How can ETC contribute How can ETC contribute to smart growth?to smart growth?

INTERACT seminar: European cooperation growing smart (er)INTERACT seminar: European cooperation growing smart (er)

Budapest, 25/26 May 2011Budapest, 25/26 May 2011

The general policy contextThe general policy context Global competition for resources, markets and ideas Global competition for resources, markets and ideas that

provide competitive advantage

Globalisation of supply chainsGlobalisation of supply chains: More oppor-tunities but also more concentration in R&D

More pressure to specialise and invest in high value added More pressure to specialise and invest in high value added activitiesactivities to position regions

More value for moneyMore value for money: Reduced scope for public investment = more careful deployment of resources

Need for a strategic and integrated approach to innovationstrategic and integrated approach to innovation (European Council, 4 February 2011)

The general policy contextThe general policy context Economic growth Economic growth is a function of changes in

population, employment and productivity rates “A country’s ability to improve its standard of living over

time depends almost entirely on its ability to raise its output per worker” (P. Krugman, 1990)

Productivity growth Productivity growth comes both from restructuring between sectors and improvement within industries

To generate growth, regions have to invest in human human capital, R&D and innovation capital, R&D and innovation and focus on integrating policies (OECD + EU COM)

Europe 2020: 3 pillars, 7 flagshipsEurope 2020: 3 pillars, 7 flagships

Smart GrowthSmart Growthdeveloping an economy based on knowledge and

innovation

Sustainable Sustainable GrowthGrowth

more efficient, greener and more competitive economy

Inclusive Growth Inclusive Growth fostering a high-

employment economy delivering social and territorial cohesion

Innovation« Innovation Union »

Climate, energy and mobility

« Resource efficient Europe »

Employment and skills« An agenda for new 

skills and jobs »

Education« Youth on the move »

Competitiveness« An industrial policy for the globalisation era »

Fighting poverty« European platform against poverty »

Digital society« A digital agenda for 

Europe »

• Europe 2020 Headline indicator:

3% GDP for R&D

• Proposed new indicator for innovation:

Share of fast-growing innovative firm

s

Regional Innovation Scoreboard - 2009See: http://www.proinno-europe.eu/page/regional-innovation-scoreboard

Why Why InnovatioInnovation Union?n Union?

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

LV BG LT RO SK PL HU MT GR ES CZ IT PT EE SI CY EU FR LU IE NL AT BE UK DE FI DK SE

MODEST INNOVATORS MODERATE INNOVATORS INNOVATION FOLLOWERS INNOVATION LEADERS

Too much funding for overlapping projects or overlapping projects or prioritiespriorities where regions lack relative strength

Little funding for pooling resources and expertise pooling resources and expertise through trans-national projects through trans-national projects and investments (e.g. research infrastructures/world-class clusters)

MS need to improve use of SF for R&Iimprove use of SF for R&I, incl. skills skills developmentdevelopment and smart specialisation strategiessmart specialisation strategies

The Innovation Union must involve all regions…Europe must avoid an “innovation divide”

Action 24: Improve use of SF

supported by smart specialisation strategiesAction 25: Future Cohesion

Policy to support innovation

Smart Growth CommunicationSmart Growth Communication

Joint Communication (REGIO, RTD, ENT, EDU)

RP as key delivery mechanism for EU202key delivery mechanism for EU202

Mobilising innovation potential of all EU regions

Re-focusing ERDFRe-focusing ERDF: More strategic use of SF

More support for education, research, innovationeducation, research, innovation

Aligning investments with National Reform Prgs

R&I to be in with line smart specialisation stratssmart specialisation strats

Regions to concentrate resourcesRegions to concentrate resources on activities of high added value and competitive advantagehigh added value and competitive advantage

More effective / synergetic use of public funds (ERDF, FP7, CIP, own funds).

