« Smart Specialisation Strategies”

1. « Smart Specialisation Strategies” 16th meeting of the Interservice Group on Urban Development 8 June 2011CSM1 08/66 – 15:00/16:30 Mikel Landabaso European Commission, DG REGIO Thematic Coordination and Innovation REGIO-HEAD-OF-UNIT-D2@ec.europa.eu

2. Regional Policy and EU 2020 Smart Growth • Regional Policy: a major potential means of implementing EU 2020 strategy on the ground in all the EU, contributing to improved governance national/regional/local. • Regional dimension to the Innovation Union: invites all regions to design ‘smart specialisation strategies’ - S³ to unlock growth. «Innovation can not be dictated but it can be cultivated » (The Federal Government and the growth of Regional Innovation Clusters, J. Sallet et Al, 2009) • Promote efficient regional innovation systems and open innovation – beyond narrowly defined technology aspects. • Increase Innovation capacities in regions, businesses in particular, through public-private partnership and strengthening links to Universities and R&D capacities: “triple helix” – “knowledge triangle” “Innovation is one of the most fundamental processes underpinning economic growth…The innovation process requires significant and appropriate public policy support to secure the social benefits it can deliver” (‘SMEs, Entrepreneurship and Innovation’ - p. 15. OECD, 2010)

3. Is there a link between innovation output and regional growth?“...in the last 50 years innovation has been responsible for at least half the economic growth of our nation...” (Neal Lane, Director National Science Foundation - NSF, February 1997, Seattle, U.S.A) Source: Mikel Navarro et al, Basque Competitiveness Institute 2010. "Until the 1980s, technology and innovation were under recognised influences in the explanation of differences in the rates of economic growth between regions in advanced industrial nations..."(Townroe)

4. Cohesion Policy Funding for RTD and innovation 2007-2013 • Cohesion Policy support for Innovation: • 4% in 89’-93’ • 7% in 94’-99’ • 11% in 00’-06’ • 25% in 07’-13’

5. What is Smart Specialisation ? http://ec.europa.eu/research/era/publication_en.cfm • ‘Knowledge for Growth’ expert group (DG RTD) launched concept in the framework of ERA; • Problem: fragmentation/imitation/duplication of public R&D investments; • Stresses role for all regions in the knowledge economy, if they can identify comparative advantages in specific R &I domains/clusters • Challenges: Smart specialisation has to embrace the concept of open innovation, not only investment in (basic) research. « Policies need to distinguish clearly between a few highly innovative and high growth potential firms and the great majority of SMEs, reflecting the different ways in which they innovate. The different needs can be characterised by a distinction between Science, Technology and Innovation mode of innovation on the one hand, focused on R&D and breakthrough innovation and Doing, Using and Interacting mode of innovation on the other, focused on incremental innovation in the « ordinary » SME. Both must be encouraged » (OECD, 2010) “Most advanced regions invest in the invention of general purpose technologies, others invest in the co-invention of applications of the generic technology in one or several important domains of the regional economy” Dominique Foray 2010

6. What is Smart Specialisation ? = evidence-based: all assets = no top-down decision, but dynamic/entrepreneurial discovery process inv. key stakeholders = global perspective on potential competitive advantage & potential for cooperation = source-in knowledge, & technologies etc. rather than re-inventing the wheel = priority setting in times of scarce resources = getting better / excel with something specific = focus investments on regional comparative advantage = accumulation of critical mass = not necessarily focus on a single sector, but cross-fertilisations “…A particular case is made for selecting Innovation as a core priority. Place-based interventions, building on the strengths and taking account of the weaknesses of previous experience as regards cohesion policy in this area, could complement policies aimed at developing a European Research Area, by selecting in each region a limited number of sectors in which innovation can most readily occur and a knowledge base built up. Through such an approach – defined in the current policy debate as “smart specialization” - the most could be made of the present diversity of industrial agglomerations and networks, while their “openness” beyond regional or national boundaries would be promoted…” (“An agenda for a Reformed Cohesion Policy: A place-based approach to meeting European Union challenges and expectations”, Fabrizio Barca Report (2009))

