rural income disparity. Rural regions face a relatively high risk of job automation (with economies holding a high share of repetitive tasks), a lack of diversification and outmigration of highly skilled workers.
To ensure rural communities and businesses can fully seize the benefits of the digital age and trigger innovation, governments need to ensure and strengthen a number of enabling factors in rural regions. They include:
Ensuring high-quality broadband in all types of rural communities. Rural communities face a lack of digital connectivity in comparison with urban areas, especially in terms of broadband quality. Low-speed networks (less than 20 Mbps) can prevent communities benefitting from many technologies, including advanced telemedicine and cloud computing. Improving broadband access in rural regions would benefit from:
Greater government involvement in broadband investments either through direct investment with public-private partnerships (PPPs) or promotion of incentives for competitive tendering.
A sound policy framework that reflects the need for a wider diffusion of digital networks.
Support for bottom-up models in rural regions to finance and deploy high-speed networks. For example, municipal networks or high-speed networks fully or partially facilitated or financed by local governments.
Strengthening infrastructure (e.g. telecommunications infrastructure and roads). Even in the digital age, a strong infrastructure backbone is required to provide quality information and communication technology (ICT) services. As more connections are made wirelessly, the speed and rate of download of these connections ultimately depend on the capacity of fixed networks. New technologies such as autonomous vehicles or trucks also need good quality roads to expand their service across the whole territory.
Upskilling the labour force and preparing skills for the future. Workers with skills that complement technology and can perform non-routine tasks are the most likely to benefit from high-skilled/high-paid job opportunities in the digital age. Policies to make workers thrive in technology-rich work environments include:
Investing in training in digital skills, a mix of cognitive skills (literacy, numeracy and problem solving), along with ICT and behavioural skills.
Shaping career pathways focused on skills rather than jobs makes it easier for people to make occupational transitions and enhances the life-long productive capacities of the rural labour force.
Co-ordination of education and training providers, employers and labour unions provide training options that match workers’ needs for career progression and transitions.
Work with educational systems at the national and local levels to adapt the curriculum in rural schools and promote access to high-end technological devices.
Developing forward-looking policies and regulations with greater involvement of rural communities. This includes foresight planning to ensure policies are flexible and prepared to face rapid changes in the future, improving information systems (on skills and demographics of workers) and enabling technological trials and awareness strategies about the forthcoming changes and involvement of the community.
Improving the understanding of how innovation occurs in rural regions. Innovation in rural regions occurs differently and has a different impact than in densely populated areas. It often happens through adaptive measures that try to overcome market and policy failures, with entrepreneurs in rural regions often creating innovative products and processes through an aggregation of smaller changes, such as learning by doing.
Forward-looking rural policies need also to comply with global agendas and Sustainable Development Goals (SDGs), including climate change, poverty reduction and gender equality. Achieving the SDGs will require participation at the local level, where governments are directly responsible for delivering on SDG targets. Rural regions are crucial to the achievement of these global objectives as they provide the world’s biodiversity, natural resources, food and raw materials. Leveraging innovation and working alongside local communities is key for rural regions to contribute to the global reduction of poverty and the transition to a low-carbon economy.
A number of global shifts are likely to characterise the 21st century and shape how rural regions can succeed in a complex, dynamic and challenging environment. In rural regions, technological progress can mitigate some of the challenges caused by the structural changes discussed in previous chapters. These include demographic changes, shrinking local economies and a shortage of skilled labour and entrepreneurs. Digitalisation and the arrival of new technologies (e.g. 3D printers, delivery drones, autonomous vehicles and augmented reality) can reduce the cost of moving people and goods. They can also help regions to deliver quality services and transition to a low-carbon economy, These changes might lead to more evenly distributed production structures and working methods, making rural environments more attractive to people and firms. Likewise, reducing the transport and communication costs in low-density areas will propel rural economies forward, thus opening up wider possibilities to engage in regional, national and international markets.
Furthermore, the COVID-19 pandemic has highlighted the relevance of embracing technology for economic resilience and well-being. Confinement measures during the crisis fomented the use of teleworking, remote learning and e-services, which are particularly important for rural regions given their longer distances and commuting times. The aftermath of the COVID-19 crisis might further accelerate policy and society decisions to enhance digitalisation across all type of areas. The changes in working methods and ways to access services emerging from this crisis have ultimately the potential to boost the attractiveness of rural regions as places to work remotely while enjoying natural amenities.
Nevertheless, without this forward-looking approach, policy responses may not harness the potential benefits that digitalisation and new technologies can bring to rural communities, widening current inequalities and diluting growth opportunities for rural dwellers. An acceleration towards knowledge-based service economies might further challenge rural regions since most of today’s knowledge-intensive services (e.g. tech start-ups, consulting firms) are predominantly located in urban areas. Likewise, rural communities face the highest risks of job automation, as their economies tend to have activities with a high share of repetitive tasks, low economic diversification and outmigration of high-skilled labour force.
Preparing rural economies to address the challenges and leverage the benefits of technological change is crucial to make the most of the digital age for people and businesses. Political will and forward-looking public policies that establish the necessary conditions at the local level (i.e. quality broadband and education) are instrumental to facilitate an effective uptake of the new technologies among rural dwellers and businesses.
This chapter outlines the digitalisation trend and its impact in rural regions as well as the policies needed to realise the promises of digital technologies for rural growth and well-being. The first section describes the effects of digitalisation in rural communities and examines the policies needed to harness the benefits generated by technological change. The second section maps a number of disruptive technologies and how governments may seize their benefits for rural communities. The last section outlines how the emerging opportunities for rural development can be used as a tool to reach countrywide and global SDGs in the rapidly approaching 2030 Agenda.
A growing number of people, services and products are going online. Digital transformation carries much the same weight as earlier industrial transformations propelled by general-purpose technologies like steam or electricity. Along with the spread of high-speed broadband, digital technologies can create new growth opportunities, enhance productivity (e.g. 3D printing), facilitate social connections (i.e. virtual reality) and change how economic activities impact the environment and services are delivered (e.g. automated mines and farms or e-Health and e-Education). Effective use of digitalisation in rural communities requires establishing the right conditions at the local level, including high-quality broadband and civil infrastructure, education/skills and future-proofed regulation and policies (OECD, 2019[1]).
Digitalisation will open new market opportunities for rural economies
Digitalisation can help rural regions to overcome some of their traditional challenges. Low density and shrinking local markets are two of the main bottlenecks for long-term sustainability in many rural economies (see Chapter 3). These characteristics tend to inhibit the formation of economies of scale, making it difficult for businesses to grow and for workers to find the right labour opportunities to apply their skills. Firms in small, local economies struggle when it comes to competing against firms in urban areas that can produce higher volumes at more strategic locations closer to customers (OECD, 2019[2]). Digitalisation can offer new growth possibilities and opportunities for better and more diversified jobs in rural regions. Some effects of the digital age that can provide a boost for rural regions include reduction of trade times and costs, the exchange of new types of products and services, and disruptive ways to work and join the labour market.
Technological change can reduce the costs of trade, opening up new market opportunities for rural regions. New technologies are likely to enable rural goods and services to reach more distant markets with a lower cost and greater speed than today. For example, driverless trucks can run 24 hours a day and cover much greater distances than traditional trucks, reducing transport costs and shipping time (OECD, 2019[2]). Likewise, drone-based deliveries are likely to be deployed first in rural regions since regulation is less strict and it is far more difficult for drones to navigate the infrastructure in densely populated cities (Xu, 2017[3]). This type of delivery system can help rural regions to overcome challenges of geography and infrastructure. Many drone-based delivery projects have already been tested in different countries and companies like Amazon have projected that once the service is fully deployed they will be able to deliver more than 80% of their goods by air (Rao, Gopi and Maione, 2016[4]).
The digital age can modify how firms provide non-tradeable services. Traditionally, the exchange of non-tradeable services (e.g. law, health or hairdressers) occurs through face-to-face contact (e.g. getting a vaccine or a haircut). However, some researchers have claimed emerging technologies like virtual or augmented reality can make face-to-face contact less relevant for exchange of non-tradeable services (Baldwin, 2016[5]). The technology for administering a vaccine or providing a haircut through an automatised robot already exists (Anandan, 2018[6]; Decker, Fischer and Ott, 2017[7]). If a doctor can operate online with the assistance of a controlled robot, he/she might choose to live and practice in a rural area to benefit from better environmental quality, larger space and lower housing costs (see Chapter 3). Technological progress would thus enable rural economies to compete in the provision of non-tradeable services currently dominated by urban dwellers. Furthermore, the increased use of digital tools for service delivery can help firms (and governments) in rural regions deliver non-tradeable public services (e-Health, e-Education) during times of crisis, such as during the coronavirus pandemic.
New technologies can enhance the entrepreneurial business environment in rural economies. Technology is already making it easier for rural small- and medium-sized enterprises (SMEs) to trade. Commerce through digital platforms, or cross-border e-commerce, has become instrumental to lower entry barriers for firms and SMEs that aim to sell in global markets (OECD, 2019[1]). Likewise, new technologies like additive manufacturing (e.g. 3D printers) have the potential to reduce the need for economies of scale by making small-scale production more cost-effective (see next section for detailed explanation). 3D printers can also reduce the reliance on global value chains (GVCs) by allowing small firms to produce goods and standard parts tailored to local demand without the need for importing or warehousing large quantities of inputs from elsewhere. The opportunity to replace certain products from external markets can help develop local value chains for traditional rural sectors, including agriculture, mining and forestry.
Technological progress has the potential to spur innovation in rural communities. Emerging technologies have the scope to enhance the interaction of markets and ideas. Greater interaction among firms and people facilitate innovation processes. While agglomeration can facilitate this in urban areas, virtual and augmented reality can also make this possible in rural economies by simulating face-to-face collaboration among firms, academics and research institutions across rural regions and between rural and urban regions. Through cloud technology, workers or academics can work remotely or stationed in different offices, collaborating on the same projects and following up the evolution of creative processes.
