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Conclusion - Smart development: a never-ending challenge for rural areas

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Abstract

The objective of this book has been to examine the possibilities of implementing smart development policies in rural areas. Our results show that the smart development policies implemented by the EU are not well-suited to all types of geographic areas. They are effective in urban regions or in intermediary territories-that is to say, those that combine rural and urban areas characterized by a high enough population density. But they are less effective in more rural and peripheral regions.
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
1
Conclusion
Smart development: a never-ending challenge for rural areas
André Torre, Frederic Wallet, Stefano Corsi, Michael Steiner, Hans Westlund
The objective of this book has been to examine the possibilities of implementing smart development
policies in rural areas.
Our results show that the smart development policies implemented by the EU are not well-suited to
all types of geographic areas. They are effective in urban regions or in intermediary territories that
is to say, those that combine rural and urban areas characterized by a high enough population density.
But they are less effective in more rural and peripheral regions. We briefly discuss these aspects below.
I. Smart development policies are not well suited to all types of territories
The question of the validity of rural smart development or smart growth policies is relevant, because,
unlike other European economic policies, those policies take explicitly into account the differences
between the various European territories, and are supposed to be tailored to the specificities of each
type of region in Europe. However, these policies are based on principles embeddedness,
relatedness, connectedness, entrepreneurship, critical mass which might be very difficult to apply
in rural regions. Indeed, the latter are often known to suffer from several limitations related, precisely,
to the underdeveloped entrepreneurial network. The resulting absence of a critical mass effect
seriously hinders possibilities of connectedness and prevents the emergence of mechanisms of
embeddedness and related variety on a large scale. These insufficiencies condemn those areas to slow
or even deficient development.
The study conducted over several years on the various dimensions of development, in a wide range of
territories in Europe, shows that the Smart development strategies are suited to well-developed or
intermediate regions combining both urban and rural areas, provided they have a sufficiently large
population base. But they only offer very limited possibilities for peripheral/remote regions, because
of the lack of scale, which results in the following problems:
low density (lack of - strong - relations)
lack of diversification (technological relatedness only applies to a highly diversified industrial
structure)
lack of intermediate organizations and innovation brokers
However, it is necessary to consider the great diversity of rural areas, which produces a very different
relationship to smart development principles and policies. For simplicity’ sake, let us state that:
- Rural areas close to cities are good candidates for smart development policies as defined by
the EU: this group includes areas that are more or less integrated into cities, and intermediate
regions combining urban and rural areas
- The more peripheral rural regions have characteristics that limit their potential to gain from
smart development policies. Those characteristics include: a lack of embeddedness, of
relatedness, of connectedness, of entrepreneurship, of critical mass
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
2
- However, some of them might have a potential to achieve smart specialization through
exploiting local amenities and other resources (like tourism, natural resources or service
economy for elderly people)
Moreover, regarding smart development principles in rural or peri-urban areas, two additional
dimensions (land uses and agriculture) must be considered.
The first dimension is related to land uses and their evolution, which play a crucial role in the
development capacities and development policies of the European rural regions, because they
determine the implementation of new activities or the replacement of existing activities with new
ones. For example, competing land uses in a context of land scarcity can lead to the emergence of
conflicts and obstacles to governance processes. On the other hand, excessive specialization of land
uses can lead to a high degree vulnerability in a situation of economic crisis or climate shock for
example.
Thus, best development practices in land uses must be grounded in two key principles similar to those
of related variety at the industrial level.
- regions must avoid monolithic land use (characterized by insufficient variety), which can make
those regions vulnerable in situations of climate change, economic crisis, policy changes…;
- they must avoid a fragmentation of land uses, which can lead to a wild competition, or
conflicts, which, in turn, can be an obstacle to smart development processes.
The second dimension is related to the possibility of implementing a process, given the key role played
by farming activities in rural land use on the one hand, and in supplying food for European populations.
The limitations of the conventional agricultural model require that alternative solutions and resilient
productive systems be developed. The prospects offered by new technologies and digital technology
certainly open interesting possibilities for adaptation but cannot be the only answer to the challenges
posed by agro-ecological transition.
Smart agriculture is polymorphous:
- At the regional level, it is characterized by various levels of performance and smartness, which more
or less depend on economic, environmental or social performance;
- The dynamics, at the level of sub-regional territories, are characterized by a profusion of initiatives
and diversity. Innovation niches, with varying development potentials, combine to move the
production system towards greater sustainability, often in the framework of agricultural and food
supply projects supported by local authorities;
- In sparsely populated rural zones close to urban areas, and despite the pressure on agricultural land,
the sustainable development of smart agriculture is possible thanks to the close proximity of a large
consumer pool and of key infrastructure.
- In areas located further away from cities, agriculture can benefit from developing strategies based
on product quality and from diversifying towards activities based on natural amenities (such as tourism
for example).
In short, rural and peripheral regions vary in their potential for smart development, because they differ
in their access to and capacity to utilize resources and social infrastructures:
access to different types of amenities (tourism, leisure)
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
3
value creation and innovations based on local resources
the ability to mobilize financial internal and external resources
access to land suitable for economic development
II. Innovation in rural areas
It is necessary to move beyond smart development policies for predominantly rural regions because
their effectiveness rests on the utilization of technological innovations, which appears to be ill-suited
to the specificities of rural areas.
The literature highlights that rural areas lack the necessary resources and levers to foster growth and
innovation; levers and resources found in metropolitan areas and in some medium-sized towns.
Among the disadvantages rural areas suffer from, the most often mentioned is a shortage of resources
linked to the production of externalities: low concentration of highly skilled workers and individuals
whose aspirations, lifestyles and tastes can be likened to those of the creative class; lack of
competencies and entrepreneurship necessary for developing a fabric of SMEs; absence of research,
development and higher education centers; deficiencies in transport and communication networks as
well as in physical and digital infrastructure; insufficient demand both in terms of consumer numbers
and consumption characteristics; insufficiencies in terms of networks of expertise and of potential
partners; lack of engineering mechanisms for supporting the formation of business clusters and the
dissemination of technological innovation. All those deficits place rural areas at a disadvantage in
terms of economic development. Finally, actors in rural areas have poor access to innovation funding
and to land for economic activity.
Thus, actors in rural areas appear to have less capacity to participate in and develop organizational
chains of innovation and production, which form the basis of the smart specialization model,
particularly in terms of sectoral integration, related variety and connectedness. One might think that
in the face of low population and industrial density and diversity, a strategy based on specialization is
an efficient solution, through which can be avoided a vain quest for diversification and an ineffective
distribution of scarce resources among various sectors. Focusing more on a few interconnected value
chains seems to make sense. However, the benefits of this strategy often depend on levers whose
effectiveness varies according to the territories concerned.
Thus, at the regional scale, smart specialization is well suited for intermediate regions combining urban
and rural areas, provided they have a large enough population base; However, this course of action
has limited effectiveness in very isolated regions, and creates few possibilities due to the lack of scale
economies.
At a sub-regional level, rural areas close to cities and more or less integrated into an urban area, can
take advantage of this proximity to benefit from the positive effects of urban dynamics (where they
exist) in order to develop a potential for value creation by positioning themselves strategically in such
a way as to take advantage of the resources provided by the city’s economic network. Similarly,
intermediate regions composed of interconnected urban and rural areas often achieve positive
development based on the complementarities between these territories. On the other hand, the more
peripheral rural regions have less potential for smart specialization. However, local amenities and
other resources (tourism) are means through which these territories can initiate and sustain local
smart development processes, provided that they are able to develop and exploit these assets.
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
4
A geographically differentiated development of the various categories of activities involved in the
innovation process could offer opportunities to territories located outside the restricted club of high-
tech metropolises. Indeed, two phenomena are observed: the dissemination of technologies from
high-tech regions to other territories, including less technologically advanced areas, on the one hand;
and the development of new forms of innovation projects in the less advanced territories. Moreover,
all the activities that are involved in a given stage of development of an innovative technology, or all
the applications resulting from it, are not necessarily carried out in the same territory. Thus, the
territorial dimensions of innovation processes represent opportunities for rural areas to refine their
strategic positioning, by building on their complementarity with leading innovative regions, and on a
mode of action combining interactions with local and extra-local actors, within innovation networks.
The digitization process that has taken place in the agricultural sector illustrates how this type of
innovation dynamics can be initiated, and embedded in rural areas, thereby generating knowledge
externalities within and beyond the agri-value chains.
