Smart Specialization No recipe for stupid regions Ben Dankbaar Radboud University Nijmegen

What is smart specialization? Smart Specialization is a strategic approach to economic development through targeted support to Research and Innovation (R&I). It will be the basis for Structural Fund investments in R&I as part of the future Cohesion Policy's contribution to the Europe 2020 jobs and growth agenda. More generally, smart specialization involves a process of developing a vision, identifying competitive advantage, setting strategic priorities and making use of smart policies to maximize the knowledge-based development potential of any region, strong or weak, high-tech or low-tech. (from Website Smart Specialization Platform)

Where does smart specialization come from? At the origin of the smart specialization concept is the expectation that the creation of the European Research Area will lead to concentration of world-class research in only a few places These top research locations are expected to produce the ‘general purpose technologies’ (GPTs) of the future Concentration is desirable but also problematic in the eyes of the designers of the smsp concept, because top research will disappear in other regions This is problematic, because research is considered as the main engine of growth and innovation

Smsp is about applying new technologies In order to mitigate the consequences of concentration of research, other regions will have to invest in the application of the GPTs The idea is that regions not blessed by a concentration of top research develop ‘pipelines’ to the sources of knowledge in the top institutes presumably located in core regions Of course, in doing so these regions should take account of their current strengths, which in all likelihood determine their ability to absorb and apply the general purpose technologies The smart specialization approach thus makes a distinction “between regions specialized in the basic inventions and regions investing in specific application domains”

Vocabulary: pipelines? Does knowledge flow like oil? Knowledge comes with people

In reality… No reason is given why ‘regions specialized in basic inventions’ will refrain from developing smart applications themselves. In reality they will. – Non-core regions should then try to think of applications that cannot be readily developed in the core region itself (because of the availability of local knowledge) and/or for which sufficient demand is present in the region In reality, research is not necessarily and certainly not everywhere the main engine of growth or innovation The link between research and innovation differs between industries – development is far more important, but development is mainly taking place inside companies and therefore less affected by the creation of the European Research Area

Different types of regions A rough distinction is frequently made between high-tech or core regions, old industrialized regions, and ‘non S&T driven’ regions Smart specialization (laying pipelines with centers of knowledge) seems to be far more relevant for old industrial regions than for the ‘non S&T driven regions’ But these ‘non S&T driven regions’ were always the main object of regional and cohesion policies Smart specialization has little to offer for regions that are really lagging behind

Organizing ‘entrepreneurial search’ Economic development, revival, and renewal require the active engagement of companies Regional authorities may be aware of the strengths and weaknesses of their regional companies and industries, but they should refrain from ‘industrial planning’ and ‘picking winners’ The smart specialization concept therefore calls for ‘entrepreneurial search’, which means that in a first phase smsp should provide support to many entrepreneurial initiatives – In a later phase, after evaluation, only the successful/most promising initiatives should continue to receive support, while the others should be allowed to wither away This is a policy of ‘backing winners’ – But the time frame of the smsp program may not match the time frame necessary to establish who is winning

Vocabulary: organizing entrepreneurial search “The decision-makers will limit their interventions to four aspects of the process : – helping these entrepreneurs; – evaluating the value of the identified specializations; – identifying complementary investments (human capital) and facilitating the coordination mechanisms allowing a regional system to collectively switch over toward the selected specializations; – and pruning the investments which turn out to be inappropriate ex post but were supported ex ante as part of the search process” (Foray in a JRC Report 2009) No planning, but …. organizing for a collective switch Schumpeterian creative destruction as policy instrument?

Smsp in The Netherlands The Netherlands are already engaged in smart specialization by means of the ‘Topsectorenbeleid’ – All leading sectors have developed plans for research, pre-competitive development, education and training, etc. It doesn’t make much sense to apply the concept of smart specialization to a lower geographical level than that of the Netherlands as a whole – All cohesion funding should go to the Topsectorenbeleid Whatever remains of earlier regional or cluster policy in the Netherlands (Pieken in de Delta: energy valley, food valley, health valley, Brainport) has been or can be subsumed under the Topsectorenbeleid

Smsp in The Netherlands An interesting model is provided by the three innovation campuses – High tech campus Eindhoven – Automotive campus Helmond – Chemelot (chemicals and biosciences) Triple helix constructions Two out of three drawn by large enterprises All three firmly embedded in Topsectorenbeleid

Smart specialization is for smart regions… Smart specialization is nothing for regions that are ‘non S&T driven’ – Let’s call them lagging, backward, retarded: plain stupid Regional (and a fortiori cohesion) policy should be concerned with stupid regions Stupid regions should do whatever is necessary to strengthen and modernize still existing activities and industries Stupid regions should encourage diversification, not specialization Stupid regions should invest in vocational training of workers in close collaboration with existing companies

… not for stupid regions Stupid regions should develop close collaborative relations with schools for vocational and professional education in neighboring regions (they usually don’t have their own) and organize for free problem-solving activities and advice in local companies by staff and students Stupid regions should avoid European funding with all its emphasis on research and high technology, not to mention the unavoidable time consuming paper work Discover the advantages of backwardness and stupidity …. peace of mind

Smart specialization... … but still an insect

Criteria from the Guide Book 1.Is the strategy based on 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?

Criteria from the Guide Book 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 and measure progress? How does it support a process of policy learning and adaptation? How is it to be communicated?