The Challenge and the Opportunity of Smart Specialisation

The Challenge and the Opportunity of Smart Specialisation (RIS³) for Europe’s regions:

a place based agenda for economic transformation rooted on research and

innovation

Dr Dimitri CORPAKIS Head of Unit, Regional Dimension of Innovation

DG Research and InnovationEuropean Commission

Helsinki, 22/4/13

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Innovation performance (2012)

R&D expenditure in the business sector as % of GDP (2011)

PolicyPolicy Research and Innovation

Research and Innovation

Investment in R&D is part of the solution to exit from the economic crisis



The need for a new policy approach The need for a new policy approach for regional developmentfor regional development

The knowledge economy is here – with a priceThe knowledge economy is here – with a price Globalisation has pushed the boundaries and has changed Globalisation has pushed the boundaries and has changed

traditional ways for dealing with regional developmenttraditional ways for dealing with regional development Global value chains have redrawn the map of conceiving Global value chains have redrawn the map of conceiving

and producing products and servicesand producing products and services Countries / regions that are not able to adapt will see their Countries / regions that are not able to adapt will see their

economies being marginalised economies being marginalised Global positioning necessary – need for a thorough system Global positioning necessary – need for a thorough system

of SWOT analysisof SWOT analysis Need for a new growth proposition based on knowledge Need for a new growth proposition based on knowledge

assetsassets



The Promise of Smart The Promise of Smart SpecialisationSpecialisation

D.Foray, P.A. David and B.Hall : Smart Specialisation: the Concept

Knowledge for Growth expert group for the EC



A simple idea (KfG brief no 9, 2009)A simple idea (KfG brief no 9, 2009)

“It should be understood at the outset that the idea of smart specialisation does not call for imposing specialisation through some form of top-down industrial policy that is directed in accord with a pre-conceived “grand plan”. Nor should the search for smart specialisation involve a foresight exercise, ordered from a consulting firm.

We are suggesting an entrepreneurial process of discovery that can reveal what a country or region does best in terms of science and technology. That is, we are suggesting a learning process to discover the research and innovation domains in which a region can hope to excel. In this learning process, entrepreneurial actors are likely to play leading roles in discovering promising areas of future specialisation, not least because the needed adaptations to local skills, materials, environmental conditions, and market access conditions are unlikely to be able to draw on codified, publicly shared knowledge, and instead will entail gathering localized information and the formation of social capital assets.”

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Draft Common Provisions Regulations for Cohesion Policy

Thematic Ex Ante Conditionalities Thematic Objectives Ex Ante Conditionality Ex Ante Criteria for Fulfilment 1. Strengthening research, Technological development and innovation (R&D target) (referred to in Article 9(1) )

1.1. Research and innovation: The existence of a national or regional research and innovation strategy for smart specialisation in line with the National Reform Program, to leverage private research and innovation expenditure, which complies with the features of well-performing national or regional research and innovation systems.

– A national or regional research and innovation strategy for smart specialisation is in place that: – is based on a SWOT analysis to concentrate resources on a limited set of research and innovation priorities; – outlines measures to stimulate private RTD investment; – contains a monitoring and review system. – A Member State has adopted a framework outlining available budgetary resources for research and innovation; – A Member State has adopted a multi-annual plan for budgeting and prioritization of investments linked to EU priorities (European Strategy Forum on Research Infrastructures / ESFRI)



Smart Specialisation is not Smart Specialisation is not what you usually think it iswhat you usually think it is

• It is not about pure specialisation – since this involves It is not about pure specialisation – since this involves huge risks about potential lock-inshuge risks about potential lock-ins

• It is not about selecting and favouring only a few It is not about selecting and favouring only a few sectors – but this might be an intermediate stagesectors – but this might be an intermediate stage

• It is rather about identifying the new It is rather about identifying the new opportunities that often emerge at the opportunities that often emerge at the intersection of existing sectors and technologies – intersection of existing sectors and technologies – the target of the "entrepreneurial discovery the target of the "entrepreneurial discovery process"process"

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Smart Specialisation and Regional Development

• In a regional context this translates to:

- Embeddedness

- Related variety

- Connectivity• Philip McCann and Raquel Ortega-Argilés:

Smart Specialisation, Regional Growth and Applications to EU Cohesion Policy

http://ec.europa.eu/regional_policy/cooperate/regions_for_economic_change/index_en.cfm#4

Courtesy Philip McCann

http://ec.europa.eu/regional_policy/cooperate/regions_for_economic_change/index_en.cfm#Slide%204

http://ec.europa.eu/regional_policy/cooperate/regions_for_economic_change/index_en.cfm#Slide%204

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Smart Specialisation and Regional Development

• Embededness: can be captured by regional CGE models, regional Input-Output models, location quotients, case studies, longevity, social capital etc.

