Creating innovative and resilient regions through Smart Specialisation – but how?

Increasing regional resilience through innovation and concepts such as smart specialisation is high on the regional development agenda at both the European and Nordic levels. Economic and social resilience in the Nordic regions is most commonly linked to the ability of regions and societies to counteract and adapt to external shocks such as the financial crisis and structural changes related to, for instance, global competition and the restructuring of industries.

Innovativeness today is linked not only to technological development, but also to the creation of new services and social innovations to address issues such as the ageing population and the integration of immigrants, as well as to seizing the opportunities arising from refining and reusing natural resources. An agile regional innovation system is often linked to the region’s ability to respond to external shocks and to renew itself amidst global fluctuations and structural changes.

A call for place-based innovation strategies

To encourage resilience and innovation across European regions, in 2010, the European Union (EU) launched the concepts of Smart Specialisation Strategies (S3) and Research and Innovation Strategies for Smart Specialisation (RIS3). Today, the concept of smart specialisation is both a core pillar of the EU Cohesion Policy agenda and a precondition to be addressed to receive funding from the European Regional and Development Fund. Briefly, S3 is strategic approaches to economic development with the aim of adding support for research and innovation. They involve the process of developing a vision, identifying strong potential areas of the regional economy, developing multi-stakeholder governance mechanisms, setting strategic priorities and using policies to maximise the development potential of a region. The S3 approach brings in the territorial dimension of innovation policies and challenges European regions to evaluate their regional strengths, competitive advantages and resources, and consequently, to engage in a joint regional process with the aim of boosting the so-called entrepreneurial discovery process and cross-sectoral innovation. The S3 approach articulates place-based local development policies by promoting closer integration between research and innovation policies and territorial policies. By engaging in dialogue and co-operation between business, knowledge environments, public authorities, and civil society concerning the opportunities, challenges and synergies related to the society and markets, new innovative products, services, networks and governance models are expected to emerge.

Where are the bottlenecks for implementing smart specialisation in the regions?

The first analyses of the implementation of smart specialisation strategies in the European regions have also pinpointed certain challenges. Whereas parts of Northern Europe have already been working with regional innovation in a cross-sectoral manner since before the smart specialisation approach was introduced, areas of Southern Europe seem to have benefitted most from this concept, which has helped them to crystallise regional competitive advantages and niches and to build bridges between actors and sectors for joint innovation processes. The picture appears more challenging in Eastern Europe, where the smart specialisation approach has been partially crippled by a lack of local preconditions for innovation (e.g., the adaptation of enabling technologies is at a lower level). In addition, governmental and institutional settings are not always suited to the S3 approach, which advocates for multilevel governance and consideration of local peculiarities. On the other hand, the S3 approach has also served as an opportunity to reconsider the administrative structures and to innovate new approaches for more inclusive governance and stakeholder engagement. The regional S3 processes can also become distorted because of the interlinkages that exist between policy prioritisation at regional, national and EU levels. Both regional practitioners and academics have underlined the risk that regional and local levels may have the tendency to replicate what is thought to be strategic at the national and global levels. Although this might be beneficial in terms of attracting funding for regional projects, it may undermine the in-depth process of identifying and upgrading regional strengths and building a resilient regional economy. However, the first mappings of S3 priorities across European regions do indicate that the diversity of chosen priorities and themes is wide. While implementing well-designed S3 policies may enhance the position of regional expertise and businesses in the global markets and value chains, global developments tend to be out of policymakers’ control; thus, even the most thought-through S3 approaches can be rapidly altered by decisions taken by, for example, multinational companies and actors. The S3 approach argues for the strong incorporation of regional and local businesses into the joint innovation process and highlights the potential vested in cross-sectoral collaboration between businesses. This can lead to new business ideas and solutions that emerge from joint ventures between different sectoral businesses and services. However, small and medium-sized companies are often limited in their resources, so getting them engaged in the creative, experimental S3 processes can impose a challenge. The risk is that the so-called entrepreneurial discovery process in the region becomes too dominantly driven by public sector actors such as regional authorities and research institutions without sufficient input from entrepreneurs and businesses.

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What can regional authorities and policies do?

Translating the somewhat ambiguous S3 concept into actual policy frameworks and concrete actions at the regional level is not a simple task. The role of public authorities and policy instruments for the facilitation of the smart specialisation approach is vitally important. On the one hand, their role is to facilitate debate and dialogue between actors and sectors, and through this discussion and mapping exercise, to find legitimacy for the regional prioritisation of focus areas and projects. On the other hand, the regional authorities can play an important role in advancing and co-steering the process of smart specialisation and entrepreneurial discovery by adjusting and using regional strategies and funding for the benefit of these processes. At the same time, the regional authorities and policymakers need to put serious effort into getting the regional businesses on board the smart specialisation train and demonstrating the benefits of the S3 approach for industry and entrepreneurs. What is to be understood by the word ‘specialisation’ in the term ‘smart specialisation’ has created something of a buzz in the European regions. Does it mean narrowing down and prioritising the strongest sectors of our regional economy, or diversifying and letting all the flowers bloom in a strategic manner? The latter is an approach that would in fact connect with the argument that diversified economic structures tend to be more resistant to external shocks. As smart specialisation is a relatively new concept, we still lack longer-term evidence regarding the success of different S3 design and implementation approaches. At the same time, it is worth bearing in mind that specialising and diversifying are not mutually exclusive terms. Promising S3 approaches seem to arise in regions that have been able to re-evaluate their own strengths, rethink the ways they work with them and engage in a truly place-based, inclusive process that also aims to address societal challenges as part of the innovative processes.

