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The New Rural Paradigm (NRP)

The New Rural Paradigm (NRP) is a framework adopted by OECD member countries to promote development in rural regions. Globalisation, the dramatic reduction in farm employment and the emergence of important non-farm niche markets have generated a common understanding that rural policy falls short if being conceived only as agricultural policy. On the contrary, across OECD countries, rural areas are increasingly looked upon as a heterogeneous array of regions where one-size-fits-all policies are no longer suitable to capture the diversity of rural needs and opportunities (OECD, 2006a). In this context, innovative governance structures have been created in many OECD countries to strengthen co-ordination across sectors and across levels of government and between public and private actors; and innovative policy instruments aimed to identify and exploit the varied development potential of rural areas. The OECD has labelled this policy shift as the “New Rural Paradigm” whose two main characteristics are: i) a focus on places instead of sectors; and ii) a focus on investments instead of subsidies (Table 2.2). The key features of the NRP are:

  • 1. an investment-oriented approach
  • 2. a holistic focus on the entire rural economy and not just a few sectors
  • 3. a bottom-up development strategy that reflects local priorities and an inclusive style that encourages the participation of all potential stakeholders, not just a small elite.

Table 2.2. The New Rural Paradigm

New approach

Old approach


Competitiveness of rural areas, valorisation of local assets, exploitation of unused resources

Equalisation, farm income, farm competitiveness

Key target sector

Various sectors of rural economies (for example, rural sustainable tourism, manufacturing, ICT industry, natural amenities etc.)


Main tools



Key actors

All levels of government (supra-national, national, regional and local), various local stakeholders (public, private, non-governmental organisations)

National governments, farmers

Source: OECD (2006), The New Rural Paradigm: Policies and Governance, OECD Publishing, Paris,

The aim of the NRP is to better align policies aimed at incentivising rural regions to mobilise their assets and resources. This approach to rural development creates the potential for rural regions to move from lagging status to making a stronger contribution to national development. The strategy does not envision that in this process rural regions will inevitably grow to become large urbanised regions. In the regional hierarchy, there are specific roles for both large urban and smaller rural regions and these roles are complementary. Instead, what is contemplated is a process where rural regions develop in the sense of accumulating the types of capital that are appropriate for their particular role in the national and global economies.

The NRP is a framework for thinking about rural policy. It is up to each member country to determine how to implement the approach. A necessary first step is the identification of a national rural development strategy, followed by the introduction of policies and programmes, and finally the implementation and evaluation of these interventions on a regional basis. The idea is to integrate and better co-ordinate all national programmes that concern the rural domain and at the same time add flexibility to national policy to ensure it adapts to the different needs of various rural regions.

The NRP promotes a place-based approach involving top-down and bottom-up development processes. Because the NRP is an investment approach, it implicitly adopts the economic development as wealth or a capital expansion approach. In rural regions, the current and optimal mix of capital are likely to differ, and will also differ from those of urban regions. This suggests that there can be important benefits from introducing both urban and rural development approaches. Further, because rural regions are more reliant on natural capital, and natural capital endowments vary considerably across rural regions, it is important to follow a bottom-up approach where each region identifies its particular assets and opportunities, and identifies a specific strategy to make investments that augment its unique capital stock.

The NRP recognises the large variability in the needs and assets of rural regions requiring adaptability and flexibility. The large variability makes it impossible for a central authority to manage the development process. While national governments have the important role of setting out broad goals and acceptable behaviour, it is important to provide a flexible approach at the regional level in finding ways to achieve these goals. National financial support can help or limit this process, depending on how it is provided. Where it is provided with some flexibility in how the funds can be used, then it can greatly facilitate the development process. However, when funds are tightly restricted to specific uses, the result is typically activity in rural areas that leads to limited development. The region takes the money that is offered and implements the project, but the project provides few long-term benefits, so in effect the money is wasted.

The final part of the NRP is a recognition that an integrated rural policy requires significant co-ordination among various national government ministries, regional and local governments, and private firms. This point is further expanded in Chapter 3. Effective development requires contributions from all actors, but these contributions need a degree of co-ordination. The aim of multi-level governance is to provide at least a forum where each party knows what the other parties intend to do. In some cases, this may lead to a co-ordinating agency, but this is neither always necessary nor desirable.

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