Experiences from rural development policy in Austria

Thomas Dax, Vienna, Austria
 XXI Summer Course - XIV European Courses
 "Desarollo rural y gestión territorial"
 University of the Basque Country,
 Donostia - San Sebastián, 1-2 August 2002



Over the last decade programmes on rural development have been launched all over the European Union by shifting policy priorities towards regional cohesion as a major common policy commitment. Austria which accessed to the EU only in 1995 had started to develop regional action programmes on peripheral, rural areas already in the late 1970s. The paper will concentrate on the main elements and experiences of those programmes which emphasised a change in the regional policy paradigm at that time that can be described as no longer seeing the "weak regions" as the objects of government regional policy "from above", but increasingly as bringing them into action "from below" as "self-driven" subjects. The formulation of the concept of endogenous development, its results and assessment will be discussed. Later critique on the concept and additions have contributed to take account of a new conceptual understanding which emphasis the network of differentiated regional and inter-regional socio-economic relations. Lessons from the previous rural programmes and the enlargement of support for rural issues has led to new approaches on a much larger scale. With increasing competition of regions positive results are ever more difficult to achieve and require sound cooperative structures, institutional changes and a long-term commitment of involved actors.

1. Introduction

This paper presents an overview of the situation of rural areas and an analysis of main factors of rural/regional development policy in Austria. Austria is characterised by a high degree of rurality and thus the 'rural' always has played an important role in the perception of society and policy. Problem regions in Austria, in general, have due to its predominant location in mountain areas low population densities and therefore appear more or less rural in character. With the exception of some older industrial regions, the majority of the problem areas are fairly under-industrialised. However, agriculture is no longer the dominant economic activity in rural regions. The majority of areas have a multifaceted, although weakly structured sub-layer of SMEs, whilst tourism plays an important role in most parts of the Alps. Nevertheless, in terms of development policy for a long time rural areas were hardly supported in an integrated sense or by territorial schemes, but primarily by sector measures. Only the concept of endogenous development introduced in specific remote parts of more mountainous areas provided a clear exception to the sectoral approach.

With accession to the European Union (EU) also Austria's regional policy, which has a distinct priority and impact on rural areas, experienced a decisive break. Wide-ranging changes had to be dealt with across Austria's economic, social and political structure. These included the opening of markets (above all for agriculture), the introduction of new structures and supporting measures and the establishment of new institutional frameworks and policies in a short period of time. These changes also affected the rural areas and their economic and social positions.

This paper starts with a short introduction of the position of rural areas within Austria's economic and social structures. The second part deals with relevant administrative structures of support for rural regions. Due to the complexity of these structures this can only be done partially and the paper focuses on 'bottom-up' movements in regional development.

The third part explores major changes and impacts of the introduction and implementation of EU-Structural Fund programmes. These new policy measures have influenced the former balances of leadership and local power and have triggered new dynamics in rural areas. In addition, the most relevant programmes and experiences drawn from the great variety of local and regional measures applied are assessed and the impact of rural development policy is discussed. Thus the conclusions attempt to outline both the main positive impacts and primary deficiencies of the rural development measures and institutions in Austria.

2. The socio-economic structure of rural Austria

Structure and rural areas of Austria

In terms of its location, Austria is often seen as lying in the heart of Europe. This geographical position had a strong impact on its post-war development which has been shaped by a rapid process of reconstruction. This development was influenced by two core factors, these being firstly the long period of border closure on the frontiers with the former Eastern European countries which encircled nearly two thirds of Austria, and secondly by Austria's gradual integration within political and economic developments in western Europe. Despite its strong economic integration within Western Europe, Austria has been characterised by rather self-sufficient mode of development and its situation as an "island". Above all, the agrarian sector has been shaped to a great extent by specific national schemes preserving rural areas and, in particular remote mountain areas, from international and global developments. The opening of the borders to the eastern countries in 1989 and the accession to the EU in 1995 have therefore been outstanding changes which have influenced the development of Austria much more than of other EU countries. It is important to appreciate the social evolution of Austria and to interpret the resulting structural data against this background. The landscape and structure of Austria is shaped by a very high proportion of mountainous areas. Only in the eastern part is there a greater lowland area, with Vienna as capital and sole significantly metropolitan area.

Figure 1. Elements of the large scale spatial structure

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Different methods have been used to define rural areas but there has never been much consensus about this scientific and political discourse. To provide comparable data, key features of rural areas are explained by using the method adopted by the OECD´s Rural Indicators Project (OECD 1994). The first stage of this process requires the division into rural and urban communities at the local level. A community is labelled as rural if the population density is under 150 inhabitants per km2. In a second step a typology of regions is constructed with the share of the population living in rural communities calculated for each region. This share is used to divide the regions into three categories:

1) Predominantly rural regions (PR) are those where more than 50% of the population live in rural communities (often described as peripheral areas).

2) Significantly rural regions (SR) are those where between 15 and 50% of the population live in rural communities (also described as transitional regions).

3) Predominantly urban regions (PU) are those where less than 15% of the population live in rural communities (also described as economically integrated regions).

The OECD-definition introduces a very different concept at the regional level comprising the centres and small towns of "rural regions", in contrast to former definitions primarily based on the size of municipalities.

According to this spatial scheme, in all three categories there are both rural and urban communities. This hierarchical typology takes into account the intra- and interregional relations of exchange. In an international comparison of OECD-countries, about 35% of the population were defined as living in rural communities, which cover 96% of the total surface. This share is particularly high in the North European and North American countries. This scheme also reveals the high share of rural areas in Austria. In Austria a high share of the population (42%) lives in rural communities, whilst the EU average lies at 26%. The geographical area of these communities amounts to 91% of the total land area of Austria. However, in relation to the settlement area the rural areas are relatively densely populated. Pressure on settlements is very high, particularly in some inner-alpine valleys. At a regional level, Austria together with the Scandinavian countries has one of the highest shares of rurality. According to the OECD classification, 78% of the population live in the two types of rurally structured regions whereas the EU average is just 48% (OECD 1994).

