Smart Specialisation

Opportunities and Challenges for Regional Innovation Policy

Dominique Foray

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9781138776722
• eBook ISBN: 9781317680291
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This is the first book on a new policy approach that has been widely adopted in Europe and beyond. It analyses the concept of smart specialisation and discuss the need for smart specialisation strategies, explains why the approach is new and different from more standard policy processes and explores what are the conditions for successful implementation.

Smart Specialisation: Opportunities and Challenges for Regional Innovation Policy describes the origin of the concept, explains when a smart specialisation policy is necessary, provides a detailed analysis of the design principles of the policy and discuss the pertinence of this approach according to regional development levels. Finally the book discuss the practical implementation phase of the process – based on the first feedback acquired from certain regions engaged in the preparation of their smart specialisation strategy.

The book is original in that it provides the first full analysis of smart specialisation strategies both at theoretical and practical levels. It has been written at the critical period of the implementation of smart specialisation strategies in every region in Europe. The fact that the EU has adopted smart specialisation as a mandatory principle for every region and member states will make this book well received by and very useful for: i) policy makers in regional and national administrations in Europe, ii) policy makers in other parts of the world who are in charge of regional policy and have heard about the concept, iii) consultants, analysts and experts who are active on the "markets for smart specialisation diagnosis and expertise", iv) scholars, researchers and graduate students working in the field of regional studies, technology policy and geography of innovation.

1 The origin

The notion of smart specialisation was conceived around 2009, in a very specific place, the Knowledge for Growth Expert Group, composed of growth and innovation economists. It must be emphasised, however, that the analysis of the spatial, and especially regional, dimensions of innovation policies – whose development lies at the crossroads between geographical economics and technological change economics – was conceived well before that and was already widespread both within the academic community and in the public-policy arena.

It is therefore logical that the smart specialisation concept very quickly attracted the interest of regional development policy specialists.

1 Knowledge for growth (2005–09)

The origins of the idea are to be found in the discussions and communications that animated the Knowledge for Growth Expert Group established by Research Commissioner J. Potočnik in 2005.¹ These origins are strongly connected to discussions within the group about foreign R&D in European regions and the ways in which these regions could be more attractive to global firms’ location strategies (Foray and van Ark, 2008). One main conceptual argument in the discussion was that the logic of territorial attractiveness is based on the scarcity of a specific resource: the economies of agglomeration themselves (David, 1999). This rare resource is depleted by the proliferation of sites competing to capture the same assets. The related argument was that this is an accurate description of the European situation because of the combined effects of two factors.

First, the public research system in Europe remains fragmented and nationally based, limiting agglomeration processes and hampering the formation of world-class centres. This fragmentation has limited the natural development of the hubs whose growth should unrestrictedly be nurtured to support the expansion of the knowledge economy. With certain rare exceptions, agglomeration processes associated with public research operate within national systems and resource flows do not cross borders.

Second, we observe a definite tendency in Europe for countries and regions to do the same thing and envisage their future in a similar fashion. Every European region prides itself on having an investment plan in information and communications technology (ICT), biotechnology and nanotechnology. In most regions, decision-makers have defined priorities without any evidence of their prospects for success.

National-level fragmentation of public research systems and the duplication of knowledge bases have contributed to a collection of sub-critical systems in Europe, all doing more or less the same thing, systems that are unattractive entrants in the world localisation tournament. Such a situation is obviously a source of inefficiency. Economies of scale and spillover potentials are not fully realised and the potential economies of agglomeration are dissipated, resulting in a system composed of too many unappealing sites. Imitative and duplicative policies aimed at creating the next ‘miracle growth’ region, capturing a leading position in a major segment of headline industries such as semiconductors, biotechnology, automobiles or mass-market software, not only create slender chances for any region to succeed, they also perpetuate patterns of market dominance with leaders and followers.

This was the starting point of the analysis from which emerged the idea that one possible solution for those regions under threat from the locational tournament and global competition involves building aptitudes to particularise themselves by generating and stimulating the growth of new exploration and research activities, which are related to existing productive structures and show the potential to transform those structures. This is the rationale for smart specialization (Foray et al. 2009, 2011).

Thus, from the start, the idea of a smart specialisation policy was not conceived as a planning doctrine that would require a region to specialise in a particular set of industries. Instead, it seeks robust and transparent means for nominating those activities, at regional level, that seem likely to benefit from R&D and innovation. Therefore, rather than offering a method for determining whether a hypothetical region has a ‘strength’ in a particular set of activities, a smart specialisation strategy emphasises the formation of capabilities and the design of institutions to support entrepreneurial discovery and the early growth of the most promising activities that have been discovered. Rather than suggesting, for instance, that Galicia, Spain, which has an important fisheries sector, should intensify its specialisation in this industry, smart specialisation policy provides a means to assess whether fisheries would benefit from more R&D and innovation and whether Galicia should ‘specialise’ in the development of new innovative solutions for this industry.

This also means that a smart specialisation strategy must address the missing connections that should be made between R&D and innovation activities, on the one hand, and the sectoral structure of the economy, on the other.

