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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 agriculture and forestry: Los Rios. O’Higgins. Maule, Araucania, Los Lagos. Bio-Bio and Coquimbo are the most specialised regions. Amongst these. Los Lagos and Los Rios have become more specialised over the past five years.
  • • In fishing: Aysen and Los Lagos are the most specialised regions with both of them increasing their specialisation in recent years.

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):

  • • The total weight of the rural economy almost doubles, from 12.7% to 22.1%.
  • • Activities in service-related sectors in rural areas more than double in the revised definition in the sectors of public administration (from 7.3% to 26%), social and health services (from 5% to 15%), hotels and restaurants (from 6.8% to 19.1%), education (from 7.1% to 20.2%), other community social and personal activities (from 5.1% to 14.3%), wholesale and retail trade (from 6.3% to 15.6%) and transport and communication (from 8% to 16.7%).
  • • Manufacturing activities also double in the revised definition, from 10% to 20%.
  • • The same figures are obtained in agricultural hunting and forestry; financial intermediation; and electricity, gas and water.

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

% of all

% of sector

Change

Revised definition

INE

OECD

INE

Urban

Rural

Urban

Rural

Urban

Rural

Urban

Rural

Fishing

0.3%

0.4%

0.5%

0.3%

42.9%

57.1%

64.0%

36.0%

21.2%

Mining and quarrying

2.3%

1.0%

2.9%

0.4%

70.0%

30.0%

88.9%

11.1%

18.9%

Public administration

3.9%

1.4%

4.8%

0.4%

74.0%

26.0%

92.7%

7.3%

18.8%

Education

6.6%

1.7%

7.7%

0.6%

79.8%

20.2%

92.9%

7.1%

13.0%

Hotels and restaurant

2.9%

0.7%

3.4%

0.2%

80.9%

19.1%

93.2%

6.8%

12.4%

Manufacturing

9.0%

2.3%

10.2%

1.1%

80.0%

20.0%

90.0%

10.0%

10.0%

Social and health services

3.9%

0.7%

4.3%

0.2%

85.0%

15.0%

95.0%

5.0%

9.9%

Construction

7.0%

1.7%

7.8%

0.9%

80.4%

19.6%

89.8%

10.2%

9.5%

Wholesale and retail

17.4%

3.2%

19.3%

1.3%

84.4%

15.6%

93.7%

6.3%

9.3%

Other community, social and personal activities

2.6%

0.4%

2.9%

0.2%

85.7%

14.3%

94.9%

5.1%

9.2%

Electricity, gas and water

0.5%

0.3%

0.6%

0.2%

66.6%

33.4%

75.4%

24.6%

8.9%

Transport, storage and communication

6.1%

1.2%

6.8%

0.6%

83.3%

16.7%

92.0%

8.0%

8.7%

Buildings and condominiums

5.0%

1.1%

5.4%

0.7%

81.8%

18.2%

89.1%

10.9%

7.2%

Real estate activities

5.6%

0.5%

5.7%

0.4%

91.0%

9.0%

94.0%

6.0%

3.0%

Agriculture, hunting and forestry

2.6%

5.4%

2.8%

5.2%

32.8%

67.2%

35.3%

64.7%

2.4%

Financial intermediation

2.1%

0.1%

2.2%

0.1%

95.5%

4.5%

96.1%

3.9%

0.5%

Extra-territorial organisations and bodies

0.0%

0.0%

0.0%

0.0%

100.0%

0.0%

100.0%

0.0%

0.0%

Total

77.9%

22.1%

87.3%

12.7%

77.9%

22.1%

87.3%

12.7%

9.4%

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.

  • • Renewable energy could mean higher prices for producers; land rents for wind and solar facilities; jobs in construction, operations and maintenance, among others.
  • • Forestry and aquaculture and fishing activities can represent an important source of employment in rural areas.
  • • Sustainable tourism represents another attractive alternative given Chile’s rich and diverse environmental attractiveness with a wide range of natural reserves and protected areas and rural heritage, tourism offers many unexploited opportunities.
  • • Innovation actives around natural amenities such as those related to the natural laboratory in Chile2 offers a privilege environment for the development of science in astronomy, biodiversity, seismology, renewable energy and many other areas.

Table 1.11. Share of workers by economic activity as a percent of total employment in urban

and rural areas, 2013

% of urban and rural regions

Revised definition

INE

Urban

Rural

Urban

Rural

Agriculture, hunting and forestry

3.4%

24.6%

3.3%

41.3%

Fishing

0.4%

1.9%

0.5%

2.0%

Total agricultural related

3.8%

26.4%

3.8%

43.3%

Mining and quarrying

2.9%

4.5%

3.3%

2.9%

Manufacturing

11.6%

10.2%

11.6%

8.9%

Total mining and manufacturing

14.5%

14.7%

15.0%

11.8%

Electricity, gas and water

0.6%

1.2%

0.7%

1.5%

Construction

9.0%

7.8%

9.0%

7.0%

Wholesale and retail

22.4%

14.6%

22.1%

10.3%

Hotels and restaurants

3.7%

3.1%

3.8%

1.9%

Transport, storage and communication

7.9%

5.6%

7.7%

4.6%

Financial intermediation

2.8%

0.5%

2.5%

0.7%

Real estate activities

7.1%

2.5%

6.6%

2.9%

Public administration

5.0%

6.2%

5.6%

3.0%

Education

8.4%

7.5%

8.8%

4.7%

Social and health services

5.0%

3.1%

4.9%

1.8%

Other community, social and personal activities

3.4%

2.0%

3.4%

1.2%

Buildings and condominiums

6.4%

5.0%

6.2%

5.3%

Extra-territorial organisations and bodies

0.0%

0.0%

0.0%

0.0%

Total services, electricity, gas and water

81.7%

58.9%

81.3%

44.9%

Total

100%

100%

100%

100%

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.

 
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