Why Some Rural Areas Decline and Other Not

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Journal of Rural Studies 68 (2019) 135–143

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Journal of Rural Studies


journal homepage: www.elsevier.com/locate/jrurstud

Why some rural areas decline while some others not: An overview of rural T
evolution in the world
Yuheng Lia,∗, Hans Westlundb,∗∗, Yansui Liua,∗∗∗
a
Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, 11A Datun Road, Chaoyang District, Beijing, 100101, China
b
Department of Urban Planning and Environment, School of Architecture and Built Environment, KTH Royal Institute of Technology, Sweden

A R T I C LE I N FO A B S T R A C T

Keywords: Rural decline is an inevitable process as human society transforms from the agrarian to the urban-industrial
Rural decline economy, and further on to the knowledge economy. Through an extensive literature review, this paper aims to
Rural revitalization interpret why some rural areas decline while some others do not. The findings show that it is by the interactions
Rural resilience between rural areas and the external environment that rural communities either grow, decline or even vanish.
Rural evolution
The paper emphasizes the necessity to improve rural communities' resilient capacity through adjusting their
Sustainability
internal components' function and structure to survive the external changes. In this process, rural livelihood
diversification, the creation of market oriented institutions and strong social capital are considered to enhance
rural resilience and build up sustaining rural communities. Finally, three conditions for sustainable rural de-
velopment in the knowledge economy are discussed: 1) development of new economic activities that can re-
spond to potential urban demand; 2) local entrepreneurship that can establish and expand these new activities;
and 3) social capital that can support the entrepreneurship in new activities with access to credits, labor, human
capital, external markets and external knowledge for learning and innovation.

1. Introduction and the bigger the economic and social differences between city and
countryside are, the higher outmigration from rural areas can be ex-
Despite the lack of a common definition on what is rural and what is pected. Depopulation, particularly the outward migration of young
urban, rural decline is today an undisputed fact and it has become a adults, is the main expression of the shrinkage of rural communities and
global issue as the world endeavors to promote urbanization and in- local economies (Muilu and Rusanen, 2003; Champion and Shepherd,
dustrial development (Liu and Li, 2017). Countries like the US, Canada, 2006; Amcoff and Westholm, 2007; Luck et al., 2011). As people have
Sweden, Australia, China and Japan have either experienced or are left rural communities, services have been reduced, businesses have
experiencing rural decline (Wood, 2008; Markey et al., 2008; Odagiri, closed, and social capital has diminished. In these circumstances, the
2009; Luck et al., 2011; Hedlund and Lundholm, 2015; Li et al., 2018a). spiral of rural decline seems inexorable. Coupled with the outflow of
As early as the 1960s, concerns about rural renewal were expressed in young adults, aging of the remaining residents also leads to a significant
the US (Anding and Gustafson, 1968). Then, similar expressions such as decline in community-based autonomy (Ono, 2005, 2008). As young
rural decline, community destruction, "dying" rural communities, and talented peasants move to cities, the left-behind population's ca-
marginal community and "hollowing out" of the countryside were put pacity to maintain the basic rural functions diminishes, a development
forward successively to describe the downward spiral of decreasing often referred to as community marginalization (Sakuno, 2006;
employment, depopulation, economic depression and deteriorating Kasamatsu, 2009; Odagiri, 2011).
quality of life in the countryside (Gallaher and Padfield, 1980; Forth, Moreover, policy making that disrupts the urban-rural relationship
2000; Ono, 2005; Carr and Kefalas, 2009; Li et al., 2016). will directly impair the countryside. For instance, the policy program in
A general explanation to rural decline is the outcomes owing to the Canada views hinterland areas as a "resource bank" from which to fund
differences in living standards between rural and urban areas (Young, provincial infrastructure and services, without adequate attention to
2013). Living standards have both an economic and a social component rural reinvestment. Consequently, such policies have led to sharp rural


Corresponding author.
∗∗
Corresponding author.
∗∗∗
Corresponding author.
E-mail addresses: [email protected] (Y. Li), [email protected] (H. Westlund), [email protected] (Y. Liu).