7. Actions to be considered in S³ • Clusters for regional growth: business ecologies that drive innovation • Innovation-friendly business environments for SMEs: good jobs in internationally competitive firms • Stronger focus on financial engineering: not only grants • Lifelong Learning in research and innovation: support knowledge triangle and university-enterprise cooperation • 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 • Digital agenda: enabling knowledge flows throughout the territory –connected regions • Public Procurement for market pull: pre-competitive PP to open new innovation friendly market niches • European Innovation Partnerships: innovation through cooperation

8. Why S3? • Making (hard) choices and defining a regional vision: Defining where regions wants to go in terms of competitiveness through innovation. • Focusing minds, efforts and (scarce) public resources on the development of a limited number of thematic or (cross) sectoral innovation priorities in each region. • Identify factors of competitiveness (critical mass) and bottlenecks, enabling General Purpose technologies, and concentrate resources on key priorities. • This is not about picking winners from above but about making sure efforts are not wasted being too dispersed • Some are already developing these actions: need for review? - others may wish to adjust and up-date their strategies in light of this Communication. • The EU to set up a ‘Smart Specialisation Platform’ to provide assistance and run pilots with interested regions. “An entrepreneurial and dynamic process of discovery, based on strategic intelligence, interaction and policy learning” D. Foray

9. Regions towards S3 What makes smart specialisation different from Regional Innovation Strategies or cluster initiatives? • Focussing on a narrower set of priorities and practical implementation with clear-cut indicators and the idea to address this in the Operational Programmes • More aware of the international context and ERA, seeking complementarities with other regions and coordination of research and innovation investments • Aligning different public funding instruments in a coherent way to support investments in these fields (synergies), leveraging private investment. Source:Hausman and Klinger, 2007 “Occupy the rich parts of the forest where it is easier to jump to other trees” D. Foray

10. S3 Innovation-driven development strategy focusing on regional strength/competitive advantage • Focus on private R&I investments, SMEs in particular • Specialising in a smart way, i.e. based on evidence and strategic intelligence about a region's assets • Looking beyond boundaries,positioning region in global context • International differentiation strategy to attract investments • Not necessarily new for regions, but needs to be reinforced across all regions • What: Constructing regional advantage and promoting ‘related variety‘ for regional development • Supports the integration and exploitation of all sorts of R&I assets • Promotes ‘related variety’ by focusing on cross-sectoral linkages • Emphasis on interregional connections and the EU dimension

11. S3 • How: Strong focus on bottom-up process and stakeholder involvement and interaction • Top-down setting of objectives (EU2020, Innovation Union) and bottom-up processes of entrepreneurial discovery • Involving experts, businesses, research centres, universities and other knowledge-creating institutions and stakeholders: builds on triple-helix partnership • Sound SWOT analysis, identification of competitiveness factors, enabling technologies, concentrating resources on key priorities. • Is this only for high-tech regions? • Surely not! It provides a strategy and global role for every regional economy, irrespective of whether they are innovation leaders, followers or catching-up, whether they are mainly driven by agriculture, manufacturing or services.

12. Smart Specialisation in a city-state: the case of Bremerhaven (DE) • Economy based on shipbuilding & commercial fishing in strong downturn end of 1990’s • Selection of ‘offshore wind energy’ as new development: clear & integrated industrial strategy and clustering of competencies • Strong existing synergies between ‘shipyard’ & ‘offshore wind’ sectors • Now Bremerhaven = major hub of offshore wind in DE, 4 major manufactures, already 1,000 jobs created

13. Energy efficiency in buildings: a smart urban strategy ? • The building sector, current situation: • 41% of the EU’s total final energy use • 36% of CO2 emissions • 9% of EU GDP • 7-8% of EU employment Needed emission reductions: 13

14. Refurbishment of social housing (FR) • Investments of € 320 M of ERDF in whole country • Average support by ERDF = € 2,886 per dwelling (14% of total needs) • Impacts: • generated over € 1 billion in investment in energy performance in social housing in FR • helped to create and maintain 15,000 local jobs & potentially 31,000 with measures in the pipeline • 50,000 households with modest incomes supported to fight energy poverty (heating costs reduced on average by 40%) 14