More extensive use of financial engineering (venture/risk capital, loans, guarantees)

More peer-review and independent experts

ERDF to fund shortlisted FP7 and CIP projects

More use of peer learning and interregional networks for improving regional innovation policy

Recommends also:Recommends also:

Ex. for smart growth actions:Ex. for smart growth actions:

Support to innovation clusters, science parks, incubators, voucher schemes, etc.

SME support services along the entire innovation cycle from idea through R&D to commercialisation

Promotion of entrepreneurship education and training and of transversal skills

Support to knowledge triangle and university-enterprise cooperation

Support to financial engineering: e.g. JEREMY

Development of excellent research infrastruc-tures and supporting researchers to link to them

Integration of cultural and creative industries and design into development strategies,

Investment in ICT, e.g. high-speed internet access

Use of pre-commercial public procurement for creating demand for innovative solutions

Ex. for smart growth actions:Ex. for smart growth actions:

Exploiting regional potential for Exploiting regional potential for the knowledge economy through the knowledge economy through

smart specialisationsmart specialisation

Smart Sp. Strategies – why?Smart Sp. Strategies – why?

Smart Sp. Strategies (what?)Smart Sp. Strategies (what?)

Smart Sp. Strategies (how?)Smart Sp. Strategies (how?)

Smart specialised regions:Smart specialised regions:

Prioritise on areas of competitive advantagePrioritise on areas of competitive advantage

Exploit unrealised economic potentialExploit unrealised economic potential

Facilitate transition to higher productive activitiesFacilitate transition to higher productive activities

Focus on long-term Focus on long-term rather than short term gainsrather than short term gains

Support ‘regional branching’Support ‘regional branching’: i.e. globally significant : i.e. globally significant and sufficiently diverse assetsand sufficiently diverse assets

Support ‘strategic anchoring’Support ‘strategic anchoring’: i.e strong : i.e strong connections to other centres of activity, in particular connections to other centres of activity, in particular global hubsglobal hubs

Support innovation and diversififcationSupport innovation and diversififcation, not , not imitation of leadersimitation of leaders

= evidence-based: all assets + capabilities

= inv. key stakeholders: entrepreneurial discovery

= global perspective & cooperation potential

= source-in knowledge, & technologies (e.g. KETs)

= focus policy learning on differentiation not following the leader

= bundling policies + instru-ments into integrated + coherent packages = smart policy mixes

= priority setting in times of scarce resources

= focus investments on strengths/real potential

= get better/excel in area of specialisation

= position region in global value chains

= cross-fertilisations/cross- sectoral initiatives

= accumulation of critical mass

Smart Specialisation ?Smart Specialisation ?

Role of ClustersRole of Clusters Smart specialisation has been identified as a process of

“entrepreneurial discovery” of priority-areas for knowledge investments in specialised regional clusters[1].

Smart specialisation is therefore a process in which the (global/local) governance of the interaction of all actors concerned is of strategic importance.

This interaction should be directed at the co-discovery of opportunities for new value creation according to the distinct innovation potential of “geographic localities

[1] D.Foray, P.A. David and B.Hall (2009), Smart Specialisation: the Concept, http://ec.europa.eu/research/era/publication_en.cfm

Role of ClustersRole of Clusters The key idea behind ‘smart’ specialisation strategies is not only to

build these strategies on a higher level of knowledge-based investments but also to differentiate these strategies and investments according relative strengths.

Such purposeful strategies will not only limit unnecessary duplication, but will also explicitly capitalise on interdependencies, identifying complementarities at cluster level and in international value chains, which maximise the mobilisation of resources of all regions for the knowledge economy.

While self-organising regional clusters can be the locus of co-investment to build critical mass for a new system innovation, they are also nodes in international value chains that compete with and complement each other.

Role of ClustersRole of Clusters The development of cluster strategies was a further step in the

governance of these clusters, enabling economic change through cluster management. Now, developing international cluster strategies is becoming the distinctive strategic capacity of such cluster management (e.g. the Spitzencluster Competition in Germany[1]).