Digital connectivity will help strengthen labour markets and improve skills to jobs matching. Online platforms and blockchain technologies directly link businesses to workers and customers, enabling the emergence of new forms of employment under labels such as “on-demand workers” or “crowd-workers” (OECD, 2016[8]). These workers supply various tasks ranging from low-skilled activities (Mechanical Turk) to higher-skilled ones (Freelancer, Upwork) (OECD, 2017[9]). The on‐demand economy makes it easier for firms to outsource specific tasks and better match labour supply and demand. It could thus enable workers in rural regions to overcome a small labour market size and match their skills with firms outside of the local market. Furthermore, online learning platforms allow workers to gain additional skills adapted to new labour demand. For example, online companies like Coursera or Udacity offer Google designed IT certificate programmes or “nano degrees” in areas including data science and cloud computing (Mckinsey Global Institute, 2019[10]).
Technology is enabling wider use of remote working models, which contributes to job creation in rural regions. ICTs allow workers to be more mobile by working remotely from home, delocalised business centres, or satellite offices (Scaillerez and Tremblay, 2016[11]). In many OECD countries, workers and firms have increasingly adopted teleworking as a partial or full-time working practice that helps them cut costs of office space and catering as well as improve workers’ quality of life by reducing commuting time and extending time with family. In the European Union (EU) for example, 12% of workers were working remotely every day or almost every day in 2018 (OECD, 2019[12]). The confinement measures during the coronavirus pandemic have accelerated remote working practices, leading many workers and firms to adapt themselves to new working methods and embrace digital solutions. For many businesses, teleworking has been a new experience that enables them to keep their economic activity. As a consequence of this crisis, firms and governments can shift towards flexible, partial or even permanent remote working in the long run.
Rural regions are well-positioned to benefit from the changes in working methods. They offer lower living cost and greater natural amenities than their urban peers (Clark, 2018[13]). In the United States (US), the areas with the greatest number of teleworkers before the COVID-19 crisis were medium and small towns rather than larger cities (Global Workplace Analytics, 2018[14]). Even before this crisis, some OECD countries had already explored teleworking as a policy strategy to boost rural economies. For example, Japan has used teleworking as a public policy to increase the participation of disabled populations in the labour force as well as contribute to regional revitalisation. Likewise, the US has promoted initiatives to build outposts/creative spaces where people can work remotely (Box 5.1). While the lockdown measures of 2020 revealed that capital regions had the highest rate of remote working due to the economic composition (OECD, 2020[15]), many urban dwellers during that period moved temporary to work from rural regions. Further analysis is required to measure the long-term effect of greater teleworking practices on the movement of new population to rural places.
Teleworking policy in Japan
In Japan, teleworking is seen as an alternative policy to help boost rural economies. In 2017, about 13% of companies let their employees work remotely and the government has the goal to increase this figure to about 30% by 2020. It also contributes to efforts to reduce congestion and address the nation’s chronically long working hours. In 2018, the Ministry of Economy, Trade and Industry (METI) launched the 2018 Telework Days campaign to encourage businesses to promote teleworking across Japan, declaring 24 July as National Teleworking Day. More than 950 organisations have joined the campaign with a big portion of businesses expanding their technological platforms.
Northern Japan uses the campaign to promote the adoption of flexible work styles by the nation’s self-employed urban workers. Using a grant from the Ministry of Internal Affairs, Shari City has spent about JPY 4 million to transform its legal affairs office into a teleworking space with rooms for telecommuters.
In 2018, more than 20 companies sent employees to work in Shari. Teleworkers can use the facility’s free Wi-Fi and teleconferencing system to link up with their corporate headquarters in Tokyo and elsewhere. They can also stay in guest rooms on the second floor, which have two bedrooms, a living room and a dining room with a kitchen.
Because Shari is just a 30-minute drive from the Utoro hot springs area, a popular tourism spot, visitors can easily explore the great outdoors by exploring the trails around Shiretoko’s five lakes or taking cruises to watch dolphins and even bears on the wildlife-rich peninsula.
Rural Innovation Initiative in the United States
The Rural Innovation Initiative seeks to assist rural regions interested in building local workspaces, as well as creating digital skills training programmes to give residents the skills and workspace needed to take on remote jobs or to start their own companies.
The Center on Rural Innovation (CORI), a Vermont-based non-profit organisation, leads the technical assistance programme with support from the US Economic Development Administration (EDA). Rural Innovation Strategies Inc. launches the programme in an effort to bring prosperity and investment to rural regions in the digital age.
Interested communities applied at the beginning of 2019. CORI will first work with towns that have the most immediate potential for success, due to proximity to a higher education institution or a downtown district with under-utilised historic buildings ready for a new life. It will select the places that fit the US Census definition of a rural area and that have a combination of the following: existing high-speed broadband, real estate located in a New Market Tax Credit census tract and/or Opportunity Zone that make it possible for developers to obtain tax breaks. In addition, selected areas need to have a nearby university or community college and a non-profit willing to lead the initiative.
Then, CORI will assist communities in creating an economic development strategy to attract more digital and knowledge-economy jobs, as well as pointing them toward potential sources of funding from the EDA and other private groups.
The 2019 Regional Innovation Strategies programme awarded 44 grants to applicants from 28 states and 2 territories. The grants represent a combined USD 23 million in federal and USD 26 million in local investment.
Source: Ministry of Internal Affairs and Communications of Japan (2011[16]), “Efforts to Promote Telework in Japan”, http://www.soumu.go.jp/main_sosiki/joho_tsusin/eng/presentation/pdf/110908_1.pdf; Rural Innovation Strategies Inc. (n.d.[17]), Unlocking the Potential of Rural America, https://ruralinnovationstrategies.com (accessed on March 2020).
Digitalisation will contribute to reduced costs of services provision
Structural characteristics of rural regions make the provision of services more challenging. The cost of public service provision tends to increase with the degree of remoteness and population sparsity due to transportation costs, loss of economies of scale and greater difficulty in attracting and retaining high-skilled workers (e.g. healthcare professionals) (OECD, 2010[18]). Furthermore, shrinking and ageing populations together with a lower tax base have pressed governments to adapt to new conditions amidst growing demand and higher costs. Providing access to public transportation, education and skills training as well as health services and care for the elderly population has become increasingly challenging in areas where the population is shrinking and geographically dispersed.
New technologies can contribute to improve the quality and reduce the costs of delivering services to rural communities. ICT solutions allow rural communities to access high-quality services by overcoming physical distances and road or rail infrastructure challenges. Virtual access to education (e-Learning) can help students participate in programmes without commuting, offering access to entire education programmes or courses from high-quality educational institutions. Some of the features of e-Learning are especially relevant to overcoming demographic challenges in rural regions (Box 5.2). Online health services, robotic surgeries and medical supplies delivered by drones are already complementing health services in some rural communities (OECD, 2019[1]). The e-Health trend has been accelerating since 2005 and now 58% of analysed countries (73) have developed a national e-Health strategy (WHO, 2016[19]). In the aftermath of the COVID-19 crisis, many governments can accelerate the deployment of e-Health and e-Learning services to increase the resilience of rural regions to external shocks. This shift can help rural communities retain young people and provide attractive public services to new residents.
Digital technologies create new possibilities for education and training. Digital learning and open education come in many forms (e.g. post-secondary, undergraduate and graduate education, continuing education, short-term training and professional development). Formal educational institutions, industries and entrepreneurs in the education and training fields offer digital learning platforms. Digital learning can lower the cost of training, increase flexibility in training provision and better meet individual needs, among other benefits (OECD, 2019[20]). Digital learning and open education hold much promise to foster adult and lifelong learning.
One form of digital learning is online learning, which overcomes the challenges of distance and can be open to large numbers of students. Online learning includes tutorials, recorded lectures, online educational resources, as well as small, private online courses or massive open online courses (MOOCs). MOOCs have attracted much attention over recent years but their potential for education and training is still limited.
While formal post-secondary educational institutions offered the first popular MOOCs, focusing on traditional academic subject areas, more recent MOOCs aim to enhance skills and provide professional development. Traditional educational institutions have partnered with multinational corporations on many of these skills-oriented MOOCs in order to help set the curricula and assign certificates of completion that they accept in their hiring processes. For firms, MOOCs may provide a potentially cost-effective means of investing in their employees. Users of open education are largely employees that combine e-Learning with formal education.
One key challenge with many MOOCs is that completion rates are low, and patterns of participation and completion seem to replicate offline learning patterns, i.e. the highly educated and highly skilled are more likely to participate in and finalise courses than low-skilled ones. It is thus unclear whether MOOCs will reduce or actually reinforce inequalities in adult learning. For those who complete online courses, gaining recognition remains a challenge despite many innovative approaches to certification that have evolved with digital learning, e.g. digital badges, nano and micro degrees, and other alternative forms of credentials.
Source: Adapted from OECD (2019[1]), Going Digital: Shaping Policies, Improving Lives, https://dx.doi.org/10.1787/9789264312012-en; OECD (2016[21]), Massive Open Online Courses (MOOCs): Trends and Future Perspectives, OECD, Paris; OECD (2019[20]), OECD Skills Outlook 2019: Thriving in a Digital World, https://doi.org/10.1787/df80bc12-en.
Digitalisation enables better governance in rural communities and provides further opportunities for rural dwellers to participate in civic engagement (Chapter 5). The use of digital platforms is expected to improve the function of public administration and its relationship to the public. Most OECD countries have developed strategies of e-governance to involve greater numbers of citizens in the policy decision-making process (OECD, 2014[22]). Likewise, ICT provides an array of tools for people to share ideas and influence regional and national agendas. Countries like France have strategies to engage a broader population through ICT and offer proposals for policy reforms (Grand débat national).
Making automation a complement for rural economies
Automation brings positive and negative disruptive effects on local economies. Automation anxiety has been a recurrent theme ever since the first industrial revolution. Telegraph and telephone networks made many jobs obsolete, automated teller machines (ATMs) made some bank tellers redundant and industrial robots replaced plant workers. However, reduced costs as a result of technological progress have also increased wages and created new jobs. For example, the rise of ATMs increased demand for bank tellers as this labour-saving technology reduced the costs for banks to open new branches (Bessen, 2015[23]). Internationally, there is no clear consensus on the net effect of job automation (OECD, 2019[2]). On the upside, automation offers a path to revive productivity growth by creating new jobs and allocating low-skilled workers to new sectors (Autor and Dorn, 2013[24]). On the downside, automation can lead to large-scale job losses and high unemployment (Frod, 2015[25]).
Today, many rural communities are ill-prepared to face automation effects. Rural communities, especially remote rural economies, tend to experience low economic diversification, shrinking and relatively low-skilled labour force with lower levels of educational attainment (see Chapter 3). Regions highly concentrated in manufacturing with a lower share of service activities and those with low productivity face the highest risks of job automation (OECD, 2018[26]). Many rural economies fall into this group as they tend to have a high degree of specialisation in manufacturing and extractive industries whose production processes embed a high share of repetitive tasks (OECD, 2018[26]). For instance, operational tasks in mining such as drilling, blasting, and train and truck driving constitute over 70% of employment in mines (Cosbey et al., 2016[27]). In fact, all top five occupations with a higher risk of automation are extremely common in many rural communities (Table 5.1).
Nevertheless, technological change can be an occasion to create more rewarding jobs and build better learning systems and career pathways. New technologies can complement high-skilled, non-routine cognitive tasks and replace mid-skilled routine tasks, while parts of the low-skilled workforce can shift to service and sales occupations (Autor and Dorn, 2013[24]). Policy makers must view technological change as substituting or complementing certain tasks rather than replacing occupations (Arntz, Gregory and Zierahn, 2016[28]). At the same time, technology is likely to create new jobs we cannot imagine today; academic research suggests that about 8% to 9% of jobs by 2030 will be ones that barely exist today (Mckinsey Global Institute, 2019[10]). Frey and Osborne (2017[29]) find that even occupations dominated by automatable tasks require other complementary tasks that are hard to automate.
Despite the uncertainty about the effects of automation, governments need to ensure that technological progress will enhance overall well-being and does not lead to rising inequality. Policy has a major role in shaping the consequences of automation in labour markets. Regulation and fiscal policies need to respond to the changes in the new digital era. For instance, different international actors have advocated for a tax system that takes into account a robot tax to compensate for the negative effects of automation (OECD, 2019[2]). The EU proposed but ultimately rejected, legislation to tax robots, citing concerns such a tax might stifle innovation (Reuters, 2017[30]).
While future predictions on how technological progress and automation will affect rural economies are difficult to make, many rural regions still lack the adequate characteristics to face the forthcoming changes. Technological progress can reach everywhere and lead to negative or positives outcomes at the local level. To make the most of technological progress, rural regions need to invest in their local capacities by strengthening a number of factors including technological and civil infrastructure, quality education and skills training. These enabling factors need to be supported by sound institutional characteristics such as awareness, forward-looking regulations, administrative capacity and political will capable of triggering the needed long-term investments and policy foresight.
Ensuring high-quality broadband connectivity
Universal and high-quality broadband is the basis for creating new market opportunities for rural communities. As the Internet and ICT facilitate the transfer of information, they should be regarded as production factors (similar to electricity or labour) for productivity gains and economic growth either for places or individual businesses (Salemink, Strijker and Bosworth, 2017[31]; Tu and Sui, 2010[32]; Martínez and Rodríguez, 2008[33]).
Rural communities need sound communications networks to make the most of the new trends in technologies and digitalisation. Broadband access provides the physical means for using Internet-based digital services through a variety of technologies (e.g. Digital Subscriber Line (DSL), high-frequency 4G LTE, TV white spaces or satellite).1 Access to broadband plays a key role in economic and social interaction and tends to have positive effects on firm productivity, the number of firms and local labour market outcomes (OECD, 2018[34]).
Differences in broadband access across geography persist within OECD countries. Rural communities face a comparatively larger lack of digital connectivity than urban areas, which is commonly known as the urban-rural digital divide (OECD, 2019[1]). In 31 out of 37 OECD countries, the share of rural households with Internet services is smaller than in urban areas (OECD, 2018[34]). Such divide also exists on devices and machine-to-machine connections, which is critical to embrace the whole functionality of new technologies (e.g. automotive cars).
Nevertheless, the gap in digital access among urban and rural communities is decreasing. The urban-rural digital divide in the OECD has halved since 2010 in almost all countries (OECD, 2019[1]). In some countries, like the Netherlands, the share of households in rural communities with broadband access is now similar to the share in urban areas (see Chapter 2). OECD countries have set the goal to provide universal broadband coverage high on their policy agenda. All OECD countries have specific national goals for broadband availability, where most goals are set in terms of speed of service offered and percentage of coverage (OECD, 2019[1]).
Despite the progress in access, the urban-rural gap on broadband quality remains significant. Rural regions are lagging behind cities in broadband access at sufficient speeds. During 2010 and 2018, OECD countries have increased, on average, the share of high-speed fibre in fixed broadband Internet (from a share of 12% in 2010 to 25% in 2018). Yet, most of that improvement has happened in urban areas. Across OECD countries, only 56% of rural households have access to fixed broadband with a speed of 30 megabytes per second (Mbps) or more, far below the 85% of urban households benefitting from such high-speed connections (OECD, 2019[1]).
The factors explaining the digital gap arise mainly from the geographic and demographic characteristics of rural regions. Geography (difficulty of terrain) and population distribution patterns, both in terms of density and dispersion, make it challenging to attract market players concerned about the profitability of such broadband investments. Yet, some OECD countries have proven that it is feasible to create the right market conditions to cover sparsely populated rural regions with high-speed broadband. Finland, Iceland and Sweden have some of the lowest population densities in OECD countries but rank among the top 10 OECD countries with the highest Internet coverage in rural regions (see Figure 2.28 in Chapter 2).
Quality broadband is fundamental to harness the benefits from new technologies. Quality broadband is a multi-dimensional concept that involves connection speed, the time taken to transfer data between users or devices and the number of errors arising in data transfer (OECD, 2019[12]). For example, low-speed networks (less than 20 Mbps) become a barrier in the adoption of many technologies, including advanced telemedicine and cloud computing (Box 5.3). There is a growing consensus that the minimum requirement to meet all digital demands and benefit from future technologies is a connection capacity of minimum 100 Mbps (Bain & Company, 2016[35]; Ministry of Enterprise and Innovation of Sweden, 2016[36]).
Some OECD countries measure broadband availability by collecting metrics on coverage. Most often, these access indicators are collected using a technology-based approach. It then takes into account a number of variables including the percentage of households/population, the share of xDSL, FTTx, cable TV networks, cable modem enabled networks as well as 3G and 4G mobile network coverage and the number of kilometres of fibre deployed. In addition to availability, speed and quality of service are also important for broadband access, as low speeds or poor quality may make it difficult or impossible to use certain Internet applications and services. Table 5.2 shows the type of services that different ranges of broadband download speeds can enable.
Some countries have begun splitting the access indicators not by technology but by speeds of connections announced. Given the different capabilities within each speed threshold, this technology-neutral approach is desirable since it demonstrates the accessibility gaps in terms of quality of service offered for each area. Canada, Japan and the US are examples of countries using this speed threshold method. For example, the US measures access in terms of upload speeds, coupled with download speeds (25 Mbps for download and 3 Mbps for upload). For this threshold, 39% of the rural population in the US (23 million people) lack broadband access at these speeds, in contrast with only 4% of the urban population.
Source: OECD (2018[34]), "Bridging the rural digital divide", https://doi.org/10.1787/852bd3b9-en.
Governments need to avoid that the deployment of the new generation of access networks expands the quality broadband gap between rural and urban. The next generation of access networks such as the 5G network is required to meet the growing demand for high speeds and fast transfers. This network is essential to enabling machine-to-machine communication and make it possible for the functioning of autonomous technologies including self-driving cars and drones (Box 5.4). There is a growing concern that the gap between the most and least connected areas will further increase in the rollout of 5G. As this network requires high investments and thus a large demand, it is likely that market operators will opt to deploy it firstly in high-density areas. Policies should ensure high-speed connection networks are also deployed in rural regions. Incentivising innovation in broadband platforms such as high-powered fixed-wireless solutions or low Earth orbit (LEO) satellite systems can help to cover lower-density areas with higher speed access, where fixed solutions (cable, fibre) are not economical (Bain & Company, 2016[35]).
5G networks are intended to support: enhanced mobile broadband; intelligent devices with fully automated data generation, exchange and processing; and critical communications and applications (ultra-reliable communications with very rapid upload and download of data).
While the international standard is not yet finalised, 5G will be the first generation of wireless networks conceived mainly for a future in which tens of billions of devices and sensors can connect to the Internet simultaneously. Major improvements upon previous network generations include higher speeds (i.e. 100 times faster than 4G), faster data transfer (i.e. 10 times less than 4G) and networks that better support diverse applications through the virtualisation of the physical layers (i.e. “network slicing”). Trials are underway in multiple countries, including through collaborations between network operators and vertical industries.
A major difference with 5G is that it can connect not just people but things, underpinning a world of machine-to-machine communication that takes place largely hidden from human eyes. For example, 5G networks will improve communication between self-driving vehicles, roads and traffic lights, making feasible – the automatic linking of vehicles on highways in a convoy so that they are much closer together than would be safe with human drivers. This could ease road congestion as well as improve safety and fuel efficiency. In addition, sensors embedded throughout farms will be able to communicate crops’ water and fertilisation needs directly to agricultural machinery and systems.
Personal devices will download data at far higher speeds even in crowded areas, realising the potential coverage of on-demand media from almost any location reached by 5G networks.
Source: OECD (2019[1]), Going Digital: Shaping Policies, Improving Lives, https://dx.doi.org/10.1787/9789264312012-en.
Improving broadband access in rural regions
Active national policies along with private sector partnerships are instrumental to improve Internet quality in rural regions. A high-quality broadband provision in rural communities faces many challenges to attracting private investment. Low densities and geography often discourage commercial operators to invest, which in turn can make low-density areas more prone to natural monopolies. Thus, government involvement in broadband investments proves critical to promoting broadband investment in rural communities, either through direct investment with public-private partnerships or promotion of incentives for competitive tendering (e.g. tax exemption, changes to spectrum license arrangements, or loans) (OECD, 2019[1]). As Chapter 3 depicts, OECD countries have been active in addressing challenges in broadband access in rural regions (see Table 3.3).
Wider digital connectivity in rural regions will also benefit from clear regulations. Enhancing access to ICT for all individuals and businesses at an affordable price requires sound policy frameworks that reflect the need for a wider diffusion of digital networks. Ensuring competition in broadband provision, promoting private investments, setting minimum speeds and establishing an independent regulation are strategies that have been effective in extending broadband coverage across different OECD countries (OECD, 2018[34]).