15. Revolving fund example Estonia • Switch from grants to a revolving fund: KredEx (Credit and Export Guarantee Fund of the State) • Why revolving fund? • Opportunity for re-usage of the funds • Funds stay in state • Loan needed for reconstruction • Easier to administer and lower administrative costs • End-beneficiary is used to take loans • Innovative scheme, help from kfW • Started 06/2009 and by March 2010: 70 contracts with multi-apartment buildings, total 5,1 mn € (average 74 400 €, 2035 apartments, saving 33%) 15

16. Smart Specialisation in RES: case of Burgenland (AT) • Regional development & innovation strategy in RES over more than 15 years • Initial situation: economic downturn, emigration, unemployment • Objective to re-develop the region based on local characteristics & assets • Reach energy self-sufficiency • Generate regional growth, employment & tax revenues

17. The case of Burgenland (AT) • Strategic & significant use of Cohesion Policy funding in biomass, solar and wind energy as well as into training & technology centres • Great success in terms of jobs, regional development & energy security Extensive case study available at: http://ec.europa.eu/regional_policy/newsroom/pdf/200912_burgenland.pdf

18. The case of Alsace (FR) • Key focus on partnerships & cooperation at regional & cross-border level • Broad involvement of local authorities, companies, universities • 42 innovation projects in pipeline worth € 211 M

19. Outline of the S3 Platform • The platform will be established at the Joint Research Centre (IPTS) in Seville • It covers a three-year period • 2011actions and results achieved will be used to reinforced actions in 2012 and 2013… • It will act as a facilitator in bringing together the relevant policy support activities in research, regional, enterprise, innovation, information society, education and sustainable policies. • Will inform and communicate on related funding opportunities under the relevant EU funding programmes. • It will include the facilities to provide direct feed-back and information to regions, Member States and its intermediate bodies. • Provides methodological support, expert advice, training, information on good practice, etc.

21. A platform for what? • To provide direct assistance to regions and Member States in producing smart specialisation strategies and gather information on this process and • To help to develop in Member States and regions the strategic intelligence needed to design, to implement and to monitor them

22. Who runs the S3 Platform? • The platform will be run by a steering team gathering representatives of several Commission Services: REGIO, EMPL, RTD, ENTR, EAC, INFSO, SANCO, CLIMA and the JRC. • The steering group started its activity in January to prepare the list of actions and launch the Platform. It meets regularly every month. • A mirror group is being set up with high-level experts, representatives of networks and bodies (e.g. EURADA, ERRIN, UEAPME, EBN, OECD, European Cluster Observatory, European Cluster Alliance, ERIS@, etc.) It will meet every three months.

23. The 'S3 Shop' • Launch a web portal by June 2011 • Develop and maintain a web-based facility • Provide feed-back and information to Member States and regions • Create and manage databases of policy-makers, intermediary bodies and international experts • Promote an annual meeting on smart specialisation for policy-makers • Keep links and share information and knowledge with projects, initiatives, groups gathered by other Services and events that are relevant for S3

24. The ' S3 Learning Platform' • Develop a guide for policy-makers and implementing bodies • Assess the needs types in types of support of the regions and prepare actions to answer to these needs • Organize training of 'trainers in smart specialisation' • Elaborate peer review methodology to assess S3 strategies • Manage a toolbox of indicators and case studies • Develop economic analysis on the concept of smart specialisation and its impact on smart growth

25. Road-map main events • The WS ‘How to assist regions in developing smart specialisation strategies? 10/11 March 2011 in Brussels http://www.eurada.org/site/index.php?option=com_content&view=article&id=184&Itemid=186&lang=en • WIRE conference, 7/9 June Debrecen • The S3 Platform will be launched in the RFEC Conference on 23/24 June • An annual event for policy-makers and several workshops for practitioners: Open Days, 10/13 October 2011 • A large number of events initiated Member States and regions is underway.