SLI-Report 2004:3

A thriving countryside – can it be achieved by government policy?

Authors: Helena Johansson  Eva Kaspersson 

Observations of income disparities between urban and rural areas, high rural unemployment rates in combination with net migration from several rural areas have raised concern among the public and policy makers, and have resulted in special assistance to stimulate rural development in order to decrease inequalities between regions. Recognising that market forces provide an efficient mechanism for allocating scarce resources in a society, government intervention can only be justified when market forces for some reasons fail to generate an efficient market equilibrium, or when the market equilibrium is perceived to be “unfair” on equity grounds. An understanding of the underlying economic processes that generate regional disparities is fundamental to the proper design of a policy that aims at producing a remedy. In this report, the theoretical basis for rural development policies is investigated, and existing rural policies in Sweden (EU Structural Funds, rural development policies in CAP and national rural policies) are evaluated in this context - are they built on a sound theoretical basis and do they in fact address problems that hinder the economic development in rural regions? The answer is, in many cases, no. Several measures do, for example, have an income distribution effect. Further, there is sometimes a highly optimistic view concerning what public interventions can actually achieve. There are strong economic forces behind the current urbanisation process – forces that are difficult to counteract – especially in a country like Sweden with a small population and a low population density in many areas.


Helena Johansson

Eva Kaspersson

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