No single high-speed transmission technology works for all types of rural regions. Instead, investment decisions should leverage the most cost-effective technology in each region. Some exercises have shown that providing rural regions with high-speed Internet requires a mix of technologies with a co-ordination of actors (telecom companies, broadcasters, technology firms and policy makers) (The Boston Consulting Group, 2018[37]). For instance, the Swedish broadband national programme underlines that different technologies are optimal for satisfying the need for broadband in different parts of the country (Figure 5.1).
Note: Broadband via copper is not included in the illustration, neither has the extension of the individual technologies been taken into account.
Source: Ministry of Enterprise and Innovation of Sweden (2016[36]), A Completely Connected Sweden by 2025 − A Broadband Strategy, https://www.government.se/496173/contentassets/afe9f1cfeaac4e39abcdd3b82d9bee5d/sweden-completely-connected-by-2025-eng.pdf (accessed on 22 August 2019).
While market forces and national policies primarily drive broadband deployment, rural regions can also pursue their own initiatives to ensure high-quality Internet connection. A number of OECD municipalities and regions have been implementing bottom-up models to finance and deploy high-speed networks (OECD, 2018[34]). For example, municipal networks or high-speed networks, fully or partially facilitated or financed by local governments, have filled the gaps and provided substantial service to some regions. The “village fibre” in Sweden or Community Broadband Scotland in the UK are guiding examples of community-led schemes to provide and improve local broadband (Box 5.5).
The village fibre approach in Sweden
In the 1990s, the liberalisation of the telecommunication market in Sweden not only encouraged the expansion of alternative operators and the creation of municipal networks but also the formation of local co-operatives for the rollout of fibre networks. This “village fibre” approach relies on community involvement to plan, build and operate local fibre networks in co-operation with municipalities and commercial operators. The Swedish Governmental Broadband Forum estimates that there are around 1 000 village fibre networks, which each connect 150 to 200 households on average.
Proponents say the village fibre approach facilitates fibre deployment at a considerably lower cost compared to that of commercial operators through a combination of three factors: handling of permissions; excavation work and trenching; and voluntary work with respect to aggregation of demand. Moreover, the deployment of fibre networks through village fibre as well as all other operators is facilitated by consumers’ willingness to pay upfront fees of around USD 2 300 to connect single dwelling units as well as the possibility to apply for a subsidy from public funds.
A cornerstone of the village fibre approach is that members of local communities make a significant contribution through voluntary work by, for example, communicating with residents in order to raise interest and aggregate demand. On average, the penetration rate for village fibre projects is around 80% compared to roughly 50% in commercial fibre network projects. In addition to voluntary work, the individual households that participate in the construction of a village fibre network must pay a connection fee. Typically, the fee is around USD 2 300, roughly representing some 25% of the total cost of a rural broadband connection. Given that village networks develop in areas where no commercial operators are deploying fibre networks, they meet the key criteria for state aid.
Aside from public funding, Sweden’s experience suggests that village networks require local initiatives and commitment as well as leadership through the development of local broadband plans and strategies. They also require co-ordination with authorities to handle a variety of regulatory and legal issues and demand competency on how to build and maintain broadband networks. The most decisive factor is the willingness of people in these areas of Sweden to use their resources and contribute with several thousand hours of work to make a village network a reality.
Community Broadband Scotland, United Kingdom
In the UK, Community Broadband Scotland is engaging with remote and rural communities in order to support residents in developing their own community-led broadband solutions. Examples of ongoing projects include those in Ewes Valley (Dumfries and Galloway) and Tomintoul and Glenlivet (Moray), which are inland mountain communities located within the Moray area of the Cairngorms National Park. Another example of a larger project can be found in Canada and the small Alberta town of Olds with a population of 8 500, which has built O-net, the town’s own fibre network through the town’s non-profit economic development network. The network will reach all households in the town with a number of positive effects reported for the community.
Source: OECD (2019[38]), OECD Territorial Reviews: Småland-Blekinge 2019: Monitoring Progress and Special Focus on Migrant Integration, https://doi.org/10.1787/9789264311640-en; OECD (2018[34]), “Bridging the rural digital divide”, OECD Digital Economy Papers, No. 265, OECD Publishing, Paris, https://dx.doi.org/10.1787/852bd3b9-en
Providing quality infrastructure for business development
Many new technologies will require quality civil infrastructure. Even in the digital age, a strong infrastructure backbone is still required to provide quality ICT service. As more connections are made wirelessly, the speed and rate of download of these connections ultimately depend on the capacity of fixed networks (OECD, 2019[1]). Basic infrastructure can include workstations, high-speed network, projection/display technology, interactive devices and video conferencing equipment (Pramanik, Sarkar and Kandar, 2017[39]). Autonomous vehicles or trucks also need good quality roads to expand their service across the whole territory.
Quality infrastructure will continue playing an important role in providing opportunities for firms and people in rural regions. Despite the digital age promises of a lower necessity for physical movement, many reasons remain to promote well-connected rural communities. For example, the tourism sector is a relevant source for income and economic diversification for many rural communities. Good quality infrastructure can help spread the benefits from tourism across the whole territory. Well-maintained airports, roads and ports can unleash new economic opportunities for rural communities and allow greater exchange of products and movement of people.
Bridging education and skills gaps
Human capital is a critical factor influencing regional growth and development throughout all types of OECD regions. A skilled human capital base is at the essence of regional development and competitiveness. It contributes to the creation of a learning society that is able to absorb as well as create knowledge, drive innovation and facilitate local adaptability to changing labour demands and technology (OECD, 2019[40]).
Providing workers with the necessary education and skills to attain high-wage roles is instrumental to face automation. Workers with skills that complement technology and can perform non-routine tasks are the most likely to benefit from high-skilled/high-paid job opportunities in the digital age (OECD, 2019[1]). Likewise, lower average levels of education and skills in rural communities have a negative impact on adoption and use of ICT (Salemink, Strijker and Bosworth, 2017[31]). Investing in training for rural workers to acquire new skills can help them prepare for new jobs. Evidence shows that workers need more than digital skills to thrive in technology-rich work environments (OECD, 2019[20]). Workers require a mix of cognitive skills, such as literacy, numeracy and problem solving, along with analytical, ICT and behavioural skills.
Shaping career pathways focused on skills rather than jobs make it easier for occupational transition and enhances the life-long productive capacities of the rural labour force. Not all workers have to learn completely new skills during occupational transitions, as long as education and experience prepare all workers for less automatable occupations. In fact, many workers at high risk of job displacement have transferable skills that are compatible with occupations at lower risk of automation. For instance, accountants and auditing clerks have the skills to become insurance underwriters or credit analysts, which have higher median wages. To limit the cost of the education and training effort, governance can reduce occupational regulatory barriers (such as occupational quotas, high costs for certification) and promote future-looking skills-based educational policies that can facilitate transitions between occupations and harness the productive capacity of the rural labour force.
A mix of public and private training can provide the necessary skills and career path for workers. Most workers receive very short training focused on job-specific skills that are unlikely to facilitate occupation transitions (OECD, 2019[20]). Education and training providers, employers and labour unions can better co-ordinate their actions to provide training options that match workers’ needs for career progressions and transitions. For example, industry-specific training programmes delivered through local educational institutions have proven effective in job placements (Mckinsey Global Institute, 2019[10]). For these training programmes to work, stronger co-ordination between regional programmes and local companies, fiscal incentives and enabling regulatory environments are required to increase workforce suitability with the current and future needs of the private sector.
Primary to tertiary education are essential to provide the skills needed for tomorrow’s work. Governments need to work with education systems at the national and local levels to adapt the curriculum in rural schools along with promoting access to high-end devices. For example, student assessments rarely measure computer competencies, so there is little evidence on whether technology use in schools improves students’ digital skills (OECD, 2019[20]). Encouraging schools to foster and measure general digital skills as well as creativity and computational and critical thinking can help prepare students for the new job scenarios of the future (OECD, 2019[20]).
Sound regulations, policies and information to benefit from new technologies
Adapting governance of regional development policy to account for technology is crucial to prepare rural regions for forthcoming changes. Long-term planning, projections and other foresight methods translated to policies can future-proof regional policy making (OECD, 2019[2]). OECD governments have conducted different methods of foresight planning to ensure policies are flexible and prepared to face rapid changes in the future (Box 5.6). Close work with communities and universities is important to ensure consensus on future scenarios and co-ordinated solutions.
Clear regulations will help rural regions face technological change. Apart from the regulations to enhance access to ICT mentioned above, regulatory changes need to happen to ensure this technology fits the needs of rural dwellers. For example, to harness the benefits from self-driving cars in rural regions, rural regions require regulations to address the low share of public transport in rural regions and promote usership rather than ownership in order to attain shared transport systems.
Strategic foresight is a thought-driven, planning-oriented process for looking beyond the expected future to inform decision-making. It aims to redirect attention from knowing about the past to exercising prospective judgement about events that have not yet happened. For example, strategic foresight does not claim predictive power but maintains that the future is open to human influence and creativity, with an emphasis – during the thinking and preparation process – on the existence of different alternative possible futures (Wilkinson, 2017[41]). This generates an explicit, contestable and flexible sense of the future, where insight about different possible futures allows the identification of new policy challenges and opportunities and the development of strategies that are robust in face of change. Some governments have conducted such exercises to define possible future scenarios and adapt public policies.
Canada
A possible-scenarios assessment (MetaScan 3: Emerging Technologies) was used by the Canadian government in 2013 to explore how emerging technologies will shape the economy and society, and the challenges and opportunities they will create. The study involved research, consultations and interviews with more than 90 experts. The key findings include some of the following policy challenges:
The next decade could be a period of jobless growth, as new technologies increase productivity with fewer workers.
All economic sectors will be under pressure to adapt or exploit new technologies, in which case having workers with the right skills will be essential.
New technologies are likely to significantly alter infrastructures, forcing governments to decide whether to maintain old infrastructures or switch and invest in new, more efficient ones.
United Kingdom: Megatrends analysis and scenario planning
In 2013, the UK Government Office for Science launched a plausible scenarios-led foresight assessment (Futures of Cities). The goal of the project was to develop an evidence base for the future of UK cities (challenges and opportunities towards 2065) and to inform national- and city-level policy makers. The office commissioned working papers and essays and conducted interactive workshops, with over 25 UK cities participating. By combining megatrends analysis and scenarios planning, the study imagined a plausible future consisting of considerable climate shocks presenting key urban challenges by 2065 – e.g. drier summers and heatwaves affecting the UK’s southern cities and higher levels of precipitation affecting western cities during the winter.
