With gains in agricultural productivity leading to a dramatic reduction in farm employment, rural regions across the OECD now depend on a wide range of economic engines for growth. Increasing globalisation, improved communications and reduced transportation costs are additional drivers of economic change in rural areas. Traditional policies to subsidise farming have not been able to harness the potential of these economic engines. In 2006, the OECD published a thematic report The New Rural Paradigm: Policies and Governance, which seeks to explain the shift in rural development policies to account for these important economic changes and the need for a new approach to governance.

In recent decades, Chile has experienced significant economic growth and social progress. A large share of national income and exports is associated with the primary sector, especially minerals, but also agriculture, forestry and fisheries. Yet there has been little focus on providing a stronger milieu for these industries at the regional level. Chile’s peculiar geography concentrates economic activities and settlement patterns in a few geographic areas, contributing to very high levels of regional inequality. More than half of Chilean regions with high degrees of rurality record GDP per capita below 75% of the national average. To resolve this problem there is a need to shift the rural policy vision from the current approach, where lagging regions depend on social programmes and agricultural and other sectoral policies, to a more comprehensive and integrated rural development programme. Chile’s current official definition of rural areas is not suited to a modern rural economy, where recognising the significance of urban and rural interactions, differentiating among different types of rural areas, and finally recognising and defining multiple types of rural areas are important considerations.

In recent decades Chile has experienced significant economic growth as a result of democratic reforms and opening the economy to global markets. Much of this economic growth has come from the ability to capture foreign markets by the natural resource firms of Chile and by first stage processors of these resources. These essentially rural industries support urban development and efforts by government to improve social conditions for Chileans. However, the ability of government to assure additional growth in primary industries and to provide a better quality of life in all parts of the national territory is impeded by the lack of a comprehensive national rural development policy.

This first chapter of the OECD Rural Policy Review of Chile provides a general diagnosis of Chilean rural regions. The chapter starts by recommending a revision to the current definition defining “rural” areas in Chile. It then follows with four main sections. The first section discusses the main framework conditions for rural development in Chile, covering macroeconomic aspects, the geographic characteristics of the country and high levels of concentration and inequality. The second section describes the main rural characteristics in Chile using the OECD taxonomy defining predominantly rural regions, the OECD functional urban area definition and the revised definition. The third section examines the performances of rural regions; however, for the case of Chile, given that GDP data are not available for TL3 regions; this section benchmarks the performance of the larger TL2 regions using population density and the degree of rurality as a proxy for capturing rural characteristics. The final section focuses on the social and environmental characteristics of rural areas in Chile.

This second chapter presents the key pillars of “Modern Rural Development Policies” in OECD countries based on 10 dimensions and examines how Chile’s economy could benefit by implementing this framework to its rural areas. The chapter consists of four main sections. The first starts by describing three general types of rural areas, also present in Chile, and how the role of the rural economy changes through the process of economic development. It then follows with a section describing modern approaches to rural policy in OECD countries highlighting the importance of integrating rural with urban polices in addition to promoting rural development based on the New Rural Paradigm and targeting the enabling condition for growth in rural areas. The third section describes the main rural sectors in Chile and identifies possible areas for growth potential. The final section describes the benefits that are associated with adopting a modern rural policy in Chile.

Chapter 3 identifies a number of concrete steps that can be implemented in the current institutional context for Chile to advance towards a modern rural development policy framework over the short and medium term. The chapter is divided into three main sections. The first briefly describes the institutional setting of rural development in Chile and the main governance challenges that Chile faces to advance towards comprehensive place-based approaches to rural development. The second section focuses on one of these main challenges: how to generate synergies and co-ordination between the many policies, programmes and actors that intervene in rural development. Finally, the third section will be devoted to providing recommendations on how to strengthen place-based approaches with stronger participation from local actors as a way for promoting rural policies adapted to the idiosyncrasy, challenges and potentialities of rural territories in Chile.