• Relatedness: It is not about sectoral specialisation but diversification → specialised technological diversification

• Embededness + Relatedness = Relevant Size Domain

Courtesy Philip McCann



Key points on Smart SpecialisationKey points on Smart Specialisation::

• Stimulate innovation through entrepreneurship, modernisation, adaptation

• Dare to introduce innovative governance solutions

• Think about strategic technological diversification on areas of relative strength and potential

• Increase diversification – promote new linkages, synergies and spillovers

Adapted from Philip McCann (2012)



Step 1: Analysis of regional potential for innovation-driven differentiation

Step 2: RIS 3 design and governance – ensuring participation & ownership

Step 3: Elaboration of an overall vision for the future of the region

Step 4: Selection of priorities for RIS3 + definition of objectives

Step 5: Definition of coherent policy mix, roadmaps and action plan

Step 6: Integration of monitoring and evaluation mechanisms

Steps to RIS3Steps to RIS3

(6) Monitoring

(5) Policy mix

(4) Priorities

(3) Vision

(2) Process

(1) Analysis

RIS 3 Strategy



Assessment questions for RIS3 strategiesAssessment questions for RIS3 strategies 1. Is the strategy based on an appropriate stakeholder involvement?

How does it support the entrepreneurial discovery process of testing possible new areas?

2. Is the strategy evidence-based? How have areas of strength and future activity been identified?

3. Does the strategy set innovation and knowledge-based development priorities? How have potential areas of future activity been identified? How does it support the upgrading of existing activities?

4. Does the strategy identify appropriate actions? How good is the policy mix?

5. Is the strategy outward looking and how does it promote critical mass/potential?

6. Does the strategy produce synergies between different policies and funding sources? How does it align/leverage EU/national/regional policies to support upgrading in the identified areas of current and potential future strength?

7. Does the strategy set achievable goals, measure progress? How does it support a process of policy learning and adaptation?

8. Can the strategy be regarded as a regional research and innovation strategy for smart specialisation following the guidance provided by the EU Commission? Which advice can be given to improve the strategy?

RIS3 assessment



Horizontal issues and policy delivery instruments for RIS³ Green Growth: only sustainable is smart – Eco-innovation & Energy efficiency Digital agenda: enabling knowledge flows throughout the territory –connected

regions Clusters for regional growth: business ecologies that drive innovation Innovation-friendly business environments for SMEs: good jobs in internationally

competitive firms Social Innovation: new organisational forms to tackle societal challenges Stronger focus on financial engineering: not only grants Lifelong Learning in research and innovation: support knowledge triangle (KICs)

and university-enterprise cooperation Key Enabling Technologies: systemic potential to induce structural change Research infrastructure/centres of competence: support to ESFRI and EU wide

diffusion of leading edge R&D results Creativity and cultural industries: innovation beyond technology and outside

manufacturing Public Procurement for market pull: pre-competitive PP to open new innovation

friendly market niches



Example: Bremerhaven (DE)Example: Bremerhaven (DE) Economy based on Economy based on

shipbuilding & commercial shipbuilding & commercial fishing in strong downturn fishing in strong downturn end of 1990’send of 1990’s

Selection of ‘offshore wind Selection of ‘offshore wind energy’ as new development: energy’ as new development: clear & integrated industrial clear & integrated industrial strategy and clustering of strategy and clustering of competenciescompetencies

Strong existing synergies Strong existing synergies between ‘shipyard’ & between ‘shipyard’ & ‘offshore wind’ sectors‘offshore wind’ sectors

Now Bremerhaven = major Now Bremerhaven = major hub of offshore wind in DE, 4 hub of offshore wind in DE, 4 major manufactures, already major manufactures, already 1,000 jobs created1,000 jobs created



A three-step entrepreneurial discovery process

Visioning: with focus on societal challenges (transition management / starting experiments) in Transition Arenas Strategy development: with focus on transformation by innovationstrategies within innovation hubs)in Innovation Direction GroupsAction plan: with focus on investment projects in consortia driven by frontrunners(promoted in Round Tables and Transformation and Innovation Platforms)

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Vision

Strategy

Action Plan

Jan Larosse, 2012

The Flanders example

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EU R&D and Innovation EU R&D and Innovation Policy Policy

future Horizon 2020future Horizon 2020

EU Cohesion PolicyEU Cohesion Policy

DifferencesDifferences

Based largely on Based largely on individual R&D and innovation individual R&D and innovation Projects Projects of a pre-competitive nature aiming at of a pre-competitive nature aiming at advancing knowledge and fostering innovation for advancing knowledge and fostering innovation for growth and jobs, including but not exclusively growth and jobs, including but not exclusively frontier frontier research (also co-funding national and research (also co-funding national and regional programmes)regional programmes)

