Many of us tend to associate innovation with high-tech sectors and processes within firms, often concentrated in knowledge-intensive services and high-tech manufacturing.
However, this perspective sometimes neglects the broader concepts of innovation, which involve the incorporation of existing innovations into products and processes across various sectors and markets, as well as within new businesses.
This perspective is especially relevant in rural areas, where innovation plays a crucial role in economic development. Due to their geographical nature, rural areas face unique challenges in terms of accessing government services, finance, and skills, particularly when compared to urban locations.
A recent OECD report on Scotland offers valuable insights that can be applied to other nations, including Wales, to enhance innovation in rural areas and create a conducive environment for entrepreneurship.
One significant challenge faced by rural areas is their declining and ageing population. These demographic shifts have important implications for policies and programmes related to innovation and well-being, something which the Welsh Select Committee has recently recognised by announcing an inquiry into why younger people are leaving Wales.
Without considering the specific demographics of rural areas, policies may miss opportunities for inter generational community-building and economic growth. While there always should be a focus on improving the entrepreneurial potential of young people, any initiatives aimed at providing a skilled labour force for innovation should consider the older average age of rural workers.
Promoting the inclusion of women in the labour force is also crucial, especially in starting new businesses where the rate of women’s entrepreneurship still lags behind that of men. In doing so, it is essential to acknowledge that mainstream programs and practices may not adequately address the challenges women face when establishing businesses while maintaining work-life balance.
That is something that Chwarae Teg focused on for many years in Wales prior to its demise earlier this month, and it is critical that the vacuum created because of its closure is filled quickly if the potential of women’s contribution to the labour force is to be maximised.
The study also shows that as rural areas have limited access to social support and government services, social innovators can play a critical role in delivering services to rural communities, particularly in remote areas with limited access to government services, including healthcare and social services.
Here in Wales, there has been substantial improvement in developing social enterprises over the last decade, but more could and should be done to support such entities to play a greater role in the provision of public services.
Another challenge in rural areas is the nature of businesses, which tend to be smaller and less connected to international markets. Older family businesses are also more prevalent, and they may encounter difficulties in pursuing transformational and disruptive innovations, possibly requiring modern succession practices. In many rural areas, most businesses operate in the service and agricultural sectors, each with distinct innovation challenges compared to knowledge-based technology firms.
Perhaps the most important lesson is that any approach to enhancing innovation in Wales, as in Scotland, should recognise the significant potential for growth, productivity, and innovation in a broader range of services and agricultural activities, which continue to represent a significant share of rural economic activity.
This can be achieved by creating an enabling environment for entrepreneurship, supporting programmes that prioritise rural well-being, engaging with rural stakeholders, strengthening partnerships with schools, and providing increased support for women entrepreneurs.
Additionally, improving access to skills for innovation, focusing on vocational education and training systems, emphasising start-up formation, and improving SME competitiveness are critical components of fostering innovation and entrepreneurship in rural areas. This includes tailoring existing programmes, improving access to finance, and facilitating access to physical and digital markets.
Such considerations should certainly be the focus of the Mid-Wales Growth Deal, which has received £110m of public money to catalyse economic recovery and growth in the counties of Powys and Ceredigion.
There is also an opportunity for Monmouthshire and Powys councils, as part of an agreement with local authorities across the border in Herefordshire and Shropshire, to work together on joint projects that could also focus on enhancing innovation and entrepreneurship across the Marches.
Therefore, as the OECD report shows, rural areas face challenges that need a more nuanced approach than just adopting what works in urban conurbations. In particular, unlocking the economic potential of rural areas requires strategic investments in infrastructure, education, and entrepreneurship support, and it is critical that the º£½ÇÊÓƵ and Welsh governments, businesses, and local communities collaborate to create an enabling environment that empowers the Welsh rural economy to flourish.