https://doi.org/10.1016/j.jrurstud.2019.03.003
Received 3 August 2018; Received in revised form 27 February 2019; Accepted 10 March 2019
Available online 16 March 2019
0743-0167/ © 2019 Elsevier Ltd. All rights reserved.
Y. Li, et al. Journal of Rural Studies 68 (2019) 135–143

decline in northern British Columbia, Canada (Markey et al., 2008). portray characteristics of sustainable rural communities. Policy im-
China has decades' of history of urban biased policy, which put villages plications are given based on discussions of future rural development
into a disfavored position from which huge amounts of rural value were and the rural-urban relationship in the knowledge economy.
squeezed to support cities and heavy industries (Li, 2011). As a result,
the rural-urban divide has widened and the hollowing villages with 2. The glimpse of rural evolution in the world
huge amount of left-behind population have become a widespread
phenomenon in China (Ye et al., 2009; Liu et al., 2010). As urbanization Throughout history, the urban-rural divide has mainly been based
in developing countries still takes place predominantly at the expense on the differentiation of economic activities. The countryside has been
of the countryside (Westlund, 2014), the induced policies and measures the areas where agriculture and other areal activities have been per-
will affect rural development in the long run. formed, while non-agricultural activities have taken place in cities and
Generally, cities and villages are an organic whole and they are towns. In the long pre-industrial era, the countryside dominated
tightly connected with each other in the forms of resource flows like strongly over the cities; it has been estimated that in the year 1800,
labor, capital, material and information (Li, 2012). Thus, in large parts about 97 percent of the world's population was living in the countryside
of the developing world the existence of rural outmigration drags cities (Raven et al., 2011). In this era, urban-rural interaction was featured by
when large scale influx of peasants exceeds the resource environmental urban residents' consuming agricultural products in exchange of cities'
bearing-capacity of cities, especially small and medium-sized cities industrial products. Such interaction was restricted by low productivity
(Birkmann, 2016). Under these circumstances, both cities and villages and limited transportation and communication.
need to develop sustainably to support each other. This development The industrial revolution and relative rural over-population were
has resulted in an increasing call for rural revitalization, rural renewal the main driving force behind urbanization in the now developed
or rural rebirth (Allison and Hobbs, 2004; Gleeson, 2008; Larsen and countries. In addition, improved transportation and communication
Barker-Reid, 2009). Thus, both considering the migration pressure on technologies enabled cities to utilize resources for production use in a
unplanned slum areas of cities in the third world, and the hollowing out larger context beyond their surrounding areas, while rural areas be-
of countrysides all over the world and all its consequences, it is im- came increasingly dependent on their metropolitan counterparts for a
portant to investigate the potentials for various types of rural areas to multitude of social, economic and political goods and services. Urban-
develop and grow in the era of the knowledge economy. rural interaction in this era shifted from the previous balanced ex-
Discussing the development of rural areas worldwide is not un- change, to flows of labor and population to the urban areas and an
problematic. First, the definitions of rural areas differ between coun- increasing dependency of rural areas on urban economies (Li, 2011).
tries and statistics are sometimes approximate, particularly in many Since the second half of the twentieth century, most developed
developing countries. Second, countries find themselves at different countries have had a major urban-resided population, mainly in
stages of development, different stages of urbanization and different growing suburbs, while the developing countries have experienced
stages of rural transformation. Third, as discussed below, it is not rapid urbanization. In the 1970s, repopulation of the countryside, a
possible to talk about just one type of rural area. process commonly termed "Counterurbanisation" or "Rural
Broadly speaking, current rural areas can be divided in four cate- Renaissance" was noted in many developed economies where rural