Based on Based on multiannual Programmesmultiannual Programmes aiming to aiming to reduce regional disparities, including through reduce regional disparities, including through close to close to the market competitive R&D andthe market competitive R&D and innovationinnovation efforts efforts

Awarded Awarded directly to final beneficiariesdirectly to final beneficiaries (firms, (firms, public and private R&D centres and Universities, public and private R&D centres and Universities, including national and regional governments in including national and regional governments in certain cases – Art. 185, ERA-NET etc.)certain cases – Art. 185, ERA-NET etc.)

Awarded Awarded throughthrough shared management exclusively to shared management exclusively to national and regional national and regional public intermediariespublic intermediaries

Through transnational competitive callsThrough transnational competitive calls addressed to international groupings through peer addressed to international groupings through peer review review based on excellencebased on excellence criteria criteria

Non competitive attributionNon competitive attribution addressed to regional addressed to regional players players based on strategic planningbased on strategic planning negotiation negotiation (however competitive calls possible and rising at (however competitive calls possible and rising at national or regional level)national or regional level)

Synergies and ComplementaritiesSynergies and Complementarities

Horizon 2020Horizon 2020 will focus on tackling major societal will focus on tackling major societal challenges, maximising the competitiveness impact challenges, maximising the competitiveness impact of of research and innovationresearch and innovation (Industrial (Industrial leadership) and raising and spreading levels of leadership) and raising and spreading levels of excellenceexcellence in the research base in the research base

Cohesion policyCohesion policy will focus on galvanising will focus on galvanising smart smart specialisationspecialisation that will act as a that will act as a capacity buildingcapacity building instrument, based on learning mechanisms and the instrument, based on learning mechanisms and the creation of critical skills in regions and Member States.creation of critical skills in regions and Member States.



Research and Innovation Research and Innovation Investment proposed priorities Investment proposed priorities

for the ERDFfor the ERDF Strengthening research, technological development Strengthening research, technological development

and innovation:and innovation: Enhancing research and innovation infrastructure (R&I) and Enhancing research and innovation infrastructure (R&I) and

capacities to develop R&I excellence and promoting centres of capacities to develop R&I excellence and promoting centres of competence, in particular those of European interestcompetence, in particular those of European interest

Promoting business R&I investment, product and service Promoting business R&I investment, product and service development, technology transfer, social innovation and public development, technology transfer, social innovation and public service application, demand simulation, networking, clusters and service application, demand simulation, networking, clusters and open innovation through smart specialisationopen innovation through smart specialisation

Supporting technological and applied research, pilot lines, early Supporting technological and applied research, pilot lines, early product validation actions, advanced manufacturing capabilities product validation actions, advanced manufacturing capabilities and first production in Key Enabling Technologies and diffusion of and first production in Key Enabling Technologies and diffusion of general purpose technologiesgeneral purpose technologies



Horizon 2020 strategy:Building on the experience of researchers' mobility actions,

capacity building actions in FP7 like Research Potential and Regions of knowledge, the Commission will introduce in Horizon 2020 actions that will focus on two main directions: • “Structured Mobility", mobility of researchers that will

observe distinct organisational frameworks and will engage in twofold actions, first on raising excellence in the institutions involved and second on stimulating further regional innovation through smart specialisation strategies in the context of future Cohesion policy.

• The second family of measures will be more policy oriented and will provide specific support to national and regional governments on policy design and implementation as well as an upgraded support service through improved and scaled-up National Contact Points that will have also better links and cooperation with the Managing Authorities of the Structural Funds, across Europe.



Keys to SynergiesKeys to Synergies

Smart Specialisation Smart Specialisation ex-ante conditionalityex-ante conditionality

Thematic ConcentrationThematic Concentration(both under Cohesion policy)(both under Cohesion policy)

The Synergies and Smart Specialisation Matrix

STRUCTURAL FUNDS THEMATIC OBJECTIVE NO 1 ON STRUCTURAL FUNDS THEMATIC OBJECTIVE NO 1 ON STRENGTHENING RESEARCH, TECHNOLOGICAL STRENGTHENING RESEARCH, TECHNOLOGICAL DEVELOPMENT AND INNOVATIONDEVELOPMENT AND INNOVATION

