What is Smart Specialisation?

By Inger Midtkandal and Jens Sörvik

Currently there are ongoing discussions and negotiations between the European Commission and EU member states over the inclusion of an ex ante conditionality of a smart specialisation strategy in the next programming period of the Cohesion Funds. This raises questions concerning what is a smart specialisation strategy and how it differs from the strategies already in place.

Briefly, Smart Specialisation or RIS3 (Research and Innovation strategies for Smart Specialisation) is a strategic approach to economic development through targeted support for research and innovation. It involves a process of developing a vision, identifying the place-based areas of greatest strategic potential, developing multi-stakeholder governance mechanisms, setting strategic priorities and using smart policies to maximize the knowledge-based development potential of a region, regardless of whether it is strong or weak, high-tech or low-tech.

Where does Smart Specialisation come from?

The intellectual origins of the concept can be traced to a number of complementary sources. It builds partly on the work undertaken by Dominic Foray and the Knowledge for Growth expert group in the framework of the European Research Area (ERA). This group explored why Europe was lagging behind the U.S. in competitiveness with a particular focus on research and development (R&D) intensity and dissemination of new technologies to explain growth differentials. The group identified that research investment in Europe was overly fragmented, lacking in co-ordination of research and innovation (R&I) investment between stakeholders, and lacking critical mass. It noted a clear 'me-too' syndrome in that regions made investments in areas that were too similar and fashionable, such as information and communication technologies (ICT), nano- and bio-technologies. Its recommendation was to support structural change and enable the emergence of new activity sectors or industries by investing in R&I in areas of strategic potential in each of Europe's regions, acknowledging that these differ with respect to areas of strength and potential. Research and innovation strategies ought therefore to vary with regional conditions; for example, in some regions it would make more sense to invest in basic research in new and emerging technologies and in others in more applied areas or practice-based innovation. Furthermore, regions should bring an outward-looking perspective to their strategies, to identify their niches and align their policies with other actors.

The policy context

The European Commission's Cohesion Policy aims to reduce differences between regions in Europe and to ensure growth across Europe. Structural Funds are among the main tools to implement the policy and it is within this framework that Smart Specialisation was introduced.

In the present funding period, the average Cohesion Fund spending on R&I across Europe as a whole is 25%. In the ongoing discussions around the design for the forthcoming programming period (2014–2020), it is suggested that within developed and transition regions, 80% of investments should be channelled through energy efficiency, renewables, competiveness of SMEs and R&I. In less-developed regions, this target is 50%. At the same time, to receive funding from the European Regional Development Fund (ERDF), a Research and Innovation strategy for Smart Specialisation (RIS3) must be developed. For many regions in Europe, more efficient use and management of the structural funds is a crucial factor to overcome the economic crisis, reinforce their capacities and create well-being for their citizens. The RIS3 does not equal the Operational Programme for the implementation of the funding, but is a strategic framework that should guide and align European, national, regional and private investments in the region or member states.

The ideas around Smart Specialisation are well in line with the Commission's overall growth strategy, EU 2020, and its response to the ongoing economic crisis. These include a focus on identifying niche areas of competitive strength, solving major societal challenges (bringing in a demand-driven dimension), innovation partnerships emphasizing greater co-ordination between different societal stakeholders and aligning resources and strategies between private and public actors of different governance levels. Smart specialisation was also found to be an appropriate strategy to counteract EU R&D investment being amassed in a few northern regions and as a way for southern regions to find their strengths, develop their innovation potential and access these funds.

Breaking with and building on the past

The concept of Smart Specialisation builds on the accumulated knowledge from working with Regional Innovation Strategies (RIS and RITTS). This indicates that it is a fruitful concept, but some alterations are needed. In addition to the challenges identified by Foray and his group, which have also been recognized by the practitioners in these processes, it has been observed that in many regions the process was driven by external consultants rather than regional stakeholders, which created problems for appropriation and engagement. Furthermore, there was too strong a focus on technology supply and R&D, which led to a failure to recognize other important areas for innovation, such as demand stimulation, market access, social and service innovation, and calls for greater integration of policies.

Furthermore, in previous strategies, there was a lack of governance structures incorporating entrepreneurs or an entrepreneurial viewpoint in the development, priority setting and implementation of the strategy. In the RIS3 strategy, the bottom-up perspective is heavily emphasized and although it is a multi-level approach, there is a re-emphasis on the regional ownership of the process.

Stakeholder involvement in this sense must mean much more than just consultation in the traditional manner in which stakeholders have been involved in the Nordic countries. It also means that the traditional nodes of power must be reconsidered and even expanded, because they may form a relational lock-in situation obscuring future potential, which would need public support and encouragement.

A summary of the six steps in the RIS3 Guide

The resulting RIS3 is an approach that emphasizes each region's uniqueness. The path to RIS3 is presented nicely through six steps in the RIS3 Guide. The steps include an analytical, outward-looking phase, a sound and inclusive governance structure, the creation of a vision, goal and priority setting, implementation of a tailor-made and capacity-building toolbox and an integrated sound monitoring and evaluation system.

It must be said that most probably none of the regions start from scratch when developing their Research and Innovation Strategy for Smart Specialisation (RIS3). All regions with some kind of institutional framework will have experiences, both good and bad, from which to learn and depart.

The S3 Platform

The European Commission launched the Strategies for Smart Specialisation Platform (S3 Platform) in June 2011 to provide professional advice to EU member states and regions for the design of their Research and Innovation strategies for smart specialisation.

The Platform is an in-house service of the Commission, located at the Institute for Prospective Technological Studies (IPTS) in Seville, which is one of seven institutions that form part of the DG Joint Research Centre (JRC). It is overseen by a steering team consisting of ten Directorates General and with input from a Mirror Group of high-level experts and network representatives. The platform was located at JRC-IPTS because the institute was involved in the process at an early stage and arranged workshops (including the one where smart specialisation was mentioned for the first time) involving academic experts and practitioners conducting pre-studies and preparing an EC communication on the topic.

The S3 Platform both assists in developing policies and methodology and functions as a learning community. It is an arena where regions and member states meet each other, academic experts, Commission staff and others to discuss, share experiences, jointly develop understanding of policies/concepts and assist their evolution. The work of the platform is developed according to the needs of the regions and member states. By November 2012, over 100 regions and two member states have joined the platform, taken part in the learning community and have received access to organized workshops and events. So far, four Peer Review Workshops have been held in 2012 and four more are in the planning before the summer of 2013. Skåne (Sweden) and Satakunta (Finland) have been subject to peer review, and Västra Götaland (Sweden) and Pohjanmaa/Ostrobothnia (Finland) have participated as critical friends. Pohjanmaa will host a planned workshop in May 2013 in the city of Vaasa. Forthcoming are also thematic workshops on SMEs in Smart Specialisation, the roles of universities, and a workshop on indicators in RIS3.

Future developments

Smart Specialisation as an approach has attracted much attention over the past two years. In addition to the Commission, also independent academics and institutions such as the World Bank and the OECD are conducting work on the topic. OECD is about to finalize a larger project on the topic in which countries outside of Europe also participate.

This attention is further enhanced by the strong likelihood of a condition concerning Cohesion Funds and RIS3s. The indications are that no operational programme will be assessed without a RIS3 being in place or in process. At the same time, we have few good examples of appropriate RIS3s, because these are still in the process of being developed. Policy and practice can be said to be ahead of theory in this case and the various dimensions and challenges of Smart Specialisation are still under exploration.

Back to Nordregio News Issue 5, 2012