gories. A first category is villages and surrounding areas that by natural areas gained population at faster rates than urban areas (Berry, 1976;
population increase and in-migration are transformed into densely Hugo and Smailes, 1985; Champion, 1989; Frey, 1995; Kontuly, 1998).
populated urban centers. This process is since long completed in the Then, rural growth lagged in the early 1980s but returned once more in
developed countries, but is an important component of urbanization in the 1990s with the "Rural Rebound" as seen in countries like the US and
developing countries (Farrell, 2017). A second category is the rural UK (Fuguitt, 1985; Champion, 1988; Fuguitt and Beale, 1996). In this
areas that form parts of metropolitan regions, which consist of a mosaic process, rural places being located within commuting distance of cities
of activities and land-use. These rural areas are (still) not being densely have become increasingly populated by more affluent and mobile
populated, but are integrated in the markets of labor, housing and professional urbanites who are striving to reconnect with "community"
leisure activities of the metropolitan regions, and their development is and "nature" (Cloke et al., 1998; Nelson et al., 2010). Connected to this,
governed by the city-region's development (Westlund, 2018). A third the concept of "Rural Gentrification" was coined to signify the change in
category is the “intermediate” rural regions that surround metropolitan social composition that took place when middle class people with urban
regions and that have the potential of increasing their interaction with lifestyles replaced the local villagers, mostly farmers and working-class
the metropolitan regions and possibly becoming integrated in them. people (Phillips, 1993). The phenomenon of rural gentrification has
Intermediate regions exist in the developed countries, but it is uncertain been detected and widely studied in countries like the UK (Cloke et al.,
to what extent they are found in developing countries. The fourth ca- 1995), New Zealand (Swaffield and Fairweather, 1998), Australia
tegory is the vast peripheral rural areas that are situated outside the (Curry et al., 2001), the US (Ghose, 2004) and Spain (Solana-Solana,
(positive) influence spheres of the metropolitan regions. These areas of 2010).
agriculture, forestry or other natural resource based industries have in In contrast to the abovementioned cases of rural repopulation, for
general declined due to increased capital intensity of their industries, the developed and developing countries alike, rural areas, particularly
which have meant less jobs and a vicious circle (Westlund, 2018). Our those agriculture-based and far away from the city regions have in-
discussion in this paper focuses on the two latter types of rural areas. evitably experienced depopulation and the induced problems like re-
Bearing these questions in mind, the paper aims to investigate the cession and social degradation, local markets shrinkage and small
mechanism of rural decline in the world and tends to answer why some business closure. For instance, the period 1980–2000 saw seven hun-
rural areas and villages decline while some others do not. We base our dred rural counties losing 10 percent or more of their population in the
rendering on two assumptions: 1) Rural development in the knowledge US. In particular, people in their twenties are the ones leaving the
economy are local processes that are determined by strongly linked countryside in dramatic numbers (Carr and Kefalas, 2009). As quite
endogenous and exogenous factors; and 2) The right combination of many rural and small town enterprises went bankrupt in the late 1990s,
bonding (internal) and bridging (external) social capital in local/com- China witnessed the loss of 128 million rural employment opportunities
munity activities has positive influence on rural development. in the period 1995–2016 while the number of closed rural primary
Grounded on the experiences of the highly urbanized developed schools reached 365,400 in this period (National Bureau of Statistics of
countries, we discuss the trends, threats and opportunities for rural China, 2017; Yang et al., 2017). As Fig. 1 shows, the majority of
areas in the rapidly urbanizing developing countries. Further, we re- countries in the world experienced rapid decreases in the proportion of
view the rural evolution process in the latter type of countries and the population residing in rural areas in the period 1981–2016. This

