Statistics Canada recently released a report on “Trends in the prices of rurality”, which has implications for economic development.

The study of the 1949 to 2005 period, concluded that the cost of transporting goods and information has generally declined relative to the cost of all goods and services over the last 50 years, and this has made rural areas in Canada more competitive, according to the new study.

At the same time, however, the cost of transporting people has generally risen in relative terms, presenting a challenge for rural areas.

In terms of carrying goods, railroad transport prices have generally fallen in relative terms since the 1960s. The cost of moving goods by truck was flat, or rose slightly, between 1960 and 1977, but fell after that (and has likely risen since the release of this study). In contrast, the overall price of air transportation (both goods and people) has generally risen since the 1960s.
The upward trend in the relative price of transporting people has important implications for rural areas of Canada. For example, the increase in the relative cost for city residents to visit rural areas represents a challenge for rural-based tourism.

The price of communicating information from one location to another has generally been declining over time.  Within the communications sector, telephone services fell from the early 1960s to the end of the 1980s and have been more-or-less flat since then, relative to the cost of all goods and services. Further, the cost of accessing the Internet has declined, relatively, in recent years.

This has led to a relative decline in the price of rurality, with respect to communication flows. However, the decline of telecommunication prices may even have been greater in urban areas.

Implications for Rural Economic Development

The decline in the price of transporting goods is one factor explaining the spread of manufacturing jobs into rural areas. Rural Canada has always had manufacturing jobs, such as fish processing, smelting, sawmills and pulp and paper plants. However, some of the newer manufacturing jobs are part of the network of just-in-time delivery systems.

To the extent that the price of transporting goods might be expected to decline in the future, manufacturing jobs would be expected to continue to spread into rural areas.

Taken together, the trend towards a relative drop in the cost of transporting goods and information represents an opportunity for rural-based manufacturers.

Download the full reportDownload the full report here.