III. Alternative paths for the development of rural areas. Implications in terms of regional
and territorial development policies
To be smart in terms of policies has specific challenges for rural areas. The usual “smart” approach –
which is based primarily on the exploitation of technological innovation must be modified to take
into account the specificities of this type of area. Based on the considerations and empirical evidence
produced in the project, five key factors must be considered to build an efficient smart development
strategy.
a) Support variety and diversity
Rural areas not only change their image but also their economic base they are more than agricultural
areas. Their development does not just rest on single (traditional) key target sectors. Our case studies
show that rural areas are quite diverse and heterogeneous. Yet it is not diversity per se that creates
growth, but diversity in related business sectors with a common knowledge base. Related variety plays
an even bigger role for innovation and growth in rural areas than in larger urban centers, where the
diffusion of knowledge is facilitated by the presence of many related sectors.
Diversity in related business sectors can take several forms. It is linked to the identification of the core
sector of a region, which paves the way for a process of smart specialization in the region. As a first
step, regional stakeholders (politicians, development agencies, business owners, unions, and
interested public) should strive to identify and understand the competitive advantage of their region.
The strengths of a region must be developed further, capitalized on and made visible to external
regions as well as to the local actors. One possibility is to create regional brand(s), which could
represent an industry, a group of businesses, specific products or services of a region.
Related variety can only emerge through intensified networks at different levels. The firm’s internal
innovation process is not a lonely endeavor but occurs through cooperative learning with suppliers.
Collective approaches implemented through the formation of networks of producers interacting with
other stakeholders are also channels through which rural economic systems can be adapted to the
local environment, as evidenced, for example, by Agricultural Knowledge and Innovation Systems
(AKIS). Regional development agencies also serve as a sort of platform to connect and facilitate contact
and cooperation between local businesses. Networks must also build on collaboration with actors with
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
5
a certain education level. Cooperation with educational actors is important either as part of the
innovation process, through projects or training, or as a part of efforts to attract possible job
candidates, through which new knowledge can be imported.
b) Borrow size
The standard smart approach normally focuses on the expansion of knowledge within a region. Yet
rural and peri-urban areas often lack the regional R&D centers or educational facilities needed to
intensify research and development, through which they can technically enhance their products or
services.
Several complementary dimensions associated with urban space can indeed be mentioned. One of
them is the distance to and size of cities, and thereby the presence of urban infrastructure. Thus, a city
offers market opportunities, especially for agricultural production. The urban structure, which is also
characterized by social and economic diversity, and by multiple networks of actors, which all constitute
potential opportunities for rural areas able to access and exploit them. But the concept of “borrowed
size also refers to the ability to tap into specific urban resources, such as those related to R&D and to
knowledge dissemination.
The need for extra-regional knowledge and expertise becomes a deciding factor - regional businesses
must cooperate with external R&D centers or universities to compensate for this lack. To increase the
willingness to cooperate with external knowledge centers, the implicit and explicit costs incurred by
local entrepreneurs to engage in such efforts must be reduced.
Local entrepreneurs in rural areas can be encouraged to “borrow size” – and with it, knowledge in
several ways, among which the most standard are direct subsidies or tax incentives for R&D. But at a
more regional level, another means through which businesses can “borrow size” is temporary
geographical proximity. The latter can be achieved through short visits and through the organization
of or participation in congresses or conferences on topics related to the core activities of the region
concerned, and relevant to regional businesses. Besides presenting the latest research results, such
events can serve as starting points for cooperation and network building.
The actors involved in this process are not only regional businesses, regional politicians and
development agencies, but also external universities and R&D centers. These actors should be
encouraged to present their research in an environment, in which their findings can potentially and
quickly be applied by regional entrepreneurs. In addition, the development of partnership research
programs and of knowledge transfer processes responding to the needs expressed by rural
stakeholders in the framework of arrangements such as living labs, for example, seems a promising
way forward.
c) Implement education measures
In addition to encouraging regional entrepreneurs to cooperate with external R&D centers, education
measures must also be implemented in regions. Once the competitive advantages of a rural region
have been identified, the adoption of measures to support education could help regional firms to
secure their position in the global economy, by giving them easier access to a well-trained and
educated workforce.
