Plugging the Leaks will help
revive Rural Economy
Rural Wales can be revitalised and an important contribution made
to closing the wealth gap with the more prosperous parts of the country,
if examples of impressive development performance from certain rural
areas of Europe and north America are followed, a leading rural economist
argues in the latest issue of agenda, the journal of the
Institute of Welsh Affairs.
Prof Peter Midmore, who holds the chair in Applied Economics in the
School of Management and Business at University of Wales Aberystwyth
argues that areas where rural Wales has a competitive advantage, for
example in specialised tourism or niche agri-food marketing, need
to be identified and robustly exploited, and a flexible response developed
to meet changing market conditions. At the same time earnings need
to be retained locally by plugging leaks out into the wider economy
of surrounding metropolitan centres. This requires businesses to network
collaboratively, sharing information informally and developing synergies.
For these processes to work, however, Prof Midmore argues networked
firms need to be able to interact with supportive public institutions
whose aim is to develop and embed entrepreneurial dynamism, creating
what economists term “institutional thickness”.
At present, Prof Midmore concludes, rural Wales is a long way from
achieving this. Its problems are not dealt with comprehensively, but
are split between different economic forums. “Local authorities
and the Assembly Sponsored Public Bodies (AspBs) with an economic
remit are inward-looking and consequently there is no structure which
allows local public leaders to play a key role in vision building
and co-ordinated intervention.”
He urges the Welsh Assembly Government (which has recently announced
it is taking in-house the functions of three key AspBs) to take greater
efforts to revitalise local government, to re-orient public bodies
to make their rural remit more effective and to refresh its own strategies.
The outcome could be very worthwhile. Because participation rates
are substantially above average in rural Wales, relatively modest
improvements in productivity achieved as a result of action along
these lines could have a marked effect on Gross Value Added. “The
potential that is displayed by similar rural regions elsewhere suggests
that an improved and innovative economic focus, responded to by businesses,
could raise wage levels substantially. With a 12-14 per cent improvement,
the rural Gross Value Added gap would be well on the way to being
covered,” he argues.
Reviewing the current strengths and weaknesses of rural Wales, Prof.
Midmore, suggests the area benefits from a natural environment attractive
both to visitors and incomers, as well as the existing population,
good educational provision and a high quality workforce. Set against
this are poor transport and communications, resulting perhaps in a
lack of a cohesive identity.
The quality of the tourist provision is also poor and far fewer resources
are devoted to supporting its upgrade than in other areas of development,
he states.
Opportunities exist for tourism development, mainly in the specialised
areas of culture landscape and environment, and policy shifts to environmental
management in farming where specific connections to tourism can be
exploited will expand this potential.
Because of large distances between scattered business, however, many
opportunities that could exist to improve internal linkages are going
unrecognised, and greater use needs to be made of information and
communications technologies to realise the potential here. Lifestyle
in-migrants in the high value end of ICT development should also be
targeted and greater efforts made to tap the business skills of existing
in-migrants.
Other articles in this the biggest-ever issue of agenda look
in detail at the Richard Commission report on Assembly powers and
the Cardiff Bay Government’s reaction to it, at the Welsh language
in Newport on the eve of the Eisteddfod, and at the potential of e-commerce
to bring economic growth to Wales. In an exclusive article Bryn Terfel
also looks forward to the opening of the Wales Millennium Centre this
autumn and declares Wales has won a bargain for itself.
For further information please contact IWA 029 2066 6606 or e-mail
rhysdavid@iwa.org.uk
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