2 From academic idea to ex ante conditionality

At a time of economic crisis and public finance failures, the main concerns and solutions of national governments and European Union (EU) administrations have focused on macroeconomic stability and the dramatic reduction of public deficits. While this is probably a necessary answer, it has totally failed – for obvious reasons – in mobilising European society towards gratifying or even exhilarating objectives (Ahner and Landabaso, 2011; Landabaso, 2014). What smart specialisation strategy provides precisely is a framework and a means for regional administrations and regional stakeholders to take things in hand again. It allows them to organise collective efforts in order to formulate a credible innovation strategy, thereby providing a positive response to the problems of regions that are a medium- and long-term threat to growth and employment. The smart specialisation framework encourages policy-makers and stakeholders to ask themselves the important questions about the future of their region: where do we want to see our region positioning itself in the future knowledge economy and how do we implement the policies necessary to conform to our collective and strategic vision?

The political salience of smart specialisation strategies

Thinking more precisely about what has made it possible for smart specialisation to have ‘political salience’ and made policy-makers eager to ‘do it’, I would mention the following four points:

● First, by encouraging regions to reflect on their future in the knowledge economy. What are the activities that we wish to develop and what structural changes do we wish to make? The exercise has in a way served as catalyst for collective deliberation that has mobilised and often stimulated regional actors of innovation.

● Second, the principles of entrepreneurial discovery and inclusive strategy (see Chapter 2 and Chapter 3), even if they have often seemed abstract and academic, have served to show that this policy is not merely a purely technocratic exercise, nor solely a policy concentrated on high-tech innovation, but an open and complete strategy.

● Third, the smart specialisation framework is particularly concerned with regions that are less advanced. It is not a strategy reserved for the best. On the contrary, it is likely to represent a unique way for less advanced regions to dramatically improve their capabilities in certain domains.

● Finally, implementing a smart specialisation strategy was not only viewed as ‘locally’ desirable, but was also regarded as a means of achieving greater efficiency in resource allocation and coordination of activities at system level (member-state and EU level).

I will discuss these properties of smart specialisation in several different parts of this book.

EU processes and decisions: when smart specialisation meets the development of a ‘different regional innovation policy’

As part of the Europe 2020 strategy, the EC adopted the Innovation Union flagship initiative in October 2010.² This initiative provides a framework within which a comprehensive innovation strategy can be established for Europe to enhance its capacity to deliver smart, sustainable and inclusive growth. The initiative also generated strong policy guidance to influence the design of regional research and innovation strategies in order to maximise the efficiency of the allocation of public resources. This is where the principle of smart specialisation emerged as a strategic and integrated approach at regional level. The principle was designed to be instrumental in investing Structural Funds more efficiently in the areas of two key objectives: strengthening research, technological development and innovation (R&I target); and enhancing access to and use of information and communication technologies (ICT target).³

Smart specialisation is one of the 10 features for well-performing national and regional research and innovation systems, according to the Innovation Union’s self-assessment tool. More importantly, it is a key element of the European Commission’s proposal for a reformed Cohesion Policy as ex ante conditionality for use of the European Regional Development Fund (ERDF) during the next Structural Funds programming period 2014–20. This means it is a pre-condition related to the effective use of EU funds, which should be fulfilled by the time an Operational Programme is approved.

To help the regions prepare their smart specialisation strategy, the Commission has developed quite a large infrastructure – in particular the Research and Innovation Strategies for Smart Specialisation (RIS3) Platform hosted by the Joint Research Centre (JRC) Institute for Prospective Technological Studies (IPTS) in Seville, Spain, that provides technical assistance and develops a programme of peer reviews, knowledge sharing and experience exchanges.⁴ This platform grew rapidly between 2011 and 2013 as the information and knowledge needs of the regions increased considerably.

Development of new regional policies as the crucible of smart specialisation strategies

While the intellectual origin of the idea was the Knowledge for Growth Expert Group created by the Directorate-General for Research, it was the Directorate-General for Regional and Urban Policy (DG REGIO), led by EU Commissioner J. Hahn, that played a central role in the next developments – including the instrumentalisation of smart specialisation as ex-ante conditionality, as well as the implementation of this strategy in every region in Europe between 2011 and 2013. For the DG REGIO, it is the result of several decades of reinforcing its regional policies promoting research and innovation. The European Commission’s first regional innovation policies were launched in 1993–94. Then the approach became widespread: 33 regional strategies were under development between 1996 and 1999 (European Commission, 2002). These policies were essentially horizontal, concentrating on the framework conditions favourable to innovation in SMEs. As from the turn of the century however, certain experts observed that the way in which Structural Funds were used to support innovation was not very effective: ‘Based on physical infrastructure improvement, direct grants to firms and foreign inves...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Acknowledgements
• List of abbreviations
• Foreword: Smart Specialization: a smart new policy paradigm for challenging times
• Introduction
• 1 The origin
• 2 From smart specialisation to smart specialisation policy
• 3 Designing a smart specialisation strategy
• 4 Goal variations according to regional development
• 5 Towards practical implementation
• Conclusion
• References
• Index