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Y. Li, et al. Journal of Rural Studies 68 (2019) 135–143

Fig. 1. The changes of rural population proportions in the world, 1981–2016.


Data source: The World Bank, https://data.worldbank.org/

trend is especially prevalent in east and south Asia, north and south large population base, and thus a good potential to utilize the access to
Africa as well as in Latin American countries. For instance, the rural urban resources, knowledge spillovers, etc. For these areas, “smart
proportion of China has decreased by 45.89% during the past 35 years specialization” might be a successful strategy in the developed coun-
while the figure in Brazil almost reached 60%. tries (Naldi et al., 2015). On the other hand, in the vast rural areas
Today's global knowledge economy signifies still another stage of outside the positive economic influence of the metropolitan regions, the
the urban-rural relationship. In this paper, we adhere to the definition impacts of the knowledge economy are (with certain exceptions such as
given by the UK's department of Trade and Industry (DTI): “A knowl- successful tourism sites) mainly negative in both developed and de-
edge-driven economy is one in which the generation and the exploitation of veloping countries: rationalization or closure of existing industry and
knowledge has come to play the predominant part in the creation of wealth. agriculture, depopulation and brain drain (Westlund, 2018).
It is not simply about pushing back the frontiers of knowledge; it is also about The transformation from a pre-industrial to a knowledge economy
the more effective use and exploitation of all types of knowledge in all took several centuries in the western world. In the developing world, it
manner of economic activity” (DTI, 1998). The knowledge economy, is a much more compressed process, and in many cases, the growth of
which includes knowledge-intensive industries, is based on innovations the knowledge economy has commenced while industrialization con-
and innovations are dependent on new combinations of human tinues to unfold. For rural areas, this means that they in the developed
knowledge (Westlund, 2006). In this sense, big city-regions give the countries have gone through a decline that has elapsed over a century,
highest potentials for face-to-face contacts and new combinations of while in the developing world this decline is a much more rapid process
human knowledge. This is why the knowledge economy concentrates in (Farrell and Westlund, 2018). As rural development becomes more
big city-regions. For cities, the resources of the rural hinterlands (land, dependent on cities, and villages are losing their relative importance in
forests, minerals) have lost in relative importance and the resources of the emerging knowledge economy, rural decline in many places of the
other cities (knowledge) have increased in importance. As a result, world turns out to be a predestined outcome. As a result, the once self-
inter-city interaction, trade and exchange are now the predominating sufficient villages have become hollowed out and exist in a state of
forms of exchange at both global and national levels, while the share of decay when many young and fit villagers have moved to cities (Li et al.,
urban–rural interaction and trade has decreased with changing con- 2016).
sumption patterns and shrinking rural population shares (Westlund and
Kobayashi, 2013).
3. Why do some rural areas decline while others do not?
Even if the knowledge economy is a global phenomenon, it is un-
evenly developed across the world. It is dominating the large me-
Generally, the development of rural communities consist of both the
tropolitan regions and transforming smaller city-regions in the devel-
material and immaterial contents. The "material" content indicates
oping world, and it is rapidly growing in the leading metropolitan
those what we can see, such as physical space, geographic character-
regions of the developing world. The knowledge economy means clear
istics, population and resource endowments while the "immaterial"
opportunities for many rural areas that are “intermediate” i.e. located
content includes those intangible things such as personal relationships,
sufficiently close to metropolitan regions and that have a sufficiently
values, attitudes, culture and institutions. Since the rural communities