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Demographic and economic changes affecting rural areas

The demographic development in predominantly rural regions of Austria is characterised by out-migration in most regions and continuing high birth rates in some regions. Therefore the population change remains slightly positive in most regions, although with a rising share of older people.
The second type, the significantly rural regions, are characterised by a very dynamic demographic evolution with population increases and a rising proportion of young people. This leads to significant tendencies of sub-urbanisation in 'transition' regions and high pressure on settlements and land in those communities. This trend has had an impact because of a rise in long-distance commuting relations between urban centres and rural regions all over Austria. This includes weekly commuting from remote (peripheral) regions such as from Waldviertel and South Burgenland to Vienna, and daily commuting from 'transitional' suburbanised areas.

As in other rural regions the share of agricultural activities has decreased drastically during the last decade. In predominantly rural regions the share of employees in agriculture was 13% (with rates up to 20% in some remote regions) in 1991. A specific characteristic of Austria is the high rate of farmers with a second occupation in non-farming activities with an average of 60% and peaks up to 80% in some regions (South Burgenland, West Tyrol), due to the preservation of family farm holdings and the remarkable immobility of farm land. The very intensive relations between the agricultural sector and other economic sectors are expressed by this high rate of pluriactivity (Dax et al. 1995).

Table 1: Socio-economic indicators of rural and urban regions

Austria Predominantly
rural regions (PR)
rural regions (SR)
urban regions (PU)
Area 1991(% of Austria) 71.44 27.53 1.03 100
Population 1991(% of Austria) 39.6 38.6 21.8 100
Population change 1981-1991
(rates in per thousand p.a.)
2.8 4.5 1.2 3.1
Employment change 1981-1991
(rates in per thousand p.a.)
1.7 7.2 3.6 4.4
Employment activity rate 1991
(in % of persons aged 15-64)
65.4 65.4 67.1 65.8
Unemployment rate (in %) of labour force 1991, national method 4.9 4.7 6.7 5.2
Employed women as share of
total employment (1991)
38.8 41.3 45.4 41.2
Employment in sectors 1991        
-           agriculture (sector 1) 13.3 4.1 0.8 6.2
-           industry (sector 2) 37.3 36.9 29.4 35.0
-           services (sector 3) 49.4 59.0 69.9 58.8

Source: OECD rural indicators, author's own calculations.

Also in the trade and industry sectors there have been significant decreases in employment levels. It is worth noting that regional and economic policy has hardly taken this development into account, although this sector - specifically small industries, businesses, and handicrafts - has a high potential both for employment and innovation.

In consequence, employment in the service sector has increased steadily in rural areas, and above all in alpine regions with intensive tourism. In these regions the share of the service sector lies far above the average (more than 70%). Regional policy measures have tended to be concentrated on tourist activities and in the past have favoured economic strategies supporting one particular sector (e.g. tourism in the Alpine regions).

These recent tendencies illustrate the differentiated nature of 'rural' regions which goes beyond a simple equation between rural and underdeveloped. The dynamics are very different between Austrian regions, and are basically influenced by tourism. The more disadvantaged regions have been until now mainly the border regions in the northern, eastern and southern parts of Austria. These differences in the economic development of rural areas are important both for the conception of regional analyses and the elaboration of strategies. As well as the spatial dimension, regions have to be differentiated according to their development trends and potentials. This also means that a simple distinction between 'rural' and 'urban' is misleading and has to be complemented by a better understanding of development dynamics of regions.

Definition of rural areas

However, for the application of territorially focused policies a useful definition of rural areas and a concept for rural development is required. In regional scientific and political discussions the term 'rural area' has often been used in a very undifferentiated manner as a synonym for all non-urban areas, or has generally been equated with peripheral (remote) regions. This cursory approach has been supported by methodological and conceptual problems of delimitation between rural and urban areas. Above all, the expanding 'transitional' space with fast changing spatial structures provides a wide field of interpretations. Thus the use of the term 'rural areas' was traditionally assigned to all those areas not being classified as 'urban', or to municipalities of a limited number of inhabitants (e.g. under 5.000 inhabitants: ÖIR 1975, p. 11-29).

However, the term 'rural area' often has been used without any concrete spatial definition. Rural space is commonly seen as area with agriculture the dominant economic activity (and with landscapes obviously shaped by agriculture). The equation of agrarian policy with policy for rural areas could not be continued any longer because of progressive changes in most of the rural areas, including the decline of the economic and socio-cultural significance of agriculture and the multifaceted nature of interconnections between rural and urban space. Yet the current Rural Development Plan (Reg. 1257/99) still focuses primarily on the agricultural sector.

Because Austria has never had a specific rural policy, the need to define rural areas in Austria was limited. The different sector measures, also quite aware of the integrative manner of some of their programmes, focused on specific regional definitions or selection of pilot areas. With the application of the EU´s regional policy, Austria had to find a way to decide for the first time a national area for rural policy. The categorisation mainly of the Objective 5b regions (and the Objective 1 regions) had to be done using the framework of the regional statistical units, drawing on NUTS-III level data, and had to be adjusted with the reference to other objective areas. The national preparation process for this regionalisation of rural policy provided a new incentive to commission research on these issues. The debate which ensued expanded the group of actors involved in discussions about regionalisation and to some extent prompted increasing concern for this issue. However, the adoption of the programming approach for the expenditure of finance under the Structural Funds lessened the importance of diversity between regions and supported targeting of assistance for each type of objective area, thereby weakening the regional approach (Dax 1995).