Globalization, migration trends, information's, changes in rural policies and the emergence of important non-farm niche markets put rural regions in direct competition confronting them with threats and opportunities that require new policy approaches at the national and sub-national level. Against this fast changing scenario, policy makers need to re-think their priorities for rural investments. These research's paper try to answer to key questions: 1) What sectors hold potential for rural development? 2) What kind of investments and policies can help release such potential? Evidence from across the OECD shows that the capacity of regions, whether urban or rural, to support processes of learning and innovation is a key source of competitive advantage. Innovation in rural areas can be about ‘doing traditional activities in a new way', about starting up new businesses or about changing the way government interacts with citizens. In all these cases innovation is strongly linked with social processes such as the creation of networks, the strengthening of local identities, and the creation and dissemination of knowledge.