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Y. Li, et al. Journal of Rural Studies 68 (2019) 135–143

never have been separate and independent societies, strong linkages concerns interactions with the external environment (Fig. 2). At the
between cities and villages have existed based on their spatial and very beginning, villagers turned local resources into products on which
functional interdependencies (Davoudi and Stead, 2002; Potter et al., the rural economy could rely, while rural social order was simulta-
2004). Thus, it is the interactions between the inside elements and the neously upheld by intimate social relationships. Then, influenced by
outside environment that affect the rural communities and their well- external processes such as globalization, industrialization, urbanization
being (Warren, 1963). and informatization etc., villages have become increasingly dependent
Influenced by globalization, industrialization, urbanization and in- on cities and their markets. A series of changes and transformation were
formatization processes, the traditional agriculture- and natural re- induced, including rural spatial restructuring, industry upgrading, po-
source-dependent villages, either fail to transfer their economic base pulation mobility, life-style change, production-mode transformation
from the older to the newer forms of capital investments, or they are and social management change (Li, 2011). However, not every single
less capable of transforming themselves into sites where the affluent village was able to adapt to the external changes. In many cases, in-
groups from cities can enjoy rural landscapes and livelihoods. In short, dividually-run local industries failed to meet the market competition
the traditional rural communities, which decline or even vanish, fail to and the owners were less capable to introduce sufficient technologies
make adaptive and innovative responses to the external changes. In this and capital to upgrade their industries. Depopulation also exacerbates
process, local rural communities that are subordinated to outside forces rural decline when local markets shrink and talented laborers are in
can be exploited and manipulated, and their resources can be ex- shortage to maintain rural industries (Wood, 2008; Carr and Kefalas,
propriated (Vidich and Bensman, 1958). 2009). Both the bonding and bridging aspects of social capital are prone
Attempts such as improving local infrastructures, consolidating to being affected due to rural depopulation. In this process, villages are
rural land and restructuring dispersed settlement patterns have been inclined to be individualistic, lose social cohesion and become both
introduced to meet the challenges presented by rural decline (van der socially and economically isolated. As a result, villages of this kind will
Ploeg et al., 2000; Cullingworth and Nadin, 2002; Hassebrook, 2003; go into a vicious circle when declining local economy and depopulation
Bjorna and Aarsaether, 2009; Natsuda et al., 2012; Li et al., 2018b). Are coexist and mutually reinforce each other. This vicious circle will be
these measures efficient against rural decline once and for all? We accelerated into a vanishing process in the knowledge economy where
would say no, since they might be effective but are not decisive factors. big city-regions dominate and villages outside their spatial sphere of
Villages of favorable geographic conditions, i.e. situated close to large influence become marginalized.1
urban agglomerations, and having natural resource endowments have Compared to the rural decline cases, there are many exceptions of
more chances to become prosperous. However, it is the local people by rural communities that survive external challenges and develop in a
way of their knowledge, capability, willingness and resolutions that growing pattern (Li et al., 2016). For one thing, there are communities
decide whether the prosperity can be maintained and sustained. In this that possess certain functions, such as retirement communities, local
process, the risk faced with top-down measures, planning and invest- trade centers, recreation communities, academic communities and
ment initiatives is that they may fail to conform to the real needs of government centers. These functions could help rural communities to
local populations. For the future success of revitalizing declining rural develop in a multifunctional way and maintain their vitality and
communities, the actions and commitment of the people who live there wellbeing. For another thing, there are communities that successfully
and their collective self-reliance are increasingly called upon to shape have upgraded their local industries, making them geared to the
and maintain their own living quality (Wood, 2008; Elshof and Bailey, (urban) market demand (Westlund and Kobayashi, 2013). In the
2015). meantime, these communities often go through a social management
Compared with the material contents of a village or rural commu- transformation from individual to more collective based system to deal
nity, like infrastructure and resource endowment, the immaterial con- with the depopulating and aging challenges. In this process, commu-
tents, like social capital has proven its usefulness and suitability in nication and dialogue among individuals are improved and collabora-
explaining why some places are more successful than others in produ- tions between different stakeholders also get strengthened in line with
cing a high level of material wellbeing (Putnam, 1993; Woolcock, 1998; similar values and attitudes. Such local social capital acts as a form of
Brown and Schafft, 2011). Social capital, which is often defined as the glue, able to hold people and groups together and to interact with
collective norms, trust and networks of affiliation, can reduce transac- different external actors and sectors. Villages of this type will establish
tion costs, enhance people's access to information and resources, gen- and maintain effective interactions to the external environment, which
erate information spillovers, promote the transmission of knowledge, provide access to financial and political capital that can have beneficial
and facilitate collective actions (Westlund, 2006). Further, bonding development outcomes (Vidich and Bensman, 1958; Li et al., 2016).
social capital involves the close in-group solidarity while bridging so- Villages in the stagnant stage indicate currently self-sufficient
cial capital connects diverse groups both in and outside of a commu- communities. Their rural industries are still localized, small-scale and
nity. Places with a higher density of combined bonding and bridging homogeneous activities that are mainly serving the local market. The
social capital are more inclusive and participatory and they are also rural society is still characterized by close personal relationships and
predicted to have superior development outcomes and a higher quality typically maintained via informal control. Villages of this kind will ei-
of life (Flora and Flora, 2003; Besser, 2009). Bonding and bridging are ther grow or decline; this depends on the ability of locals to foresee
not only expressions of the network aspect of social capital. The two external challenges and opportunities and mobilize resources to make
concepts relate also to the values and attitudes of the actors in the social in-time responses in both their economic development and social
networks and these “emotional” aspects influences both the strength of management system (Lefebvre, 2003).
the bonding features and the extension of the bridging features of the Fig. 3 portrays the rural evolution process when rural communities
local social capital. transform from an agrarian society to an urban-industrial, capitalist
When facing various challenges, villages of this kind are able to society and then to a knowledge economy. We consider rural evolution
mobilize both internal and external resources to accomplish locally as a process in which the rural communities gain or lose their resilient
initiated change that benefits the wider community, and to adapt to the capacity against external challenges, which further influence both the
changing circumstances. The revival of the mountain village of Åre in material and immaterial elements of the rural system.
north Sweden and Xiaoguan village in China's Hebei Province have
demonstrated the important role of local social capital in enhancing the
endogenous development capability of the community (Li et al., 2016). 1
These types of processes are described by Myrdal (1957) as ”cumulative
According to the above analysis, rural evolution could be attributed causation”. The New Economic Geography has formulated these processes in
to the internal relations and governance of rural areas and it also formal equations, see e.g. Fujita et al. (1999).