Switzerland: Perspective 2030
The first step of the “Perspective 2030” report used online questionnaires submitted to experts and think tanks to identify influencing factors, changing trends and megatrends that will impact Switzerland in the next 15 years. During the second step, the surveyed experts assessed the influencing factors and trends by assigning them a value between 1 (low impact/low degree of uncertainty) and 10 (high impact/high degree of uncertainty). Third, the report integrated influencing factors and trends into four different plausible world scenarios that analysed the interaction between the Swiss and international influencing factors as well as the resulting potential “winners” and “losers” for each scenario.
Source: Adapted from OECD (2019[2]), OECD Regional Outlook 2019: Leveraging Megatrends for Cities and Rural Areas, https://dx.doi.org/10.1787/9789264312838-en; Wilkinson, A. (2017[41]), Strategic Foresight Primer, European Political Strategy Centre.
Paving the way for easy deployment of new technologies in rural regions also requires improving information systems. Tracking initiatives on work training or learning schemes as well as granular information of skills and demographics of workers will help make efficient policy decisions. Furthermore, promoting a comprehensive mapping of rural regions and enabling technological tests is instrumental to make the most of new technologies. For example, rural regions without a detailed and accurate online map can miss opportunities to expand the services from driverless cars or drones across the whole territory.
Furthermore, the political will to create awareness about the forthcoming changes and involve the community can lead to sustainability of policies. Preparing rural regions for coming technological changes also involves working and planning with communities to determine the solutions and strategies to face those changes. Many citizens are not aware of the benefits and challenges from the undergoing technologies on work and life. It involves the effect from automation or the possibilities to mitigate climate change by using new technologies. Therefore, broader information campaigns can provide space to answer and receive feedback from the community on the implementation of those new technologies as well as help rural dwellers make the most of the innovations.
Technology is changing rapidly. Every year new types of devices are available and improved in the market. Many of these technologies have the potential to improve rural economies, their production processes and the traditional economic sectors as well as support the transition towards a low-carbon economy. New technologies are also able to modify how people access public services and interact with society.
This section maps a number of technologies and outlines the possible challenges and opportunities that can bring for rural regions. While many technologies are undergoing rapid transformation and promise disruptive effects, this section focuses on those technologies with the most rapid progress and greatest international recognition to modify life in rural communities (Table 5.3). The section will also outline those technological changes transforming traditional rural economic sectors: agriculture and mining. Other technologies such as deconcentrated energy systems (solar panels), blockchain or those associated with recycling will not be discussed in deep, but they also offer a great potential to reduce costs, expand the market and mitigate climate change in rural regions.
Table 5.3. Key technologies driving rural change | ||||
|---|---|---|---|---|
Technologies | Timeframe of technology availability | Opportunities for rural regions | Policies to harness the benefits for rural regions | |
| Self-driving cars | Next ten years | - Shared self-driving cars can improve public transport and reduce CO2 emissions from rural commuting - Increase attractiveness of living in rural regions. - Ease access to services and social networks. | - Ensure a quality broadband connection. - Define regulations for autonomous cars and the low modal share of public transport. - Promote usership rather than ownership. - Improve online-mapping and quality of rural roads. |
| 3D printers | Available | - Access mass-manufactured goods without waiting for delivery. - Produce goods to sell and adapt to rural industries. - Boost entrepreneurship. - Reduce the market dependence of rural regions on mass-manufactured goods (tools). - Increase the efficiency and autonomy of public services (healthcare inputs). | - Ensure a quality broadband connection. -Train professionals for maintenance and provision. - Disseminate information about technology. |
| Drones | Next ten years | - Attract firms to test and conduct research projects with drones. - Improve access to goods (e.g. mass consumption goods, medicines). - Reduce productions and delivery costs.as well as CO2 emissions from transport. - Boost the productivity of rural businesses. | - Ensure a quality broadband connection. - Define regulation and privacy policies. - Incentivise testing and support pilot applications. |
| Advanced communications techniques | Next ten years | - Attract and retain workers by improving the teleworking experience. - Enhance social and labour connections. - Allow for collaborative innovation systems among firms and research centres. - Increase the efficiency of rural business and training of workers. | - Ensure a quality broadband connection. - Support firms to invest in data and organisational change to improve teleworking. - Enhance knowledge and information about augmented reality (AR) and virtual reality (VR). |
| e-Education | Available | - Enhance traditional learning experiences and make education more accessible and inclusive. - Retain the young population and attract families to settle in. - Support reskilling of the workforce to facilitate the shift of economic activity. - Improve teacher training. | - Ensure a quality broadband connection. - Awareness of the benefits of open education at the public and private levels. - Enhance teachers training and involvement of academic institutions with the technology. - Increase student support (either in person or virtually). |
| e-Health | Available | - Increase healthcare coverage and quality in rural regions. - Enhance the skills of medical staff. - Improve information for patients and doctors. - Reduce transport cost in conducting a medical procedure. | - Ensure a quality broadband connection. - Train health professionals. - Conduct awareness campaigns. - Update ICT infrastructure and equipment in hospitals and medical centres. |
The effect of technological progress on productivity
Self-driving cars can boost the vitality of rural communities
Car use is still a common mode of transport to reach the workplace and health and education centres in rural communities. While car use has decelerated in urban areas, it remains the prominent transport mode in rural communities (ITF, 2017[42]; Dender and Clever, 2013[43]). Public transport tends to be costly and inefficient in low-density areas, with long waiting times for passengers and underutilisation of systems. Autonomous or self-driving cars, vehicles connected to the Global Positioning System (GPS) and sensors capable of detecting the environment and navigating without human input, can become a solution to improve commuting for rural dwellers.
This technology is growing rapidly, and assisted driving (semi-autonomous cars that can complement human input, i.e. take over driving in heavy traffic) is already a reality (OECD, 2018[44]). Many cars sold today are capable of some level of automated operation and cars capable of driving autonomously have been tested on public roads in OECD countries (OECD/ITF, 2015[45]). However, fully autonomous vehicles are some time away and even optimistic projections foresee a gradual uptake since part of the existing stock of traditional cars will remain active despite the growing fleet with new technologies (OECD, 2018[44]). Most experts expect fully autonomous vehicles to be available on the market during the next decade. Studies have outlined that there will be a significant number of self-driving cars on the market by 2030, yet it is not clear to what extent these vehicles will be completely self-driving in all circumstances (OECD/ITF, 2015[45]).
Self-driving cars provide many benefits, including road safety, congestion reduction (as they make driving more efficient) and lower stress for drivers. They can support a more efficient use of time by freeing the driver from driving tasks in long commutes (providing extra time for work or leisure) and improve the mobility of people who cannot drive today.
Wider use of this technology can improve the traditional public transport system in rural regions. Shared self-driving cars can optimise routes and timetables (on-demand, small-scale bus systems), making the transport of passengers in rural regions more efficient and safer, especially in sparsely populated and less dense areas. Even in small- and medium-sized cities and towns, a shared fleet of self-driving vehicles could completely obviate the need for traditional public transport (OECD/ITF, 2015[45]). In rural regions, this technology would reduce the long waiting times for passengers or underutilisation of the system. On-demand transport can reach sparsely population with optimised routing, schedules adapted to local needs and pricing calculated on a per-hour or per-kilometre basis. A case study developed for Ann Arbor, Michigan, in the US, showed that for a population of 120 000 who travel less than 70 miles a day, the shared autonomous fleet could provide near-instantaneous access to a vehicle with only 15% of the current number of vehicles needed to carry out these trips (OECD/ITF, 2015[46]).
Self-driving cars can also increase the attractiveness of rural communities. As first porotypes are already able to overcome the threshold of a 60-minute commute autonomously (OECD/ITF, 2015[46]), self-driving cars can make rural regions close to cities more attractive for urban residents that seek bigger and cheaper spaces or more green areas with better environmental conditions. This technology can also improve accessibility and network capacity, especially in remote rural regions. They can ease access to services (e.g. banks, libraries or amenities) and social networks (e.g. bars or social events) in nearby areas.
Nevertheless, self-driving cars can bring some challenges to rural communities. Local amenities, i.e. shops and bars, can lose attractiveness, as people are able to more easily frequent other areas. Additionally, shared self-driving car systems will directly compete with the way in which taxi and public transport services are currently organised, reducing the demand for drivers or other workers in traditional public transport (e.g. bus fare collectors or inspectors). Furthermore, the engineering of self-driving cars using direct programming or artificial intelligence (AI) will have to incorporate the ethical decisions associated with accident aversion. It will be important for clear guidelines of the use of AI in situations that risk the welfare of individuals.
Policies and regulations need to ensure this technology fits the needs of rural dwellers. Defining regulations to address the low modal share of public transport in rural regions and promoting usership rather than ownership to aim for shared transport systems are instrumental. Ensuring and promoting a comprehensive mapping of rural regions is also needed to make the most of this technology. Self-driving cars are connected to GPS and satellite maps to trace the routes. Rural regions without a detailed online map can miss opportunities to expand the services across the whole territory. Finally, upskilling labour force and socialising the technology with workers in the traditional transport system will prepare the population to face this trend.
3D printing: Decreasing reliance on supply chains
3D printing or additive manufacturing is a process of making three-dimensional solid objects based on a digital file. It has the potential to transform the traditional manufacturing process of large centralised factories into decentralised workshops, allowing consumers to assemble the final products themselves, thereby integrating the whole value chain from idea and design to production and delivery. It is highly customisable and promotes the free design of complex products, as each design can be adapted to specific needs. It creates lightweight elements and can reduce production time by integrating assembly and production.
Deconcentrated manufacturing technologies can yield a disruptive change by making small-volume production much cheaper relative to mass production. It may, in turn, change the economic rationale for companies to locate in agglomeration economies in search of economies of scale by allowing firms to produce some goods in small volumes directly in the regions rather than shipping products from large factories to rural regions.
