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Regional branching and smart specialization policy. Ron Boschma CIRCLE, Lund University Urban and Regional research centre Utrecht (URU) Utrecht University Innovation Strategy for Nordland Bodo, Norway June 10-11, 2014. structure of lecture. 1. smart specialization and regional branching
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Regional branching and smart specialization policy Ron Boschma CIRCLE, Lund University Urban and Regional research centre Utrecht (URU) Utrecht University Innovation Strategy for Nordland Bodo, Norway June 10-11, 2014
structure of lecture • 1. smart specialization and regional branching • 2. regional branching and policy intervention? • 3. policy actions
1. smart specialization and regional branching • variety as key driver of regional growth: the more, the better • however, variety per se does not enhance knowledge spillovers • need for technological relatedness between firms and sectors in a region to enable knowledge spillovers • what matters for regional growth: a wide range of sectors in a region that are technologically related • the higher the number of technologically related industries in a region, the more learning opportunities are locally available, and the more knowledge spillovers will take place • the higher this related variety in a region, the higher regional growth: empirical studies in the Netherlands, Italy, Finland, Britain, Spain, Germany and the US have confirmed this
1. smart specialization and regional branching • how do regions diversify and develop new growth paths? • technological relatedness also major input for regions to diversify into new industries and develop new growth paths • regional branching: new industries branch out of technologically related local industries from which existing capabilities are exploited and recombined in new activities • Neffke, Henning and Boschma (2011) Economic Geography: industry evolution of 70 Swedish regions 1969-2002 • a new industry is more likely to enter a region when it is technologically related to other industries in the region (2,766 new industries in a region) • existing industries tend to disappear from a region when these are not technologically related to other industries in the region (3,464 events of an industry exiting a region)
2. regional branching and policy intervention? • no ‘one-size-fits-all’ policy: need for bottom-up, tailor-made policy strategies • regional policy based on regional branching takes the existing industrial structure at the regional level as a starting point • entrepreneurial discovery process: smart specialization is: “… largely about the policy process to select and prioritise fields or areas where a cluster of activities should be developed, and to let entrepreneurs discover the right domains of future specialization” (Foray et al. 2011, p. 7) • bottom-up policy: “entrepreneurs ... are in the best position to discover the domains of R&D and innovation in which a region is likely to excel given its existing capabilities and productive assets” (Foray et al. 2011, p. 7)
2. regional branching and policy intervention? • but how to identify regional potentials to diversify successfully? • entrepreneurial discovery makes a lot of sense, but: (1) anything goes? how about setting priorities? (2) how to avoid that local stakeholders take over? • relatedness and connectedness two crucial inputs to assess potentials of regions to diversify
3. policy actions • objective is not to make strong sectors even stronger (not ‘picking-winners’, avoid vested interests), or support weak stand-alone sectors, but to make related sectors interact • regional innovation policy should connect related industries to make regions diversify through relatedness • entrepreneurship (e.g. focus on experienced entrepreneurs that take relevant knowledge from related industries) • labour mobility (e.g. to enhance mobility between skill-related industries, to educate people in related disciplines) • collaboration networks (e.g. to support research collaboration between related partners and local/non-local partners)
3. policy actions • these mechanisms connecting old and new sectors basically take place at the regional level: reduces the risk of leakage effects to other regions • they have the potential to move regions in new growth paths while building on regional assets • linkages with other regions are crucial to secure exposure • in principle, every industry can be made part of this policy framework, but every industry is different (in terms of knowledge base and supportive institutions) • this also applies to every type of region: however, some regions have stronger capabilities and more related variety, and thus more opportunities to diversify into new industries