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Y. Li, et al. Journal of Rural Studies 68 (2019) 135–143

Fig. 2. The diagram of rural evolution.


Source: Authors' original

have the manageability in maintaining the community function while


depopulation has limited their manageability. Crandall and Etuk (2008)
coined the concept "community vitality" in the US to understand the
self-managing capacity of a rural community. They assumed that a
sustainable rural community has the ability to sustain itself into the
future as well as to provide opportunities for its residents to pursue
their own life goals and the ability of residents to experience positive
life outcomes. Thus, rural decline means the declining vitality of a rural
community.
The above two cases have portrayed an ideal status of sustainable
rural communities in which their function and people's livelihood could
be maintained and sustained. However, this description is too general
and fails to clarify the interactions between the rural areas and the
external environment. It is our contention that sustainable rural com-
munities should be characterized by rural resilience, a reaction to the
notion of rural decline and associated with enhancing villagers' liveli-
hood through changes in their behavior and adaptation to new cir-
Fig. 3. A sketch map of rural evolution process. cumstances, rather than being passively dictated at the mercy of un-
Source: Authors' original manageable external forces.
The concept of resilience, which was firstly introduced to assess the
4. What characterizes sustainable rural communities? ecological system, is defined as "the capacity of a system to absorb
disturbance, undergo change, and retain the same essential functions,
Generally, sustainability and vulnerability represent the two ex- structure, identity and feedbacks" (Holling, 1973). Resilience has been
tremes of a continuum. widely applied in the social and economic contexts (Allison and Hobbs,
That indicates the quality of the livelihood system (Niehof, 2004). 2004). Walker and Salt (2006) emphasized that any attempt for sus-
As rural communities consists of many elements, the robustness of rural tainable development that does not explicitly acknowledge the resi-
communities depends on the sustainability of many facets such as lience of a system leads to a malfunctioning system, which does not
economy, population, social networks, spatial factors, agriculture, cul- provide the goods and services that are expected. They argued that the
ture, land use, ecology and government policy etc. (Epps, 1995; key to sustainability lies in enhancing the resilience of the system, not
Troughton, 1995). This indicates the complexity of rural areas and in- in optimizing isolated components of the system. As thus, a resilient
tensifies the assertion that there is no single "model" for sustainable rural community possesses the capacity to prevent unwelcome chal-
rural development (Bryant et al., 1996). As people attempt to approach lenges in the face of external circumstances, and to adapt to the
rural sustainability, it is necessary to discuss what sustainable rural changing external environment in such a way that a satisfactory stan-
communities are characterized by. dard of living is maintained.
Some Japanese scholars introduced the concept "community-func- Walker et al. (2004) and Folke et al. (2010) have identified three
tion" to assess the state of a given rural community, including the aspects of resilience: 1) the capacity to buffer systemic shocks while
management of local resources and environment, seasonal cleanups, conserving existing functions and structures (persistence); 2) the ca-
and organization of local events (Sakuno, 2006; Ono, 2008; Kasamatsu, pacity to deal with challenges such as uncertainty and surprise through
2009; Odagiri, 2011). They held that sustainable rural communities renewal, reorganization and learning within the current regime
(adaptability); and 3) the capacity to create a whole new trajectory that

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Y. Li, et al. Journal of Rural Studies 68 (2019) 135–143