This could be achieved either in the form of internal courses within firms (case studies show that firms
in rural areas are more inclined to do so) or through platforms of cooperation between local firms.
Firms should be encouraged, through tax incentives, to actively promote employee training.
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
6
Furthermore, regional secondary schools as well as specialized commercial and agricultural schools
(often present in rural areas as a way of compensating for the lack of tertiary institutions) can respond
to the regional demand by providing training and education programs tailored to the needs of learners
and local firms.
These complementary educational instruments can also contribute to related variety. It is a specialized
form of support to knowledge creation and exchange between firms forming the core of a region’s
strength.
d) Making use of amenities
Amenities as place specific assets and services that make a given location more or less attractive to
individuals and firms deserve attention in the context of policies intended to promote smart
development in rural areas. They can range from natural amenities (land and water resources,
mountains and lakes) to build amenities (thanks to which natural resources can be utilized for summer
and winter-based recreational activities) to social and cultural amenities (special sites and buildings,
local culture and tradition including food, crafts, festivals and lifestyles).
Firms can use these amenities to generate new business activities such as tourism and recreation which
then generate other activities upstream and downstream. Amenities can also attract a creative class:
because outdoor amenities are often considered as quality of life factors, they can play a key role in
attracting specialized workers and in encouraging them to stay in the area.
From a resource-based view of the firm, proximity to rural amenities provides access to valuable, rare
and costly-to-imitate resources. Locations situated close to rural amenities are limited in supply and
are therefore scarce resources. Furthermore, such amenities are immobile, non-substitutable and
provide direct and indirect benefits. The presence of rural amenities can attract workers who prefer a
rural lifestyle to that of city living, and represents a socially-complex resource for members of a
creative class; these rural residents constitute a potential supply of labor for local businesses.
The amenities and resources provided by rural areas should be considered in initiatives aimed at
promoting more sustainable development models. Given the biodiversity and ecosystem services they
provide and the opportunities for agricultural and energy production they represent, rural areas
perform vital functions. This calls for the implementation of public policies that promote both smart
and sustainable development. The existence or development of these amenities raises the question of
rural-urban interdependencies, for example through reciprocity measures between the city and its
hinterland.
e) Improving the multidimensionality of infrastructures
The main characteristics of rural areas are the geographical distance separating individuals and villages
from one another, on the one hand, and their lower density on the other. The common solutions for
compensating for this distance besides the ones already mentioned concerning smart development
are better transport facilities and improved ICT infrastructures, such as high-speed internet. It
reduces the importance of distance supply and demand are no longer spatially linked to each other.
It has also enhanced the possibility to work from home.
However, digital connectivity is a necessary but insufficient condition for rural growth. Indeed, the
availability of connectivity and IT on the one hand, and of digital skills on the other, are necessary to
serve as factors of growth in rural areas. Measures to support and strengthen the technological and
digital competences both of entrepreneurs and employees become vital.
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
7
Digital connectivity and improved digital skills increase the attractiveness of rural areas especially for
young and qualified people. But this attractiveness depends especially for young parents on the
availability of social infrastructure: day nurseries, efficient public transport for school attendance, but
also a cultural and recreational offer which can, to some degree, respond to the “urban lifestyle needs
of young and qualified workers.
Consequently, long term strategies for smart development in rural areas must aim at helping the latter
to reinforce their core by promoting the development of various economic and social activities and
cultural services. Instead of encouraging uncontrolled development, what must be promoted is rural
growth through the reinforcement of the core activities and assets of those areas. Thus, a challenge
for spatial planning resides in developing rules and incentives to promote a concentration of economic
and social activities and facilities in these rural centers, which are vital for rural development.
IV. The four main models of rural development
The various forms taken by innovation processes in rural areas point to four main models of
development based on smart specialization for rural areas.
a) Rural areas can be thought of as places for experimentation in which a local demand
or issue serves as a basis for catalyzing the development of innovative solutions. The
mainspring of innovation is closely related, here, to low density, which requires the
development of alternative models that take into account the living conditions and
needs of the territory's inhabitants, in terms of healthcare services, mobility, home
services, housing, but also employment, citizen participation and resource
management. The development of online healthcare services provides a telling
example. The territory is the place where solutions are invented to respond to the
problems encountered by the local inhabitants and economic actors and that can
potentially be duplicated elsewhere. The solutions found are often a combination of
organizational innovation - sometimes technological - and social innovation.
b) Rural actors can base their strategy on the opportunities offered by eco-innovation or
the circular economy. This approach, which is still in its experimental stage, consists in
taking advantage of the potential offered by new forms of resource and waste
reclamation, in the field of bioenergy or methanization for example, to develop new
solutions through which new economic activities can be generated. The territory is the
place where solutions are developed to meet the challenges of the agro-
environmental and energy transition, based on innovation niches that can respond to
local needs or can be applied at a larger scale.