This technology is available today and the 3D printing market is growing rapidly. The number of 3D printers sold between 2005 and 2011 doubled and the market is projected to grow at around 20% per year from 2014 to 2020 (OECD, 2017[47]). 3D printers are already capable of printing in colour and some of the many final goods already on the market include aerospace products, jewellery and medical devices (Beyer, 2014[48]). While the commercialisation of fully 3D-printed products is still less common, various commercial products contain 3D printed parts. 3D printing is already significantly altering the market for machined plastic and metal parts. For instance, Boeing has replaced traditional manufacturing with 3D printing for over 20 000 units (OECD, 2017[49]). Mainstreaming 3D printing will largely depend on the cost of switching from mass-manufacturing methods to 3D printing, that will include adapting the local labour force to the skills demanded in the generation of 3D printing files, and supporting workers displaced due to the changing nature of the tasks required for working in the industry. The small size of current printers and requirement for quality input materials (plastics, resin, ceramic and metals) is still a barrier for wider production of some goods. However, with the advancement of other complements, this technology is likely to become more common for the production of different goods at competitive prices (OECD, 2017[47]).
With additive and distributive manufacturing, rural regions could access mass-manufactured consumer goods without waiting for delivery. Rural businesses or dwellers could themselves design, create or produce goods to sell and adapt to rural industries, opening up a market of mass-customisation (Conner et al., 2014[50]). Open source computer aided design (CAD) files for hand tools for agriculture (e.g. apple pickers), food industry (e.g. cassava press), animal management (e.g. ant trap; chicken feed holder) or machinery parts for water management (e.g. irrigation stake) already exist, ready to be printed (Pearce, 2015[51]). This can in turn boost entrepreneurship as prototyping of new products and tools becomes cheaper and faster. For example, the state of Hidalgo in Mexico has established a design lab where entrepreneurs can test their products by creating prototypes from a public 3D printer (OECD, 2019[40]).
Additionally, this technology can reduce the market dependence of rural economies on cities or market hubs. Using additive manufacturing can offer (short-term) solutions to bridge supply gaps for replacement or production of parts (e.g. auto-parts). 3D printing will allow printing replacement parts for legacy products that would otherwise be discarded (OECD, 2017[49]).
3D printers can also increase the efficiency and autonomy of public services in rural regions. For example, hospitals in rural regions can use 3D printing to prepare tailor-made casts or implants without the need to send specifications to specialised centres and wait for the final prosthesis to be delivered. In countries like South Sudan and Uganda, 3D printing technology is used to create prosthetic limbs (Ishengoma and Mtaho, 2014[52]).
Nevertheless, some challenges to the take-up of 3D printing technology exist for rural regions. So far, there is a lack of professionals for maintenance, provision and training for the technology. The high demand for professionals in this market could make it difficult for rural regions to attract and retain experienced workers (OECD, 2018[53]). Further, disseminating the information about the technology’s possibilities should allow rural businesses to prepare and plan the production process.
Unmanned aerial vehicles: Improving productivity and well-being
Drones, or unmanned aerial vehicles, are aircraft that can fly autonomously or with user direction through software-controlled flight plans in their embedded systems, working in conjunction with onboard sensors, transmitters, imaging equipment and GPS.
Drones are already undertaking complex and even dangerous tasks in entertainment, agricultural, construction, retail and insurance industries. Firms are using drones to survey designated areas and remote infrastructure (e.g. oil pipelines and agricultural areas), count wildlife and monitor forest fires (Rao, Gopi and Maione, 2016[4]). Insurance companies are using this technology to survey crops before writing contracts, to determine the underwriting strategy and, after, to survey the damage. Industry experts predict the market size for drones to match that of hardware sales within the next few years. Yet, currently, short battery life and the lack of proper regulation (and enforcement) remain two major limitations for their rapid commercial adoption (Rao, Gopi and Maione, 2016[4]). A lack of harmonised regulation around the use of drones can also create delays. Currently, there are mostly national guidelines on the use of a drone, which leads to uncertainty on their deployment in rural regions (Levush, 2016[54]).
Rural communities can further benefit from conducting testing and research project in drones, activities generally prohibited in urban areas. As most regulatory frameworks in OECD countries prevent the use of drones in dense urban settings (OECD, 2018[53]), sparsely populated areas provide the best opportunity for firms to openly test and improve the technology. It makes rural communities attractive for technology and research and development (R&D) companies, which, if well managed, can generate knowledge spill-overs and new jobs in local communities.
As mentioned in the previous section, drones offer the opportunity to reduce production and delivery costs in rural communities. Drone-based delivery can open a new market for rural communities, especially remote areas that tend to face a higher cost of transport. This delivery method could also increase quality of life, as rural dwellers can access a variety of goods from elsewhere in an expeditious manner and without incurring major costs. Using drones in production processes boosts the productivity of rural firms. For instance, farms are using drones to monitor livestock and fields. These automated, intelligent systems do not require the farmer to monitor the video feeds but rather flag anomalies that need further investigation. Farmers can also undertake localised irrigation with drones, which contributes to saving resources and achieving greater agricultural outputs (OECD, 2018[53]).
However, drones can also create competition at the local level. Delivery of products via drones makes rural communities less dependent on their local shops, threatening the local retail infrastructure. Such risks might create further resistance within communities, which already view drones as a threat to privacy and information based on the ability of drones to take pictures and record videos. Defining regulation and privacy policies at the national level by involving regional authorities is needed to move forward with the benefits of this technology. Further, upskilling the labour force is crucial to making the most of drones in lifting the productivity of rural businesses (e.g. agriculture).
Drones offer the opportunity to make economies more productive and improve quality of life, particularly in rural regions. USA Drone Port selected Hazard, Kentucky, to build its new research and development centre for unmanned aerial vehicles (drones). The location provides assets found only in rural regions, such as uncontrolled airspace, a varied topography and low population density. With a 60-mile radius of Class G airspace surrounding the site, builders and pilots can fly without requesting permission from the Federal Aviation Administration (FAA).
From its unique location in an area best known for its coal mining past, the company is helping to address issues of both economic growth and well-being. The Drone Port is contributing to growth by helping to develop a high-tech workforce in the region and providing the opportunity to create jobs. Of the more than 70 pilots trained on site, many have started their own private companies in and out of the region. Already three firms involved in the drone industry have formed: a publishing company, a builder and a contractor, each working with USA Drone Port to advance the use of drone technology
Innovation in rural regions, often lacking the large R&D facilities found at universities in major urban areas, also takes a different form (Freshwater and Wojan, 2014[55]). Innovation is more likely to come from entrepreneurs who cannot find external solutions for inherently local problems. For example, USA Drone Port is now working with a hospital in rural North Dakota to improve access to medicine for its most remote residents. In this way, drone technology has created opportunities for rural entrepreneurs to increase both productivity and well-being in remote areas.
Source: USA Drone Port (n.d.[56]), Our Vision, https://www.usadroneport.com/our-vision.
Advanced communications techniques: Virtual and augmented reality
Rapid progress on communication techniques is modifying the way people interact at work and in private life. Remote working systems, including teleworking, co-working spaces or virtual teams are increasing rapidly. For instance, in the US, the share of workers who primarily work from home has more than tripled over the past 30 years, currently representing 2.4% of the workforce (OECD, 2019[2]). Remote work experience can be improved with augmented reality (AR) and virtual reality (VR). These technologies expand the possibilities of digital connectivity to conduct business meetings or conferences (Bastug et al., 2017[57]). They also provide the possibility for virtual meetings, conferences or networking cocktails where virtual models of people can talk and socialise while being connected remotely.
The market for AR and VR is growing quickly. Estimates show sales of this technology grew fourfold between 2015 and 2018 (Hall, Stefan; Takahashi, 2017[58]). Distinct corporate applications are emerging across a variety of tasks, tapping into more of the human senses. Entrepreneurs have used the technology in education, to simulate workplaces, for quality inspection, during driver training and for healthcare purposes (World Economic Forum, 2017[59]). VR could also improve online shopping experiences, help monitor the production process in agriculture or manufacturing and change how marketing is done (Glazer et al., 2017[60]).The expansion of digital technologies can bring dynamism to rural communities and create new business opportunities for local firms. Better ICT, VR and AR can improve the teleworking experience. The technology can also enable people to participate in meetings from distant locations with few differences in the quality of interaction. It will benefit rural regions by attracting people from urban areas and offering diverse income and job opportunities to rural workers, especially in the service sector (Stratigea, 2011[61]). It can further help retain talent in local communities and allow for collaborative innovation systems among firms (client-suppliers, urban-rural firms) and research centres as the technology simulating face-to-face meetings becomes widely available.
AR can help workers perform tasks more efficiently. It provides field workers with an in-depth view of the equipment and onsite conditions to make more accurate decisions and better allocate priority tasks (AgriFutures Australia, 2018[62]). This technology can also improve training for workers and simulate risk situations for some professions. For example, Castilla y León in Spain has developed a training centre with simulation technologies using VR to teach mining perforation and other techniques of mining extraction (Fundación Santa Barabara, 2019[63]).
However, wider use of communication technologies can pose some challenges for rural dwellers. VR and AR could threaten tourism in some areas if people were readily able to experience new and exotic locations without leaving the comfort of their own homes. For example, Australia and Canada have already developed immersive VR tours of some of their popular tourist destinations, and hotel chains have developed tours based on this technology for guests (OECD, 2018[64]). Some authors have argued that teleworking can enhance social isolation and weaken social networks, as teleworkers are mobile and able to change their location for work (Vassileios, Stratigea and Giaoutzi, 2012[65]).
To make the most of the benefits of communication technologies, policy should ensure that local communities have the capacities and skills to use and seize AR and VA. Further, governments should support firms to invest in other knowledge-based capital including data, organisational change and process innovation. It would complement the benefits of teleworking as well as maintain productivity in business. Enhancing access to quality broadband for all individuals and businesses is needed to allow a wider benefit of these technologies.
The effect of new technologies on public services
e-Education
Education can find support in technology to overcome some challenges in rural economies such as distance, small classroom size, limited curriculum options as well as teacher attraction/retention. The provision of education in rural areas is relatively more costly with a quality that in many cases is below urban areas. Students in large cities score 31 points higher on average science than their peers in small towns in OECD Programme for International Student Assessment (PISA) tests (OECD, 2017[66]).