is rooted in a radical change in the very nature of the system (trans- 4.2. Market oriented institutions
formability). When coming to rural resilience, we consider these three
aspects of resilience as three different stages in which rural areas re- Rural livelihood diversification only means that rural areas have
spond to the changing external environment. Depending on their more chances to survive external challenges such as market fluctua-
countries’ general development level, rural areas of various countries tions. However, effective rural institutions can strengthen local decision
may find themselves in different stages. We propose the following ac- power and the ability to local management, which strong outside forces
tions to enhance rural resilience in order to strengthen the sustain- are less able to undermine (Warren, 1963). As the transformation from
ability of rural areas. agrarian to urban-industrial societies proceeds, there is an increasing
demand for organization of rural citizens if they are to succeed in the
market economy. The very important factor is to create market-oriented
4.1. Rural livelihood diversification institutions where formal rules replace informal norms as a way of
regulating relationships among workers and owners, producers and
In rural areas still dominated by agriculture, as is the case in de- states, and capitalists and the nation state (Weber, 1978). This means
veloping countries, it is necessary to improve rural diversification as an that the owners of the rural industries and those employees in the
important strategy for decreasing livelihood vulnerability in order to market economy should follow more formal mechanisms of social co-
meet the external changes (Walker and Salt, 2006). Thus, rural liveli- ordination such as contracts and work rules, instead of the informal
hood diversification indicates the process by which rural households habits and folkways. Thus, the self-regulating rural communities are to
construct an increasingly diverse portfolio of activities and assets in be transformed into societies, which are coordinated by rational, con-
order to survive and to improve their standard of living (Ellis, 2000). tractual and associative bonds.
For individual farmers, diversification means that they diversify In villages of strong market oriented institutions, people's behavior
their farm activities and that they are not solely dependent on primary and decision-making are regulated in a way that local industries will be
agricultural production, so that their income would fluctuate less, run more efficiently. Villages' adaptability will be enhanced as a re-
thereby increasing their economic persistence (Darnhofer, 2010). sponse to the changing external environment.
Agricultural diversification includes multi-functional agricultural ac-
tivities such as diversified agricultural products, agro-product proces- 4.3. Strong social capital
sing, and agriculture tourism. For the villages alike, it is better for the
rural economy to be diversified and there are both agricultural and non- Rural communities with strong social capital are considered to be
agricultural industries on which villagers could rely and get income to inclusive and participatory and they are assumed to have an increased
maintain their livelihood. This requests villagers to better exploit local capacity to respond to external disturbances (Flora and Flora, 2003;
resources and develop them into profitable industries. As for villagers Murphy, 2007). Villages of diverse internal relationships and strong
who worked outside and sent back remittances, we consider this as a external linkages are able to mobilize both internal and external re-
way of expanding people's income sources, which can help local sources to realize locally initiated actions and adjustments to respond to
households to initiate new careers. external changes (Brown and Schafft, 2011). Besides, social capital
In the developed countries, rural diversification is not only about reduces transaction and monitoring costs, and knowledge and expertise
complementing farmers' activities with new, non-agricultural activities can be exchanged more easily than in low-trust communities (Nkhata
such as agro-tourism. It is also about creating a new foundation for the et al., 2008). As an individual-level attribute, social capital generates
local rural economy, in which local agriculture merely is a part of the more immediate economic connotations since people make decisions to
mix. One example is the remote Swedish village of Åre, which is not invest in building their social relationships in a rational way, which
only Scandinavia's leading ski-resort, but also an all-year round desti- then pay off when in need.
nation that offers a mix of sports, outdoor life and entertainment. Åre's When facing external challenges, social capital acts as a form of glue
“smart specialization” strategy has meant a focus on innovations related and holds people and groups together which help them to work jointly
to sports and outdoor activities, and besides being a tourist destination to conquer difficulties. Villagers' collective actions like cooperation are
it has become a hotbed for start-ups and corporate ventures in the sport- facilitated when there is a high level of trust among the people and they
technology sector – but the growth of tourism has also meant an in- hold the same values and attitudes towards protecting public interests
crease in demand for locally produced agricultural products. New ac- and controlling the destiny of their village (Ito, 2013). Thus, rural
tors in new industries with new networks have meant a comprehensive transformation will be accomplished by actors who initiate radical
transformation of the village's social capital, not least regarding the change in the very nature of their rural system, making it more adaptive
external, bridging links, but the entrepreneurial attitudes have been and resilient.
there for generations (Nordin and Westlund, 2009). The revival of
Xiaoguan village of Yangyuan county which is classified as a national 5. Discussion
impoverished county in China's Hebei Province represents a case in the
developing countries. Xiaoguan village, which used to be challenged by Rural decline is an inevitable process associated with the transfor-
depopulation due to its backward local economy, initiated a share- mation from the agrarian to the urban-industrial economy, and further
based cooperative system for mutton breeding and greenhouse vege- on to the knowledge economy. However, rural decline is not pre-
table industries. The village committee, impoverished households, or- destined. It is by the interactions between rural areas and the external
dinary households and wealthy households receive dividends on their environment that rural communities either grow, decline or even
shares in terms of the capital, land, labor and other production elements vanish. How rural evolution proceeds depends on the capacity of the
they have contributed with. By way of this system, local peasants rural communities, which respond to external changes through ad-
benefit from diversified income sources and people become bound to justing their internal components' function and structure. In this pro-
the interests of all the households of Xiaoguan village. As a result, there cess, rural communities of different geographic conditions, natural re-
are migrant workers who returned to Xiaoguan and joined the local source endowments and social relationship, as well as people's values,
industries in the period following the initiation of the program. A strong attitudes and institutions will make different responses, which finally
sense of mutual aid, solidarity and common prosperity has emerged lead to different evolution patterns and outcomes.
among the peasants (Li et al., 2016). As urban-rural relationships change in their patterns and contents
when human society transforms, it becomes necessary to take measures
in advance to strengthen the capacity of rural areas to meet external

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Y. Li, et al. Journal of Rural Studies 68 (2019) 135–143

