1. The Challenge and the Opportunity of Smart Specialisation (RIS³) for Europe’s regions: a place based agenda for economic transformation rooted on research and innovation Dr Dimitri CORPAKIS Head of Unit, Spreading Excellence and Widening Participation Connecting research and innovation with regional and urban policies Directorate for the Innovation Union and the ERA DG Research and Innovation European Commission

2. Policy Research and Innovation Research and Innovation Setting the scene  The knowledge economy is here – with a price  Globalisation has pushed the boundaries and has changed traditional ways for dealing with regional development  Global value chains have redrawn the map of conceiving and producing products and services  Countries / regions that are not able to adapt will see their economies being marginalised  Global positioning necessary  Need for a new growth proposition based on knowledge assets 2

3. 3 Innovation performance (2012) R&D expenditure in the business sector as % of GDP (2011)

5. Europe’s innovation divide undermines competitiveness  Large parts of the EU out of ‘sync’  Modest and Moderate Innovators holding back the EU as a whole  Grand policy designs at risk without a sound and functioning base  Identification of priorities and strategies of crucial importance – yet still, among the major botlenecks EC DG RTD.B.5 DC5

6. Innovation Union flagship initiative aims at creating the best conditions for Europe's researchers and entrepreneurs to innovate A broader approach to innovation: meshing research and technological development with -Product innovation, service innovation, innovation in design etc., including process and organisational innovation -Social innovation, public sector innovation, eco-innovation etc. -Exploration of new business models > Both technological & non-technological > Both incremental & disruptive innovation  Improving framework conditions for innovation to flourish  34 commitments: Speeding up standardisation, Making better use of and 'modernising' public procurement procedures, Creating a real internal market for venture capital, Agreeing on a unified European patent, Completing the European Research Area (ERA) Innovation Union flagship initiative aims at creating the best conditions for Europe's researchers and entrepreneurs to innovate A broader approach to innovation: meshing research and technological development with -Product innovation, service innovation, innovation in design etc., including process and organisational innovation -Social innovation, public sector innovation, eco-innovation etc. -Exploration of new business models > Both technological & non-technological > Both incremental & disruptive innovation  Improving framework conditions for innovation to flourish  34 commitments: Speeding up standardisation, Making better use of and 'modernising' public procurement procedures, Creating a real internal market for venture capital, Agreeing on a unified European patent, Completing the European Research Area (ERA) Turning the European Union into an Innovation Union

7. Policy Research and Innovation Research and Innovation The Promise of Smart Specialisation

8. Policy Research and Innovation Research and Innovation A backgrounder on Smart Specialisation  Concept of smart specialisation central to economic development and growth policy  A central pillar of the Europe 2020 Strategy (see also Flagship Initiative Innovation Union [COM(2010)546] and the EU Budget Review [COM(2010)700]  A central element in the development of a reformed European Cohesion Policy, which is based on the principles of ‘smart’, ‘green’, and ‘inclusive growth’.  Regions / MS are required to identify the sectors, technological domains, where they would seem to have competitive advantage,  and then to focus their regional development policies so as to promote innovation, based in these fields. This development would then be rooted on knowledge assets.

9. Policy Research and Innovation Research and Innovation A backgrounder on Smart Specialisation (II)  The concept of smart specialisation traces its origins back to the debate on the transatlantic productivity gap. Initially conceived by Dominique Foray and Bart van Ark, and later given additional impetus by other co -authors Paul David, Bronwyn Hall and by other members of the “Knowledge for Growth” expert group (2009).  Transatlantic differences in R&D intensity used to explain differences in growth terms between USA and Europe reflected also on differences in the way new technologies diffuse in the broader economy, with a special emphasis on ICT. That was thought to explain largely the productivity differences observed.

10. D.Foray, P.A. David and B.Hall : Smart Specialisation: the Concept Knowledge for Growth expert group for the EC

11. Policy Research and Innovation Research and Innovation A simple idea (KfG brief no 9, 2009)   “It should be understood at the outset that the idea of smart specialisation does not call for imposing specialisation through some form of top-down industrial policy that is directed in accord with a pre-conceived “grand plan”. Nor should the search for smart specialisation involve a foresight exercise, ordered from a consulting firm.   We are suggesting an entrepreneurial process of discovery that can reveal what a country or region does best in terms of science and technology. That is, we are suggesting a learning process to discover the research and innovation domains in which a region can hope to excel. In this learning process, entrepreneurial actors are likely to play leading roles in discovering promising areas of future specialisation, not least because the needed adaptations to local skills, materials, environmental conditions, and market access conditions are unlikely to be able to draw on codified, publicly shared knowledge, and instead will entail gathering localized information and the formation of social capital assets.”

12. 12 Smart Specialisation and Regional Development In a regional context this translates to: - Embeddedness - Related variety - Connectivity Philip McCann and Raquel Ortega-Argilés: Smart Specialisation, Regional Growth and Applications to EU Cohesion Policy http://ec.europa.eu/regional_policy/cooperate/regions_for_economic_change/index_en.cf m#4 Courtesy Philip McCann

13. 13 Smart Specialisation and Regional Development Embededness: can be captured by regional CGE models, regional Input-Output models, location quotients, case studies, longevity, social capital etc. Relatedness: It is not about sectoral specialisation but diversification → specialised technological diversification Embededness + Relatedness = Relevant Size Domain Courtesy Philip McCann

14. Policy Research and Innovation Research and Innovation Key points on Smart Specialisation: Stimulate innovation through entrepreneurship, modernisation, adaptation Dare to introduce innovative governance solutions Think about strategic technological diversification on areas of relative strength and potential Increase diversification – promote new linkages, synergies and spillovers Adapted from Philip McCann (2012)

15. Policy Research and Innovation Research and Innovation Step 1: Analysis of regional potential for innovation-driven differentiation Step 2: RIS 3 design and governance – ensuring participation & ownership Step 3: Elaboration of an overall vision for the future of the region Step 4: Selection of priorities for RIS3 + definition of objectives Step 5: Definition of coherent policy mix, roadmaps and action plan Step 6: Integration of monitoring and evaluation mechanisms Steps to RIS3 (6) Monitoring (5) Policy mix (4) Priorities (3) Vision (2) Process (1) Analysis RIS 3 Strategy

16. Policy Research and Innovation Research and Innovation Smart specialisation: Commission assistance RIS3 Platform http://ipts.jrc.ec.europa.eu/activities/research-and- innovation/s3platform.cfmhttp://ipts.jrc.ec.europa.eu/activities/research-and- innovation/s3platform.cfm Established by the Joint Research Centre (IPTS) in Seville Facilitator in bringing together the relevant policy support activities in research, regional, enterprise, innovation, information society, education and sustainable policies. Information and communication on related funding opportunities under the relevant EU funding programmes. Direct feed-back and information to regions, Member States and its intermediate bodies. Provides methodological support, expert advice, training, information on good practice, etc. Mirror Group of International experts Outside the Platform: Commission has supported expert contracts for specific assistance to regions and Member States

17. Policy Research and Innovation Research and Innovation Designing a new Cohesion policy  Major challenge is to design policies that would maximise learning linkages both within the target regions as well as between regions.  Smart specialisation needs to be able to transcend from a sectorial innovation system approach to a regional innovation system consideration (place based).  A national innovation system needs also to be understood not only as a set of distinct regional innovation systems but as an overarching inter-regional innovation system.  This inter-regional structure will determine the ways that knowledge flows or not between regions, and the ways in which this process can become more productive and regions better connected.

18. Policy Research and Innovation Research and Innovation Thank you !