ICT devices and the Internet hold the promise of enhancing traditional learning experiences and making education more accessible and inclusive. Long-distance education (or online courses), podcasting, interactive television teaching tablets, modular coursework and self-directed learning can enrich curriculum opportunities in remote schooling (OECD, 2017[66]). For example, online courses can be effective in terms of improved student-content, increased peer-to-peer interactions and greater use of teachers’ limited time. Open online courses (MOOCs) have become extremely common, and large communities have formed around online courses (e.g. the online platform Coursera, for example, has more than 22 million course enrolments across 190 countries). Policies to foster online education are also more common. For example, in 2007, Italy launched the National Plan for Digital Schools, and the EU has undertaken a programme, Open Education Europe, to accelerate the digitalisation of education (Inamorato, 2017[67]).
Providing access to quality education in rural regions can help retain the young population and attract families to settle. Online models of education can also support the reskilling of adults to help them shift economic activity (e.g. from agriculture to ecotourism or marketing) (OECD, 2017[66]).
The government, as a service provider, can greatly benefit from technology to close existing gaps in education. By closing distances, policy can better involve local communities and take a place-based approach. Teacher training and ensuring their conformability with the technology as well as defining methods to increase student support (either in person or virtually) are important policies to support an efficient outcome from distance learning technologies (OECD, 2017[66]).
Wider use of online courses or other forms of education based on technology come also with some challenges for rural regions. Social interaction in a classroom experience is still important for the learning process. Commitment and progress in many online courses are also difficult to track (OECD, 2017[66]).
e-Health
Health relies on technology to improve the provision of healthcare and medical research. Social isolation, a lack of skilled medical staff along with an ageing population are pressing challenges for rural regions. Health technology and innovation are changing the way doctors and hospital staff address clinical and health problems. At the same time, these tools allow clinics to modify the procedures and practical styles for healthcare delivery through technologies like process innovations, e-Health and Big Data (OECD, 2017[68]). These transformations are changing the way individuals and communities engage with healthcare.
E-Health, or the use of ICT for health, is about improving the flow of information through electronic and digital means (WHO, 2016[19])). According to the World Health Organization, the e-Health trend has been accelerating since 2005 and now 58% of analysed countries (73) have developed a national e-Health strategy (WHO, 2016[19]). With the recent COVID-19 pandemic, e-Health services have been used as a solution to physical restrictions to traditional in-person meetings, clinic consultations and some forms of trial drug procedures. Mobile healthcare, for instance, is one of the ways in which this trend has progressed the most. Between 2013 and 2015, mobile health applications have doubled, reaching 165 000 available applications in 2015 (OECD, 2017[68]). Healthcare professionals are using technology: to perform various activities, such as continuous monitoring and timely response; for interactions between patients and health professionals beyond traditional settings; and communication with systems that can provide real-time feedback from prevention to diagnosis, treatment and monitoring (OECD, 2017[68]). In addition, healthcare provision is also evolving towards precision medicine, which entails tailoring treatments to individual patients.
Online communications and services provide a way to increase healthcare coverage and quality in rural regions. For example, the Swedish project My Healthcare Flows aims to provide holistic solutions based on the individual patient’s needs, including innovative e-services and open data platforms. They have already deployed the e-service Patient Journey in at least seven county councils in Sweden, which is expected to increase quality of life and communication with patients (OECD, 2016[69]).
E-Health strategies are also improving the skills to manage the technology of medical staff in rural communities. In the rural region of Alentejo, Portugal, the telemedicine programme includes a tele-training initiative to address challenges faced in providing healthcare to a geographically large but sparsely populated area. The programme consisted of free tele-training sessions for nurses, doctors and diagnostic technicians in 52 locations (WHO, 2016[19]).
Policy making will play a key role in ensuring healthcare provision benefits from technology developments. Local governments should design policies for talent attraction, including affordable housing for health professionals or improving career development path. In terms of telemedicine, policy should work on mainstreaming mobile health applications and encourage the design of regional e-Health strategies aligned with the national level. Awareness campaigns in rural communities are needed to promote the benefits of using e-Health services. Finally, many e-Health procedures require advanced-technology equipment in hospitals including HD screens, sound ICT infrastructure and broadband quality.
Effect of technological changes in traditional sectors
The digital transformation of the economy can contribute to more resilient, productive and sustainable dynamics in traditional rural sectors, agriculture and mining. At the core of these technological innovations is the increasing capacity to capture and exchange data, automate repetitive tasks and create new market opportunities. Automation of farms and mines can create entirely new dynamics in the economies around these sectors and contribute to the transition to a low-carbon economy.
Automation of farms
The data-driven technologies that are enabling the surge of “smart farming” or “e-farming” leverage ICT, sensors, the Internet of Things (IoT), robots, drones big data, cloud computing, AI and blockchain technology (OECD, 2018[70]) (Box 5.8). The integrated use of these technologies is supporting farming innovations such as the use of satellite data to monitor crop growth and water resources or automated agricultural production and ICTs to connect farmers in new ways (OECD, 2018[70]).
The digital transformation of the food and agricultural system has proved complex. The agricultural sector involves many stakeholders operating in a wide variety of contexts, including remote areas, which often face issues related to connectivity (see Chapter 3). Nevertheless, digital innovation in agriculture holds many promises, and advances in digital technologies could help boost productivity and potential savings in terms of seed, fertiliser, space, water and time.
Advances in remote sensing technologies have enabled increasingly granular data about soil, weather and environmental conditions. As the cost of digital technologies and the analysis of the data that they collect have fallen, farmers are now better able to draw insights about a range of aspects of agricultural production in a way that was not possible before.
Farms of the future could be autonomous, with machines tending livestock and harvesting food without much human intervention. In October 2017, a team of British researchers used commercially available agricultural machines and software to enable amateur drones and tractors to operate autonomously. The project culminated in the completely automated harvest of approximately 5 tonnes of spring barley, which had never been touched by human hands.
Source: OECD (2019[1]), Going Digital: Shaping Policies, Improving Lives, https://doi.org/10.1787/9789264312012-en.
Precision farming is a pioneering technique that provides farmers with near-real-time analysis of key data about their fields that is paving the way for fully automated farms (OECD, 2017[71]). This technique uses big data analytics to provide productivity gains through optimised use of agriculture-related resources, including savings on seed, fertiliser, irrigation and even farmers’ time. Initially, it began with yield mapping and simple variable rate controls and, later on, integrated automated guidance technology (OECD, 2017[71]).
However, the biggest challenge rural agricultural communities will face is the changing role of the farmer and the local farming community in general. The OECD Digital Economic Outlook (2017[71]) has identified two scenarios regarding the role of farmers in relation to the automation of agriculture. In the first, farm enterprises become local caretakers of land, animals and data. They monitor operations centred at the lower end of the value chain. The job of the farmer would be to make sure that the interactions between the supply and demand sides of the agricultural systems work together properly. In an alternative scenario, the data and intelligence provided by analytics could help empower farmers, tailoring the processes to their knowledge of local and farm-specific idiosyncrasies.
Overall, automation of farms is an opportunity for rural and remote areas to make agricultural production more efficient and sustainable. In order to seize the benefits of the deployment of data collection technologies, policy makers should address persisting issues regarding connectivity, particularly in remote regions (OECD, 2018[70]).
Agricultural data governance and regulation will be central to ensuring that rural communities benefit from the automation of agriculture. The control of agricultural data by major agriculture technology providers has led to controversial discussions on the potential harm to farmers. The benefits of data-intensive equipment for farmers in the form of spill-overs can become uncertain when data ownership is in question (OECD, 2017[71]).
New ways to produce food
Synthetic meat is a niche technology that can attain the dual goal of coping with an increasing demand for food and protein while reducing the environmental impact of regular livestock (less land and water consumption) (Alexander et al., 2017[72]) (see more in Chapter 3). This technology, though recent, is already under production in firms, like Mosameat in the Netherlands. Research is still ongoing and it is expected that synthetic meat will be sold by retailers by 2021 (Alexander et al., 2017[72]).
Further technological developments in the field of aquaculture, more specifically land-based fish farming, is already changing aquaculture practices. Conventional aquaculture systems depend on flow-through of clean water from freshwater sources or coastal currents, thus depending on an ample supply of high-quality water. In recycling aquaculture systems, on the other hand, effluent water leaving the tanks is treated and refreshed before being returned, thereby reducing water consumption (Kvernevik, 2017[73]). Benefits include more flexibility for choosing location and species for farming as well as high yield potential. While research is still ongoing to implement the technologies at an industrial scale, some firms have already begun operations. In Norway, Niri is using advanced aquaculture systems for salmon farming and Maryland-based start-up Marvesta is doing the same to farm shrimp.
Automation in mining
Automation in mining is a trend with significant implications for local communities and economies. Technological change will make mines more autonomous, as currently, changes allow operators to work primarily from distant centralised control centres that rely on a geographic information system (GIS), GPS, equipment monitoring and programmable logic controllers. This automation will have an impact on local spending and employment, which ultimately can benefit local and Indigenous communities.
Data will determine the future of mining, as will the ability to organise, manage and process it. The transition to a future digital mine will change core mining processes and will encompass the automation of physical operations and digitalising assets. It includes the adoption of autonomous vehicles, drones, 3D printing and wearable technologies, all operated through a connected network that uses IoT sensors to capture data in real time. For example, at Rio Tinto’s Yandicoogina mine in Western Australia, self-driving trucks work 24 hours a day hauling high-grade iron ore. This driverless technology can lead to a 15%-20% increase in output, a 10%-15% decrease in fuel consumption and an 8% decrease in maintenance costs (Cosbey et al., 2016[27]).
Automation is likely to reduce the number of operational jobs in areas such as drilling, blasting and train and truck driving. As outlined in the section above, repetitive tasks in mining constitute a large share of current employment in mines. Therefore, mining operations will require new roles to handle the development and monitoring of remotely controlled autonomous equipment and data processing.
Lastly, while there are many benefits to automation in the mining industry, it would be important to consider how automation in mining affects local communities and Indigenous populations. Advances in technology can be used to improve extraction processes improving work conditions and work-safety for miners and to increase productivity for mining firms. However, if local consultation processes do not simultaneously adapt to technological advances, local and Indigenous communities will be at a loss. The technological progress can be used to improve how benefit-sharing agreements are conceptualised and implemented with local and Indigenous communities. A more inclusive consultation process could be attained, for example, by using geographical scanning tools to overlay maps of mines and livelihood areas for local communities prior to the consultation process of extractive industry firms.