challenges. However, compared with the broad public policy and collaborative side-activities are marked with (o) in Table 1. En-
planning initiatives, which are often implemented from the top-down, trepreneurs need other local entrepreneurs, they need public infra-
we call for more bottom-up initiatives and collective actions as well as structure and services and they need embeddedness in the local com-
commitments from those who live there. It is the inhabitants’ resolu- munity. Local governments need entrepreneurs to create local
tions, will-power and attitudes that decide the destiny of their com- employment and incomes, and it needs local, civic associations to create
munities when there is support from the outside. In this process, the an attractive local environment that make people want to live there.
endogenous development capability of communities is strengthened Local associations and the civic community need government and en-
and the local social capital is enhanced when increased unity, co- trepreneurs for various forms of support in order to perform their ac-
operation and trust is developed among the villagers. Then, the local tivities. Successful collaboration builds on a positive social capital
social capital can serve as a platform for collaboration and interplay within and between the local actor groups.
with different external actors and sectors. It must, however, be pointed out that successful local collaboration
The knowledge economy and all the applications of new knowledge- as described in Table 1, which can be the key to sustainable local urban
intense technologies has meant that natural resources are no longer a development, most often is insufficient for rural development. The
guarantee for rural development. Capital-intense, high-tech equipment reason is the lack of scale in rural areas. In urban areas, there are in
(which increasingly can be remote controlled) have replaced most of general sufficient demand for new products, the labor markets are large
the need of a local labor force. However, there are many examples of and can supply labor with the right skills, access to credits are better,
rural areas that have adapted to changes in urban demand. The most the number of competitors are larger which means that the potential for
frequent of these are of course areas of tourism that have been able to informal knowledge spillovers is larger, which in its turn facilitates
exploit new resources in the form of natural and cultural amenities. innovation. All these factors mean advantages for urban areas; ad-
Tourism comprises a wide range of activities but mainly within low- vantages that rural areas must compensate for by building bridging
paid service jobs. Still, without tourism these areas would be much social capital, i.e. links and networks to external markets, actors and
worse off. There are also examples of rural areas that have found new sources of knowledge (Westlund and Kobayashi, 2013). This seems to
functions as research stations, testing areas of vehicles for rough cli- be one of the main characteristics of the rural areas, situated outside the
mates, or other functions that corresponds to urban demands. metropolitan regions that have shown a successful development in the
In the knowledge economy we want to stress three necessary con- knowledge economy.
ditions for sustainable rural development across the world: 1) devel-
opment of new economic activities that can respond to potential urban 6. Concluding remarks
demand; 2) local entrepreneurship that can establish and expand these
new activities; and 3) social capital that can support the en- This paper has investigated the mechanisms of rural decline and has
trepreneurship in new activities with access to credits, labor, human tried to provide some answers to the question of why certain rural areas
capital, external markets and external knowledge for learning and in- decline while others seem to find ways to survive and even develop.
novation. Our focus has been on two types of rural areas, the “intermediate” rural
The traditional perspective on entrepreneurship has been that eco- regions being situated close to the city-regions, and the vast peripheral
nomic growth is the result of individual entrepreneurs and their ac- areas that lay beyond the positive economic influence of the city-re-
tivities, whereas government and the civil sector have played a modest gions. Our conclusion is that the former, if they have a sufficient po-
or insignificant role. During the last decades, this view has been re- pulation density and connectivity, have a potential for utilizing the city-
placed by theories of innovation systems (Freeman, 1987; Lundwall, regions knowledge spillovers and markets for rejuvenating their
1992) and “triple-helix” (Etzkowitz and Leydesdorff, 2000) where col- economies, while the latter most often are in too disadvantaged of a
laboration between entrepreneurs and government (incl. institutes for position to be able to turn their negative trends.
education and research) and sometimes the civil sector has been given a However, while the negative prognosis for peripheral rural areas
more prominent role. However, these theories have been developed can be considered a global one, the potential for intermediate regions
from a mere urban perspective and have hardly ever been applied to might be restricted to developed countries, as their potential in many
rural development, which by public policy still mainly is considered an developing countries is uncertain. There, the big city-regions function
agricultural issue. Here we deliberately break with this tradition and as “migration magnets” for the population in neighboring regions,
attempt to apply modern growth theory also on rural areas. which means that the slum areas of the big cities should be the prime
While universities and research institutes normally are assumed to areas for the positive influence of the cities’ economic growth.
play a role for urban, regional and national development, local en- We based our overview on two assumptions of which the first was
trepreneurs, local government and the local civil society are the deci- that rural development in the knowledge economy are local processes
sive actors in local rural development. As shown in Table 1, each of that are determined by strongly linked endogenous and exogenous
these actor groups have a traditional main activity, marked with an O. factors. Our findings support this assumption. External economic, social
However, based on the theories of innovation systems and triple-helix and increasingly also environmental changes exert pressures on rural
we claim that the traditional main activity of each group of actors is not areas. Often these pressures are of such a magnitude and the rural areas’
enough to achieve local rural development. No single actor group – not potential to counteract them so limited, that rural decline cannot be
even the entrepreneurs – is able to achieve revitalization of rural areas prevented. However, by combinations of internal and external re-
without supportive collaboration with the other actor groups. The sources, including internal and external social capital, certain villages

Table 1
Local prerequisites for sustainable rural development, groups and their activities. The main activity of each group of actor is market “O”, while the necessary
involvement in/support of other actor groups’ activities are marked “(o)”.
Source: Adapted from Westlund (2006, p. 93)
Groups of local actors

Activity Entrepreneurs Government Local associations and community


Product development and production O (o) (o)
Public infrastructure and service (o) O (o)
Leisure activities, place attractiveness (o) (o) O

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