COVID-19 Represents Both an Economic Disaster and Opportunity for Rural Areas
A common refrain that is often heard about the ongoing COVID-19 epidemic is that the growth of dense urban areas has in some ways contributed to the rapid spread of the virus. The close proximity in which people live and work, along with the highly developed and extensive transport networks that carry people through and beyond major urban areas have allowed the virus to be transported and exposed at unprecedented speed and range. In other words, in areas that lack major cities, the coronavirus would be less damaging.
The argument that rural areas fair better in a pandemic is an incomplete one at best. In a word where even the remotest villages in the remotest corners of the world are weaved into global flow of goods and people, it is difficult to see how any part of the world can fully avoid coming into contact with regions that are heavily trafficked and thus prone to large-scale exposure to the virus. And as noted in a previous post, should the coronavirus take even a small hold in a remote village, it is likely to be far deadlier than it would be in a major urban area, where people would have quicker access to better medical care facilities.
But perhaps the bigger damage that will befall rural areas from COVID-19 would be economic. Of course, major cities would face their share of economic damage, as companies shut down, consumer spending drops, and even from simple lifestyle changes. But diversified urban economies are far more resilient than rural areas that rely on a few sources of income. Whereas tech and even healthcare firms, located in urban centers, benefited massively and went on hiring sprees during the epidemic, rural areas are seeing all-around economic declines, as rural exports to cities evaporate and locals find no alternatives to make up for the lost income.
That economic disaster threatens to become long-term and permanent for rural areas. While vibrant cities expect their economies to bounce back once the quarantines are lifted and consumer confidence return, rural areas are not likely to be so lucky. The initial economic downturn faced during the epidemic is likely to speed up the migration of young talents from rural areas to cities, where plenty more jobs and higher wages, not to mention more exciting lifestyles and entertainment options, attract younger people seeking to escape the relative monotony of the rural life.
The ability to drive emigration from rural regions is particularly true in a country like Japan where the national economy is increasingly unipolar, with all major firms and industries centered in the Greater Tokyo region. In the aftermath of the Great Tohoku Earthquake and the meltdown of the Fukushima nuclear power plant in March 2011, the population of Fukushima prefecture declined by more than 2%, greatly speeding up the average of 0.5% yearly decline that the prefecture has seen since 1999. Yet, as the Fukushima nuclear plant is cleaned up and more areas are reopened for residence, the prefecture's population did not bounce back but only continued to decline albeit converging back to the pre-2011 0.5% annual rate of decline.
In the long term, the loss of the young, educated population cannot fare well for the rural economy. The brain drain to major cities provides urban areas with the fuel to continue growth, while the resulting population decline weakens both local firms and consumption in rural regions. Just as Fukushima's economy stagnated in the aftermath of the 2011 earthquake, COVID-19 threatens to further damage rural economies as more people move to larger cities to seek out employment in firms that are much more innovative and thus resilient in the face of the changing economy even after the epidemic subsides.
Reversing the trend requires rural areas to double down, perhaps ironically, on the public perception that they are less vulnerable to epidemics. With the advent of remote working, rural areas that actively invest in the Internet and other remote working infrastructure may have a historical opportunity to lure remote workers fearful of further epidemics away from major urban centers. While difficult given dwindling tax revenues, rural governments must put up money upfront to ensure the young and educated have everything they need to work remotely in the relative middle of nowhere.
COVID-19 represents both a source of pessimism and optimism for rural areas. A global disaster is bound to kill off rural economies that remain dependent on exports to major urban areas that are themselves facing economic difficulties. Yet, as urban residents become more conscious of how densely packed cities can become Petri dishes for current and future viruses, rural living can become more attractive, especially if remote working becomes much more common in the future. For rural regions to survive in the new post-coronavirus economy, they must take advantage of a historical chance to invest in online infrastructure that attracts remote workers.
The argument that rural areas fair better in a pandemic is an incomplete one at best. In a word where even the remotest villages in the remotest corners of the world are weaved into global flow of goods and people, it is difficult to see how any part of the world can fully avoid coming into contact with regions that are heavily trafficked and thus prone to large-scale exposure to the virus. And as noted in a previous post, should the coronavirus take even a small hold in a remote village, it is likely to be far deadlier than it would be in a major urban area, where people would have quicker access to better medical care facilities.
But perhaps the bigger damage that will befall rural areas from COVID-19 would be economic. Of course, major cities would face their share of economic damage, as companies shut down, consumer spending drops, and even from simple lifestyle changes. But diversified urban economies are far more resilient than rural areas that rely on a few sources of income. Whereas tech and even healthcare firms, located in urban centers, benefited massively and went on hiring sprees during the epidemic, rural areas are seeing all-around economic declines, as rural exports to cities evaporate and locals find no alternatives to make up for the lost income.
That economic disaster threatens to become long-term and permanent for rural areas. While vibrant cities expect their economies to bounce back once the quarantines are lifted and consumer confidence return, rural areas are not likely to be so lucky. The initial economic downturn faced during the epidemic is likely to speed up the migration of young talents from rural areas to cities, where plenty more jobs and higher wages, not to mention more exciting lifestyles and entertainment options, attract younger people seeking to escape the relative monotony of the rural life.
The ability to drive emigration from rural regions is particularly true in a country like Japan where the national economy is increasingly unipolar, with all major firms and industries centered in the Greater Tokyo region. In the aftermath of the Great Tohoku Earthquake and the meltdown of the Fukushima nuclear power plant in March 2011, the population of Fukushima prefecture declined by more than 2%, greatly speeding up the average of 0.5% yearly decline that the prefecture has seen since 1999. Yet, as the Fukushima nuclear plant is cleaned up and more areas are reopened for residence, the prefecture's population did not bounce back but only continued to decline albeit converging back to the pre-2011 0.5% annual rate of decline.
In the long term, the loss of the young, educated population cannot fare well for the rural economy. The brain drain to major cities provides urban areas with the fuel to continue growth, while the resulting population decline weakens both local firms and consumption in rural regions. Just as Fukushima's economy stagnated in the aftermath of the 2011 earthquake, COVID-19 threatens to further damage rural economies as more people move to larger cities to seek out employment in firms that are much more innovative and thus resilient in the face of the changing economy even after the epidemic subsides.
Reversing the trend requires rural areas to double down, perhaps ironically, on the public perception that they are less vulnerable to epidemics. With the advent of remote working, rural areas that actively invest in the Internet and other remote working infrastructure may have a historical opportunity to lure remote workers fearful of further epidemics away from major urban centers. While difficult given dwindling tax revenues, rural governments must put up money upfront to ensure the young and educated have everything they need to work remotely in the relative middle of nowhere.
COVID-19 represents both a source of pessimism and optimism for rural areas. A global disaster is bound to kill off rural economies that remain dependent on exports to major urban areas that are themselves facing economic difficulties. Yet, as urban residents become more conscious of how densely packed cities can become Petri dishes for current and future viruses, rural living can become more attractive, especially if remote working becomes much more common in the future. For rural regions to survive in the new post-coronavirus economy, they must take advantage of a historical chance to invest in online infrastructure that attracts remote workers.
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