The smart specialisation policy approach will use international positioning of local cluster potential as an instrument for aligning the internal strategies of cluster actors and seeking competitive advantage and international synergies

[1] The ‘Leading Edge Cluster Competition’ as key element of Germany’s High Tech Strategy (http://www.hightechstrategie.de/en/468.php).

Role of ClustersRole of Clusters Cluster can, thus, facilitate smart specialisation by highlighting

activities and themes where sufficient regional specialisation already exists to facilitate the establishment and maintenance of a cluster.

Of course, on the other side of the coin, existing clusters could complicate smart specialisation by using their established position to monopolise resources that might be better invested on diversification.

This is why smart specialisation explicitly calls not only for concentration on strengths and critical mass but also for diversification on the basis of strengths (supporting ‘related variet’).

This calls for cluster policies to support knowledge spill-overs into complementary sectors for instance by promoting cooperation across the value chain or cross sectoral cooperations (e.g. grand challenges/megatrends)

Role of ClustersRole of Clusters Regional, national and interregional or supranational strategies for

smart specialisation can converge on the basis of maximising the return on investment in open innovation systems and regional clusters.

In particular, by providing shared strategic intelligence and shared road maps addressing the great societal challenges, governments can facilitate the entrepreneurial ‘discovery’ of smart specialisations.

This strategic governance needs specific capabilities and conditions in the cluster organisations and the wider innovation system, i.e. an ‘anticipatory intelligence,’ that can give direction.

The cluster strategies of the future following a smart specialisation paradigm also need to be underpinned by interregional cooperation to strengthen the outward connectivity of our regional innovation actors and the cooperation across borders and territories

The SThe S33 platform platform Shared knowledge base

for strategic intelligence

Methods, indicators, templates for analysis of specialisation patterns

Methodologies/toolbox/guide to assist MS and regions in developing smart specialisation strategies

Peer-review methodology, experts, advice To be set up and managed by a team established at JRC-

IPTS in Seville Steering Team incl. DG REGIO, RTD, ENTR, EAC, INFSO

and SANCO Mirror Group of high-level experts and network reps

The SThe S33 platform platform Shared knowledge base

for strategic intelligence

• Hosted by the Joint Research Centre – Institute for Prospective Technological Studies (IPTS) in Seville, Spain. It is run by a Steering Team gathering representatives of several Commission Services: REGIO, EMPL, RTD, ENTR, EAC, INFSO, SANCO, CLIMA and the JRC.

• It will be advised by a Mirror Group of international experts and representatives of relevant European networks (such as EURADA, ERRIN, EBN, OECD, European Cluster Observatory, European Cluster Alliance, ERISA).

• The Platform will be composed of:1. "S3 Learning Platform"2. "S3 Shop"

The SThe S33 platform platform Shared knowledge base

for strategic intelligence

• The S3 Learning Platform will…• … develop a guide for policy-makers and implementing bodies

on how to design and implement and assess regional smart specialisation strategies.

• … assess the needs of regions and identify case studies. • … create working groups of regional actors and experts

around common themes.• … organise training of "trainers in smart specialisation".• … manage a toolbox of indicators and case studies. • … elaborate a peer review methodology for the set-up of

sound peer review mechanisms based on existing practice.• … develop economic analysis on the concept of smart

specialisation.

The SThe S33 platform platform Shared knowledge base

for strategic intelligence

• The S3 Shop will…• … manage a web-gateway to smart specialisation

to disseminate information to all regions and register the 'inscription' of regions into the platform, for an active participation.

• … manage a database of experts and policy-makers available for peer review activities.

• … promote an annual meeting on smart specialisation for policy-makers and experts.

• … participate to events on smart specialisation. • … establish permanent contacts with

professionals working on 'smart specialisation'.

Claus SchultzeEuropean Commission, DG REGIO

Policy Analyst, Unit D.2Claus.schultze@ec.europa.eu