To fully embrace the transition and distribute the extractive industry’s benefits to local communities, policy makers should seek to improve skills, re-train local workforce and ensure local and Indigenous communities can benefit from increased transparency associated with increases in technology in the extractive resources sector. Rural communities will need a strategy to identify and support one or more new and profitable regional activities to reduce regional dependence on extractive industries as well as create backward and forward productive linkages with existing industries.
In 2015, all UN member states adopted the 2030 Agenda, which established 17 Sustainable Development Goals (SDGs) to improve people’s lives now and in the future. While the pattern is one of moderately positive overall changes, OECD countries are not universally on track or on pace to achieve targets by 2030 (OECD, 2019[74]). On average, OECD countries are closest to meeting their goals for Cities, Climate and Energy, but remain furthest away from targets on Gender Equality, Food, and Reducing Inequality. Achieving the SDGs will require participation at the local level, where governments are directly responsible for delivering on SDG targets. Policy makers predict that as much as 65% of the SDG agenda cannot be achieved without the involvement of local actors (UNSDSN, 2016[75]). As a result, rural policies are integral to the achievement of SDGs. As emphasised by the OECD’s new programme, A Territorial Approach to SDGs, some of the SDGs that rural communities will specifically need to address include Good Health and Well-being, Quality Education, and Decent Work and Economic Growth.
The 2030 SDG Agenda includes health goals that particularly affect rural regions, even in OECD countries with universal health coverage. SDG Goal 3 strives to promote healthy lives and well-being at all ages. Regional differences in healthcare may stem from supply-side drivers of delivery, the booking system and waiting time, as well as the volume and distribution of resources (Brezzi and Luongo, 2016[76]). According to 2016 data, subnational governments in OECD countries commit 18% of their budgets to healthcare on average, demonstrating the significant stake local stakeholders have in achieving Good Health and Well-Being (OECD, Subnational Finance Statistics).
However, local governments in rural regions may not be able to meet the healthcare needs of its citizens due to higher service costs and lower tax revenues. Indeed, several EU member states have reported acute shortages of medical practitioners in rural regions. Access to health services was a particularly salient concern during the COVID-19 pandemic and was exacerbated by an unusual inflow of temporary urban migrants. Some countries, including Belgium, France, Lithuania and Portugal, have taken measures to incentivise physicians to work in rural regions (EC, 2018[77]). In spite of these efforts, regional disparities persist, particularly amongst females (Figure 5.2). Meeting SDG targets for health will therefore require local and national governments to work together in providing improved health outcomes for rural dwellers. Current technological advances in e-Health can help deliver services to rural regions that may be further away from high-density zones.
Note: Self-reported health.
Source: Eurostat (2018[78]), Degree of Urbanisation (Health), https://ec.europa.eu/eurostat/web/degree-of-urbanisation/data/database.
SDG 4, which aims to ensure inclusive and equitable education for all, also faces regional disparities that governments must address. In OECD countries, the rural-urban gap in education is most significant in transitions to higher levels of education, where approximately half of urban students make the transition compared to only 30% of rural students (Echazarra and Radinger, 2019[79]). Access to quality education in rural regions is crucial to meet the needs of rural youth and to attract families to settle in these regions. Access to early childhood education, one of the SDG targets intended to ensure preparedness for primary education, is generally lower for students in rural regions. This disparity is particularly acute amongst Indigenous students in Australia, Canada and New Zealand (OECD, 2016[80]). If students in rural regions are going to develop the skills to meet the demand for regional labour markets in the future, an eye towards the SDGs will be necessary. While traditional education systems are key to developing the minds of the future, governments can encourage schools to use e-learning resources and update local schooling infrastructure and curricula to the changing education standards in urban areas.
Rural regions will be particularly important to achieving SDG 8, which promotes inclusive and sustainable economic growth, full and productive employment, and decent work for all. Achieving this goal requires intentional investment in rural economies, where diversification, technological change and innovation can help improve productivity. The rural economy has huge potential for economic growth and the creation of decent employment with the right policies. Knowing that agriculture is increasingly productive and not necessarily the predominant provider of income, policies that support local economies in developing higher value-added activities and preparing the local workforce for jobs in diverse types of employment will be necessary prerequisites to meet this goal. Furthermore, forward-looking skill anticipation strategies and regional employment councils that incorporate civil and business stakeholders can help future-proof the equilibrium between demand and supply of skilled workers in local rural economies.
Forward-looking policies for rural regions to support the transition to a low-carbon economy
Rural communities are key to attain environmentally related SDG objectives and move forward the transition to a low-carbon economy. These goals include enhancing the use and development of clean and affordable energy (SDG 7), responsible consumption and production (SDG 12) and climate actions for the environment (SDG 13). Rural economies tend to be focused on primary activities by relying on natural resource extraction and transformation. Agriculture and mining, for example, modify the land and consume important quantities of other natural resources (i.e. water) for the production. However, technological progress can optimise the consumption of resources and their impact on the environment (see more in chapter 3).
Increased awareness from society of an environmentally sustainable demand and the relevance of product traceability has driven change in the production of primary industries. For instance, some mining companies in OECD countries are embracing technology to achieve competitive advantages through responsible mining and metallurgic activities (Box 5.9). The transformation of traditionally extractive industries into environmentally friendly ones is a challenge for the industrial grid of a region. Taking an isolated view of industries neglects the great diversity of links between them. Therefore, the capacity of a primary sector to respond to this challenge is a great engine to drive further changes in the value chain.
In an increasingly competitive market, consumers are demanding a greater environmental commitment from companies, with product traceability emerging as a guide for consumer choices. Industries such as mining, but also the textile and automotive industries, find in technological innovation a competitive advantage to embrace environmentally sustainable industrial process and materials.
The quest for a low-carbon mining value chain in Upper Norrland
The mining companies operating in Upper Norrland are at the forefront of technological development in the process of the carbon-free mining value chain (from mineral extraction to transformation). By 2030, mining companies in Upper Norrland have set themselves the goal of reducing their CO2 intensity by 40%, in line with the Paris Agreement. Substantial investments are being made to achieve the target, striving to increase energy efficiency, mining recycling and decreasing the use of fossil fuels. It is in these regions of Norrbottenn, Upper Norrland and Vasterbotten that specific mining technology is increasingly being implemented to achieve CO2-free minerals, and efforts are underway to enhance the traceability of their products.
Mining companies, in Upper Norrland as in the world, depend on access to land and water, and require important amounts of energy to operate. Due to their extractive nature, companies and governments are supporting a sustainable mining process to reduce the effects on the environment. The state-owned company LKAB is currently carrying out several key projects: use of energy-saving trolleys, production of fossil-free steel (CO2-free pelletising process and fossil-free iron) and developing an autonomous mine, among others. In the case of Boliden, another active company in the region, projects and technologies are being embraced to produce minerals with low impact on nature and the climate. The large mining companies in the region (Boliden and LKAB) have carried out internal projects to achieve environmentally sustainable mining operations. Boliden carries out a series of projects for electrification, automation and deployment of 5G networks in the mines. Together, these innovation strategies may lead to the production of environmentally responsible minerals and materials, which can gain relevance in the demand from the market.
Technological innovation is in most cases not specific to one sector and can be transferred and scaled to other sectors. Reducing consumption, inputs and externalities are usually objectives shared by all sectors. The automotive sector for example, in the face of increasing constraints and growing market demand, is converting traditional fuel engines to electric-hybrid technologies, as well as investing in increased traceability of product manufacturing, automation, machine learning and 5G network deployment. There is a need for a shared technological effort among several sectors with overlapping necessities in addressing an increasingly demanding consumer.
Source: OECD (forthcoming[81]), OECD Mining Regions and Cities Case Study of Västerbotten and Norrbotten, OECD Publishing, Paris.
Supporting responsible consumption and production (SDG 12) in rural regions also requires close work with communities. As Chapter 3 argues, rural communities are key to help assess and manage the costs, risks and vulnerabilities from climate change on biodiversity, sustainable food production and ecosystem services. For this, governments need a closer working relationship with people and businesses in rural regions, prioritising and co-ordinating projects as well as funding and allocating resources to mitigate and prepare for forthcoming impacts.
The Rural Well-being Policy Framework acknowledges the importance of the multi-dimensional approach adopted by the SDGs. The framework provides the tools to prevent trade-offs between social, economic and environmental goals. By recognising the diversity of rural regions and the existence of urban-rural linkages, this output-oriented framework is ideal for achieving the 2030 Agenda by unleashing local development potential. As such, the OECD is contributing to efforts to merge SDGs with rural policy goals. Thematic works, such as projects on Indigenous communities and mining economies, together with the territorial reviews, play a key role in identifying best practices on a range of policy issues affecting rural communities. They inform policy makers on how to transform challenges into opportunities in the coming decades as we tackle structural changes such as climate change, digitalisation, ageing, services provision and inequality.
Turning the ambition of the SDGs into reality will require robust data to capture progress and evidence to inform decision-making. The OECD, by recently adopting an alternative typology on functional areas to classify regions, is helping in the analysis of trends and snapshots of the current socio-economic performance (Chapter 2). This regional classification is based on the level of access to cities and, in this way, takes into account regional diversity and regional linkages. This new classification is an approach that aims to avoid past barriers in geographical policy making by using real-time commuting and territorial distances to understand functional areas.
Technological change can benefit rural regions by unlocking new business opportunities and diversifying revenue sources for rural dwellers. New technologies can radically modify how people live and work for the better. The opportunity to reduce the cost of transport and in turn the relevance of location for workers and businesses can propel rural economies to compete effectively on national and international markets. The technology can also improve quality and access to services as well as political participation of rural populations. In all cases, to ensure rural communities can fully seize the benefits of the digital age and new technologies, policies need to:
Ensure high-quality broadband in all types of rural regions.
Strengthen infrastructure (e.g. telecommunications infrastructure and roads).
Upskill the labour force.
Develop forward-looking policies and regulations with greater involvement of rural communities.
Forward-looking rural policies also need to meet main global agendas and SDGs, including climate change, poverty reduction and gender equality. Achieving the SDGs will require participation at the local level, where governments are directly responsible for delivering on SDG targets. This includes leveraging on innovation and close work with local communities to support rural regions in their transition to a low-carbon economy.
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Note
← 1. The term broadband commonly refers to high-speed Internet access that is always on and faster than the traditional dial-up access. It includes several high-speed transmission technologies such as: Digital Subscriber Line (DSL), cable modem, fibre, wireless, satellite and broadband over powerlines (OECD, 2019[12]).
