Productive vs. Residential economy: Factors behind the recovery of rural areas in socioeconomic decline

Abstract

The analysis and explanation of the diverse rural dynamics might help to design better targeted rural development policies. We focus on Galicia (Spain) as a case study of a region in demographic decline, in order to trace what factors are associated with the recovery of specific rural areas. Since demographic ageing and depopulation are often an inheritance from strong migration processes in the past, and the resulting imbalances, we use a statistical method by Martínez Filgueira, Peón & López Iglesias (2017) to remove the demographic drag due to past migration. We then perform a multivariate statistical analysis that explores the relationship of the municipalities’ population growth beyond the drag with a total of 50 indicators in 10 domains, including territorial, such as infrastructures and remoteness, economic diversification, the profitability of business activities, human capital, and quality of life indicators, such as access to public services and trends of rurbanisation. We obtain mixed results for the dichotomy ‘entrepreneurship versus quality of life’. The main findings are the evidence of agglomeration economies –the distance to the main cities and the size of the county capital– and the positive impact of socio-economic variables such as disposable income and stock of human capital. In addition, we obtain a correspondence between rural areas in recovery and a higher density of companies and self-employment in the services sector.