Does Location Still Matter in Accessing & Using Economic Opportunities?

Brought to you by: Zenebe Uraguchi
Inclusiveness & equality

By looking at the title of this blog post, you may think that ‘oh, once again the old debate about geography and economic development!’ If one is thinking about opening a coffee shop or a restaurant, then location is still an old mantra for businesses. Even in this case, businesses still need to use a well-built website, or social network campaigns to reach out to more customers. For other economic activities, globalization, mainly rapid digitalization, seems to have reduced the importance of locations. Take for example remote work, work from home, telecommuting…


Yet, dismissing the role of location in influencing access to and use of economic opportunities is hasty. Opportunities aren’t distributed evenly in a region or within countries. Where a person was born or chose to live influences economic benefits. This could be due to the remoteness of a location or arising from the segregation of urban environments leading to urban slums and excluded neighborhoods. People also move – voluntarily in search of opportunities or are displaced due to conflicts or climate change.


In 2019, Time Magazine ran an interesting article – ‘Your ZIP Code Might Determine How Long You Live—and the Difference Could Be Decades’. The point is, where people live and work directly affects their health, from exposure to air pollution and toxins to accessibility of healthy food, green space, and medical care. It’s also an indicator of socioeconomic factors that are inherent to health and longevity, including ethnolinguistic factors/race and income.


In this blog post, I try to show why and how location still matters in supporting inclusive economic development focusing on the Western Balkan and Eastern Partnership (EaP) countries.


Location-based livelihoods & their consequences for poverty & exclusion


This may also be true to other regions. In the Western Balkan and EaP countries, people living in rural areas tend to be poorer and more excluded from opportunities and services. But why?


To begin with, geographical inequalities between rural and urban areas cause the shrinking population in rural areas and migration outflows from different countries. Those living in urban slums are also part of this category. In addition, poverty and exclusion affect Internally Displaced People (IDP) due to conflicts and natural or human-made disasters (e.g., Azerbaijan, Armenia, Georgia, and Ukraine). IDPs are largely clustered in areas adjacent to the conflict zones, and in or around major cities. 


Yet, we found out that no common definition of ‘rural areas’ exists in the Western Balkan and EaP countries. Rural areas across the different countries don’t represent a uniform group. Characteristics such as population distribution, agricultural-based economic activities, distance from major urban centers, and lack of access to main services are often used to describe rural areas. In most of the countries of the region, rural areas account for a large part of the different countries’ territory.


Just to mention a few examples, more than two-thirds of the poor population of North Macedonia and Serbia live in rural areas. In Serbia, the most vulnerable live in the South-East region, in Montenegro in the North, and in Albania in the mountainous and rural areas. In Bosnia and Herzegovina, the population living in the Republic of Srpska is more vulnerable.


Migration is another issue that shapes where people live and work. In Armenia, the high rate of male long-term migration increases the prevalence of women-headed households, and a quarter of rural households are headed by women. These households are more likely to be poor, as these are single-headed households which limit the number of working-age persons who can contribute to income generation. In rural areas, 60% of the workforce is employed in agriculture. A little over half of the agricultural workforce are women. Almost all these women are employed informally. In Georgia, spatial disparities in poverty are high. Poverty rates are the highest to the east of Tbilisi and in rural areas. The nation’s urban-rural welfare gap is the highest among the 28 countries of Europe and Central Asia. 


Forcibly displaced persons such as IDPs suffer losses of tangible materials including property and personal belongings, along with intangible assets such as social support networks, socio-cultural practices, and identities connected to the social and physical spaces they have left behind. While threats to their physical safety, wellbeing, and human rights are immediate concerns, their exclusion brings about long-term impacts on their socio-economic development. This exists from Ukraine and Moldova to Armenia, Azerbaijan, and Georgia and to some extent in the Western Balkans (e.g. Bosnia & Herzegovina and Kosovo).


In Ukraine, for example, following the conflict and annexation of Crimea in 2014, the Government of Ukraine reports some 1.5 million IDPs. Since 1991, armed conflicts in regions of Georgia have forced over 300,000 people to become internally displaced persons. More than half a million Azeri population were displaced from the Nagorno-Karabakh region of the seven districts. From the Armenian side, close to a million people mostly women, children, and elderly persons were displaced due to the recent war between the two countries.


'Peeling the onion': going beyond location as a constraint


What I wrote above is half the truth. We also need to ask: why are people affected more in the areas where they live and work? It’s because systems (e.g. services, policies) for supporting the inclusion of people in different locations are either inadequate, mismatching, or absent. People living in some locations lack adequate institutional support services, essentially becoming ‘out of sight, out of mind.’ This traps them in poverty and exclusion, which is often passed along from generation to generation.


Let us take first resources such as money, literacy, food, water and sanitation, professional skills, good health, tools, or land. Location-based constraints include access to human and physical capital (access to services and goods). If we add opportunities and choices, location-based constraints inhibit productive employment, access to infrastructure/energy, and information.


As an example, financial service providers are increasingly digitalizing their services (reducing brick-and-mortar branch services). However, investment in digital infrastructure or electricity is weak, preventing people living in certain locations from accessing and using the services. The same applies to education – the much talked about online education which is accelerating due to the COVID-19 pandemic. Knowledge isn’t a click away for some people living in certain areas.


It’s also impossible to ignore how power and voice play a role. This’s about the ability to exercise one’s human rights, articulate concerns, and needs, to take part in decision-making. It requires knowledge, access to information, and participation on equal terms. For example, there’re widespread cases of discrimination and violation of human rights mainly for IDPs who often lack a representation or the knowledge and skills to advocate for their rights.


Locations also affect human security – be it in the form of physical abuse or psychological impacts as well as the threats thereof. For example, increased environmental damages due to human and natural degradation displace many people. This means that more and more climate-resilient development needs to be the core area of our engagement for supporting economic development.


The role of location in regional value addition


In the regional program RECONOMY, we work to support benefitting disadvantaged and excluded women and young people in the Western Balkan and EaP countries. One of the contributions of the program is regional value addition – meaning, benefiting more countries in the region.


Our starting point is to identify common/shared challenges and opportunities of countries. This could, for example, be trade or skills development (standardization of skills required). We then try to link these common/shared challenges and opportunities with common actors – be it private sector enterprises or civil society organizations – to anchor and facilitate addressing the challenges or leveraging the opportunities.


This’s easier said than done. The Western Balkan and EaP regions are ‘social constructs’ marked by contested history among countries in the regions. Meaning, people don’t live in the regions but in different countries. Unlike the European Union, there is no an explicitly framed and agreed-upon regional entity. This means that we need to look at the different counters’ systems, including provinces, municipalities, and national structures.  

Zenebe Uraguchi

Zenebe Uraguchi is a development economist with multi-country experience (Asia, North America, Eastern Europe and Africa). He holds MA degrees in International Relations and Political Economy, as well as a PhD in Development Economics. His experience originates from working for a multinational private company, an international development bank and a research institute. Zenebe is the Programme Manager for a regional initiative in inclusive economic development, covering 12 countries in Eastern Europe (Belarus, Moldova, Ukraine), South Caucasus (Armenia, Azerbaijan, Georgia), and Western Balkans (Albania, Bosnia & Herzegovina, Kosovo, Montenegro, N. Macedonia, Serbia). His areas of expertise are in the design, management and evaluation of private, public and non-profit development initiatives focusing on employment and income.