Economy and socio-economic indicators in Chilean rural regions
Given that gross value added (GVA) data by sector are only available among TL2 regions. Figure 1.26 displays the specialisation of Chilean TL2 regions in four agricultural key rural sectors in 2011 and the change in specialisation over 2008-11. These include agriculture and forestry. fishing, mining and manufacturing. The figures reveal a higher degree of specialisation in fishing activities followed by mining. agricultural and forestry and finally manufacturing appears to be less specialised across the Chilean regions. Amongst the regions it appears that:
In mining: Antofagasta is the most specialised region. followed by Atacama. Tarapaca, Coquimbo and to a lesser extent O’Higgins. Magallanes, Antartica and Valparaiso. Amongst these. Coquimbo and Antofagasta have become more specialised in recent years.
• In manufacturing: Bio-Bio and Los Rios are most specialised. followed by Valparaiso, Maule. Arica and Parinacota, Magallenes and Anartica and O’Higgins. In recent years Los Rios and Valparaiso have been becoming more specialised in addition to Antofagasta.
The sectors of mining. agriculture and forestry. and fishing are concentrated in very few regions (Figure 1.26). These regions indeed depend on the comparative advantages of these sectors but will need to transform these into dynamic advantages by producing more complex and higher value-added goods in their sectors of specialisation. In addition. diversifying their production base will help them cope with global shocks and fluctuations in prices and in demand. International evidence points to a positive link between product diversity in export goods and growth. as new products and services often exploit untapped resources and potentialities of countries and regions. More developed countries have. in fact. proven successful in transforming the production of simple goods into the production of more complex and higher value-added goods in the production chain.
A finer picture of the rural economy can be obtained by imputing employment figures by economic activity in urban and rural areas from the national Labour Force Survey using the revised definition (alternative 1 defining urban as comunas inside of an FUA and rural as comunas outside of an FUA) proposed at the outset of this chapter. This also permits more accurately capturing the rural realities in Chile and assessing how these change vis-a-vis the rural picture according to the official definition. Indeed, there are striking differences according to the revised definition (Table 1.10):
Figure 1.26. Specialisation and changes in specialisation in four sectors amongst Chilean TL2 regions, 2008-11
Source: Calculations based on data provided by the Central Bank of Chile.
Non-agricultural activities, basically in manufacturing and the services sector, indeed offer an alternative or complementary source of rural income. Diversification of activity reduces rural inhabitants’ vulnerability to declines in agricultural prices and the impact of climatic shocks. According to the revised definition, only around one fourth of total rural households in Chile are employed in agricultural, forestry and fishing activities (Table 1.11), around 15% are employed in manufacturing and mining-related activities and the larger majority, representing almost 60%, is employed in services-related activities (Table 1.11).
In sum, almost three-fourths of rural households in Chile are employed in non-agricultural activities, primarily in manufacturing and the services sector, which offer an alternative or complementary source of income. Yet, national policies remain focused on agricultural promotion and there is as yet no national rural development strategy in Chile.
Table 1.10. Share of workers by economic activity in the revised and official definition
of urban and rural areas, 2013
Note: “Urban” in the revised definition corresponds to comunas inside FUAs and “rural” corresponds to non-FUAs. Source: National Survey of Employment, JJA 2013, computations estimated by the Chilean Ministry of Economy.
The development of such a strategy, which was under elaboration at the time of this report, with a comprehensive territorial focus is highly recommended and a very positive step. OECD member country governments are increasingly recognising the need to shift from traditional rural sectoral policies towards comprehensive place-based approaches to rural development, also known as modern rural development policies (see Chapter 2) that consider agricultural and non-agricultural policies as well as the links between rural and urban areas. These types of policies, as will be further discussed in Chapters 2 and 3, would be better adapted to the diverse socio-economic characteristics and productive processes that affect the development of Chile’s rural territories.
A number of off-farm activities, including renewable energy, forest, aquaculture, fishing or tourist-based activities, offer rural areas significant opportunities and potential in Chile.
Table 1.11. Share of workers by economic activity as a percent of total employment in urban
and rural areas, 2013
Source: National Survey of Employment, JJA 2013, computations estimated by the Chilean Ministry of Economy.
The modern rural policy approach is based on improving the framework conditions that can ensure rural regions realise their potential. These framework conditions are largely determined by key drivers for growth, including human capital, entrepreneurship, innovation, infrastructure, connectivity, and the availability and provision of goods and services. Improving the level of human capital in rural areas is perhaps the most important driver for growth for rural regions. The benefits, however, are enhanced when human capital improvements are complemented with improvements in other areas. It is important to adapt and tailor policy priorities to the needs of the various Chilean rural regions, which will surely differ among different types of rural regions. It is therefore imperative to revise the current rural definition in order to be able to differentiate among different types of rural regions.