HORIZON 2020 TOP HORIZON 2020 TOP DOWN RESEARCH DOWN RESEARCH AND INNOVATION AND INNOVATION PRIORITIES PRIORITIES INFLUENCING INFLUENCING NATIONAL AND NATIONAL AND REGIONAL REGIONAL PRIORITIESPRIORITIES

THEMATIC CONCENTRATION FOR THEMATIC CONCENTRATION FOR MOST ADVANCED AND MOST ADVANCED AND TRANSITION REGIONS FOR TRANSITION REGIONS FOR ALLOCATING 80% OF THE ERDF ALLOCATING 80% OF THE ERDF MONEY FOR 4 OBJECTIVES: R&I, MONEY FOR 4 OBJECTIVES: R&I, ICT, SME COMPETITIVENESS AND ICT, SME COMPETITIVENESS AND LOW CARBON ECONOMYLOW CARBON ECONOMY

THEMATIC CONCENTRATION FOR THEMATIC CONCENTRATION FOR LESS ADVANCED REGIONS FOR LESS ADVANCED REGIONS FOR ALLOCATING 50% OF THE ERDF ALLOCATING 50% OF THE ERDF MONEY FOR 4 OBJECTIVES: R&I, MONEY FOR 4 OBJECTIVES: R&I, ICT, SME COMPETITIVENESS AND ICT, SME COMPETITIVENESS AND LOW CARBON ECONOMYLOW CARBON ECONOMY

EXCELLENCEEXCELLENCE SMART SPECIALISATION EX-ANTE CONDITIONALITYSMART SPECIALISATION EX-ANTE CONDITIONALITYbased on a SWOT analysis to concentrate resources on a based on a SWOT analysis to concentrate resources on a limited set of research and innovation priorities in limited set of research and innovation priorities in compliance with the NRP; measures to stimulate private RTD compliance with the NRP; measures to stimulate private RTD investment; a monitoring and review system; a framework investment; a monitoring and review system; a framework outlining available budgetary resources for research and outlining available budgetary resources for research and innovation; a multi-annual plan for budgeting and innovation; a multi-annual plan for budgeting and prioritisation of investments linked to EU research prioritisation of investments linked to EU research infrastructure priorities (European Strategy Forum on infrastructure priorities (European Strategy Forum on Research Infrastructures -ESFRI)Research Infrastructures -ESFRI)

INDUSTRIAL INDUSTRIAL LEADERSHIPLEADERSHIP

SOCIETAL SOCIETAL CHALLENGESCHALLENGES



Possible implications for H2020 Possible impact on Horizon 2020 future Work Programmes in all Possible impact on Horizon 2020 future Work Programmes in all

Priorities (especially Industrial Leadership and Societal Priorities (especially Industrial Leadership and Societal Challenges)Challenges)

Feedback from National and Regional Research and Innovation Feedback from National and Regional Research and Innovation Strategies for Smart Specialisation could influence areas for Strategies for Smart Specialisation could influence areas for future Topics and vice versa future Topics and vice versa

Involvement of flagship Horizon 2020 projects and stakeholders Involvement of flagship Horizon 2020 projects and stakeholders in RIS3 should not be excluded although of course not in RIS3 should not be excluded although of course not compulsory and largely unpredictable. But this depends also on compulsory and largely unpredictable. But this depends also on policies by MS and regions involved (active involvement policies policies by MS and regions involved (active involvement policies maybe supported by the Structural Funds)maybe supported by the Structural Funds)

RTDI projects can be simultaneously or consecutively supported RTDI projects can be simultaneously or consecutively supported by H2020 and the ESI Fundsby H2020 and the ESI Funds



Next steps in planning for Next steps in planning for Member States / regionsMember States / regions

Perform a serious analysis of national, regional and local characteristicsPerform a serious analysis of national, regional and local characteristics Position the Member State / Region in its particular international Position the Member State / Region in its particular international

context and see what this implies for its future priorities (consider re-context and see what this implies for its future priorities (consider re-positioning)positioning)

Lay out a strategy for smart specialisation, in a bottom-up process Lay out a strategy for smart specialisation, in a bottom-up process involving all relevant stakeholdersinvolving all relevant stakeholders

Prioritise, evaluate, and choosePrioritise, evaluate, and choose Consider possible governance adjustments if neededConsider possible governance adjustments if needed Formulate a clear plan with limited and specific priorities, where an Formulate a clear plan with limited and specific priorities, where an

evaluation process has to be built-in, with relevant indicatorsevaluation process has to be built-in, with relevant indicators

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Thank you !Thank you !

The Challenge and the Opportunity of Smart Specialisation

Economy & Finance

idea of smartspecialisation

new policy approachthe

new growth proposition

europes regions

industrial policy

theircountries regions

services countries regions

pricethe knowledge economy