Spillover Effects of Proximity to Urban Centres: Evidence for Rural Scotland

Evidence on the economic performance of rural regions suggests that they tend to underperform urban regions, and that this is particularly the case for remote rural regions (Dijstra and Poelman, 2008; Brezzi et al., 2011). This empirical fact, however, does not capture the large variability in the level of socio-economic performance across rural regions, and how that might relate to proximity to nearly urban regions. The old, but still ongoing, debate about the urban-rural divide is increasingly unable to improve our understanding of changes in the demographic and economic dynamics of rural areas. There are over 200 rural settlements in Scotland, with population growth rates ranging between -25% and more than +25% for the period 2001-11. A number of factors help explain this variability, including differences in sectoral composition, specialisation and other demographic and socio-economic factors. In addition, proximity to urban regions can also affect rural performance as a result of the various connections taking place spatially through labour and housing markets. The objective of this paper is to investigate the nature of the spatial spillover effects between urban and rural regions in Scotland. We measure the effect of proximity to main urban centres as a driver of growth, or decline, after controlling for other factors affecting population and employment growth. We also measure the effect of proximity to small towns on rural area growth, besides urban centres, and investigate the presence of nonlinearities in the decay of spatial spillover effects. The analysis uses regression models and data for 1991, 2001 and 2011. Our empirical approach follows that of Veneri and Ruiz (2013) for a cross section of small regions from 14 OECD countries, and also accounts for economic structure and socio-economic factors, besides proximity to urban centres, on rural growth. We add to the approach by also accounting for the role of natural / environmental amenities and by measuring proximity using the transport network instead of physical distance. This provides a better measure of real time accessibility and avoids measurement error due to rivers and mountains (a major thing in Scotland). The results suggest that proximity to urban regions has a positive impact on the growth of nearby rural areas, while the effect for more remote rural areas tends to be mixed. The importance of the spillover effect also differs according to the size of urban areas. Finally, there is also some evidence that improved connections can improve not only growth of rural areas but also the growth of the whole (urban-rural) region, which in turn has implications for the spatial scale at which regional and planning policies should be designed.

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