The Simple Economics of Smart Specialisation Dominique Foray REGIONS AS MOTORS OF NEW GROWTH THROUGH SMART SPECIALISATION 8 November, 2013 Brussels

Smart specialisation Capacity of a regional economy to generate new specialities – through the discovery of new domains of opportunity and the local concentration of resources and competences in these domains. Such capacity is needed to drive structural transformations The meaning of specialisation in smart specialisation

Smart specialisation strategy Putting in place a process through which such a dynamic of new specialty development can be facilitated through targeted governmental intervention in order to support in a preferential way the most promising new activities (discovery, experimentation, early growth) Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Knowledge economy convergence SMEs Training Finance

Animal genetics for breeding Towards advanced ceramics Photonics for renewable energy systems Knowledge economy convergence SMEs Training Finance

Not horizontal but vertical logic Animal genetics for breeding Towards advanced ceramics Photonics for renewable energy systems Knowledge economy convergence Not horizontal but vertical logic New activities to discover a path of structural changes through R&D and innovation SMEs Training Finance

Goals/rationale Facilitating emergence and early growth of new activities potentially rich in innovation and spillovers Diversifying the regional system (structural changes) Generating critical mass, critical networks or clusters within a diversified system

Allocating scarce capital to a few domains = distorsion Animal genetics for breeding Towards advanced ceramics ICT development for rural areas Knowledge economy convergence Allocating scarce capital to a few domains = distorsion A problem of policy design SMEs Training Finance

Identification Helping entrepreneurial discoveries Animal genetics for breeding Towards advanced ceramics Photonics for renewable energy systems Knowledge economy convergence Helping entrepreneurial discoveries Structuring entrepreneurial knowledge Identification SMEs Training Finance

Mid-grained granularity: Animal genetics for breeding Towards advanced ceramics Photonics for renewable energy systems Knowledge economy convergence Mid-grained granularity: new activity Identification SMEs Training Finance

Sleeping giants, excited goblins and hungry dwarfs Animal genetics for breeding Towards advanced ceramics Photonics for renewable energy systems Knowledge economy convergence Sleeping giants, excited goblins and hungry dwarfs Inclusiveness SMEs Training Finance

After n years, the new activities are not new anymore ? ? ? Knowledge economy convergence After n years, the new activities are not new anymore Evolving prioritization SMEs Training Finance

Merci! Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI