Smart Specialization No recipe for stupid regions

1. Smart SpecializationNo recipe for stupid regions Ben Dankbaar Radboud University Nijmegen

2. 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)

3. 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

4. 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”

5. Vocabulary: pipelines? • Does knowledgeflowlikeoil? Knowledge comes withpeople

6. 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

7. 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

8. 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

9. Vocabulary: organizingentrepreneurial 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 …. organizingfor a collective switch • Schumpeteriancreativedestruction as policy instrument?

10. 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

11. 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

12. 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

13. … 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

14. Smart specialization . . . … butstillan insect

15. Criteria from the Guide Book • Is the strategy based on appropriate stakeholder involvement? How does it support the entrepreneurial discovery process of testing possible new areas? • Is the strategy evidence-based? How have areas of strength and future activity been identified? • 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? • Does the strategy identify appropriate actions? How good is the policy mix?

16. Criteria from the Guide Book • Is the strategy outward looking and how does it promote critical mass/potential? • 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? • 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?