In these two models, the ambition of a territory to position itself as a reference in a
given field contributes to the long-term commitment of actors.
c) A third model is more based on the distinction and specification of resources. Because
they possess rare resources, such as built or cultural heritage sites, or natural
resources, rural areas have a high potential for differentiation that can be realized
provided the actors concerned can commit for the long term and have the necessary
skills to develop these assets. The existence of a particular agricultural, artisanal or
industrial know-how, which is often historical, provides a basis for building an
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
8
endogenous territorial development model based on the development of local
resources. This approach has contributed to the success of some agricultural territories
that distinguish themselves through the production of a given quality-labelled flagship
product, and on the basis of diversification strategies grounded in the principles of
related variety. This success is largely due to the recognition of the unique character
the region by external actors who appreciate local products or wish to visit the area.
Success depends on the local actors’ ability to gradually develop the local resource
through collective processes based on sustainable coordination, joint ownership,
cumulative learning and specification of the territorial resources and of the territory.
d) The fourth model is based on the fact that many rural regions, especially sparse and
peripheral ones, lack potential for own endogenous growth and therefore need an
exogenous development strategy of cooperation with other territories or external
actors. In this case, proximity or strong networks to a high-density urban area can
provide opportunities to develop and take advantage of complementarities between
the city and the rural areas. Recreational activities, food supply, amenities associated
with well-being and responding to people’s need for nature, urban waste recycling
are all synergies that can strengthen rural-urban interdependencies. These
cooperation can also develop between low-density territories, through an approach
based on collaboration, the exchange of experience and expertise, or even productive
or residential complementarity.
A new place-based approach to smart development aimed at better capturing the specificities of rural
areas has emerged through the European Commission's introduction of the smart village concept.
Aimed at providing development opportunities for rural areas and villages, this approach consists of
producing strategies for better coordinating the different public mechanisms already in place in order
to promote job creation, provide basic services, strengthen connectivity and intelligent transport
solutions, but also create the conditions for an environment conducive to entrepreneurship.
Currently in its development phase, this policy position aims to promote the emergence of new
business models for rural enterprises. The idea is that this can be achieved through the identification,
development and exploitation of rural assets, such as those that can be utilized to respond to the major
challenges posed by climate change or the sustainable provision of food, biomass and energy. The
potential that the creation of activities associated with tourism or culture represents must also be
unleashed, and the residential attractiveness of rural areas must be enhanced by paying particular
attention to issues related to quality of life, and to residents’ access to public services. In this regard,
the use of technologies for the digitization of the economy is promoted as playing a key role in the
development and implementation of innovative solutions. For example, the formation of intelligent
logistics networks should help villages to provide their products and services more efficiently on urban
and global markets; and digital platforms could offer more efficient solutions in terms of rural mobility.
Now considered as playing a key role in the agro-ecological transition, rural areas have not, however,
become the focus of public policy and business efforts to achieve this rapid transition. This is
evidenced, on the one hand, by the phenomena of organizational lock-in that condition the types of
circular economy models that are developed and implemented; and on the other hand by the
geographical compartmentalization that marks the reflection around the concept of smart cities, which
tends to neglect rural-urban interdependencies. Changing the way of thinking about the territorial
metabolism is therefore necessary both in terms of strategic planning and infrastructure location. Aid
Torre A., Wallet F., Corsi S., Steiner M., Westlund H., 2020, Is there a smart development for rural
areas? in Torre A., Corsi S., Steiner M., Wallet F. and Westlund H. (eds.) Smart development for rural
areas, Routledge, 226p.
9
and tax mechanisms, or governance mechanisms should be targeted in such a way as to mobilize
networks of rural and urban actors within more coherent communities of interest, in the field of food,
ecosystem services, waste management or land in particular.
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