Joint learning and exchange of good practice play a role in specialising smartly

A vital element in composing sustainable innovation strategies for smart specialisation at the regional level is the identification of opportunities for mutual learning and the exchange of practices from other regions. Joint learning and peer-review processes are central to S3 design and implementation; exchanging experiences, comparing approaches and discussing challenges and solutions with other regions can assist policymakers in designing policy tools, actions and interventions that are best suited to their region. This learning can take place in several contexts. The focus may be on the side of policy development and innovation governance (as in the HIGHER project presented in the info box), on sectoral themes such as renewable energy or agri-food (as in the thematic Smart Specialisation Platforms for regions, launched by the European Commission) or on business engagement (as in the BSR Stars S3 project also presented in the info box). One option for peer learning for S3 is to start by identifying regions that share similar structural conditions that are relevant for innovation-driven development (social, economic, technological, institutional and geographical characteristics). As these characteristics affect the way innovation and economic evolution occur and cannot be easily changed in the short term, this method is expected to create a realistic basis for comparing the approaches and performance of the regions. Therefore, collaborating and comparing S3 policy measures with regions facing similar challenges can be very instructive and provide concrete proposals for further S3 measures.

In conclusion

The relationship between smart specialisation and regional resilience is a subject for further investigation, and more empirical evidence will be generated in the years to come as European regions proceed in the implementation and development of their S3 approaches. Nonetheless, wellplanned policy measures – preferably co-ordinated and harmonised between regional and national levels – that advocate for inclusive and interactive region-specific smart specialisation strategies have the potential to strengthen the regional economy and innovation system, and consequently increase regional resilience.


Nordregio’s ongoing work on smart specialisation and transnational collaboration

HIGHER – Better Policy Instruments for High Innovation Projects in the European Regions
Nordregio is one of the nine European institutions that collaborate in the framework of the Interreg Europe Programme for the implementation of HIGHER. The project aims to improve the innovation framework and the smart specialisation strategies of different EU regions. HIGHER will analyse and exchange experiences and good practices on the management and implementation of regional policy instruments that are designed to promote innovation projects between research centres, industry and public authorities.

The HIGHER project has two main goals: first, to achieve innovative models of public–private partnerships suitable for mobilising investment in related smart specialisation areas; and second, to foster entrepreneurial discovery in driving the innovation process of the policy instruments. This will be achieved through an analysis of nine policy instruments (one from each region involved in the project) to promote the innovation projects under public–private partnerships.

The partners of the project will evaluate these instruments and attempt to identify their main weaknesses, thereby developing a learning process to overcome the main obstacles and enhancing better and more efficient implementation.

Through basic methods such as workshops, study visits and thematic summits, and through methods such as joint analysis, peer reviews and e-learning modules, the different regions will exchange experiences and good practices for the future improvement of the policy instruments of each region.
http://www.interregeurope.eu/higher/

Smart specialisation in the bio-, circular and digital economy in the Baltic Sea Region
Nordregio is also part of a project called BSR Stars S3, which seeks to enhance sustainable growth opportunities in the Baltic Sea Region, focusing on the fields of the bio-, circular and digital economy. The project stimulates transnational and cross-sectoral partnerships, develops integrated innovation support infrastructures and innovation management tools and increases the capacity of innovation actors to utilise smart specialisation strategies (S3). BSR Stars S3 is part of the EU Strategy for the Baltic Sea Region under the BSR Stars flagship on innovation, clusters and SME networks, co-ordinated by the Nordic Council of Ministers.
http://www.baltic.org/project/bsr-stars-s3/

Local Smart Specialisation Strategies (LS3) for small, remote communities in the Northern Periphery and Arctic
Nordregio is the project leader for the REGINA project which targets regional innovation in the Nordic Arctic and Scotland with a special focus on regions with large scale industries. The project represents an innovative model for developing Local Smart Specialisation Strategies (LS3) for small, remote communities in the Northern Periphery and Arctic area with large-scale, resource-based industrial development. The LS3s will support local authorities in their efforts to maximise the benefits and minimise the vulnerabilities caused by industrial development.
http://www.reginaproject.eu/


This article is part of Nordregio News #1. 2017, read the entire issue here.

 


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