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A Shopping List Approach to Regional Development: A Cau9onary note on the Implementa9on
Applica9on of Smart Specialisa9on Dr. Andrew Crawley Marie Curie Research Fellow University of Illinois Urbana Champaign and Cardiﬀ University UK Integra9ng Economic Regional Impact Models (INTERIM) Marie Curie Research Fellowship This presentaCon • 
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What is Smart SpecializaCon The goals of the policy-‐ conceived in Europe Regional Development and ‘picking winners’ Wales and implimentaCon IniCal ObservaCons and Concerns SuggesCons for an alternaCve approach to sector selecCon and future research What is Smart SpecialisaCon •  Smart SpecialisaCon is the spaCal and themaCc approach to research and development and the future direcCon of regional policy in Europe. The concept originated out of the European Green paper on the European Research Area (CEC, 2007) •  This paper noted, a worrying lack of criCcal mass of research experCse. •  Speciﬁcally the new approach involves the selecCon of key sectors by regions in order to develop their endogenous base. Where has this come from? •  Partly from the work undertaken by Dominic Foray and the Knowledge for Growth expert group in the framework of the European Research Area (ERA). This group explored why Europe was lagging behind the U.S. in compeCCveness with a parCcular focus on research and development (R&D) intensity and disseminaCon of new technologies to explain growth diﬀerenCals. •  Understanding of innovaCon and its crucial role driving economic development (McCann & Ortega-‐Árgiles, 2013 ) •  It has come history in Europe but under diﬀerent names and has seen a transiCon from academic theory to InnovaCon policy. Previous Policy-‐ Systems of innova9on, Clusters, Learning regions, and Open innova9on The Goals of Smart SpecialisaCon* •  NaConal/Regional Research and InnovaCon Strategies for Smart SpecialisaCon are integrated, place-‐based economic transformaCon agendas : investment crea9ng synergies •  Focuses economic development eﬀorts and investments on each region’s relaCve strengths, exploiCng its economic opportuniCes and emerging trends, and taking acCon to boost its economic growth. •  Enhances the added value, impact and visibility of EU funding. It ensures value for money in Cmes of Cghter budgets and scarce(r) public resources. •  Ensures synergies between European policies and funding, complemenCng naConal and regional schemes and private investment. * NATIONAL/REGIONAL INNOVATION STRATEGIES FOR SMART SPECIALISATION (RIS3) hbp://ec.europa.eu/regional_policy/sources/docgener/informat/2014/
smart_specialisaCon_en.pdf Further Goal of Smart SpecilisaCon To avoid overlaps and replica9on in development strategies •  In the past, regions facing development challenges have oeen tried to replicate the same or similar prioriCes as other, leading, regions, even when they had few assets and lible chance of becoming world leaders in their chosen ﬁelds. •  Most regions can only acquire a real compeCCve edge by ﬁnding niches or by mainstreaming new technology into tradiConal industries and exploiCng their ‘smart’ regional potenCal. Why is Smart SpecilisaCon accomplished? •  Requires smart, strategic choices and evidence-‐
based policy making. PrioriCes are set on the basis of a bobom-‐up entrepreneurial discovery process supported by strategic intelligence about a region’s assets (1), its challenges (2), compeCCve advantages and potenCal for excellence (3) •  It is a ‘ simple idea’ to lead to this outcome, based on the understanding that regions need to promote what makes them ‘ unique’ and ‘ superior’ (Foray et al., 2011 , p. 4). The Reality: The Case of Wales EU Funds Hoizon 2020 2014-‐2020 Not just spaCal now sectoral Smart SpecilisaCon Convergence Area <75% of of the European average per cap GDP Wales got nearly £1.6bn from the EU in 2000-‐06 and has received another £1.5bn since 2007. Wales will qualify for another funding programed CompeCCveness Area >75% GDP Per head in Wales and the UK 25000 £5128 20000 15000 UK Wales 10000 £4012 5000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 “Picking Winners” •  The use of priority sectors is not new in wales and has been used in regional policy for some Cme. •  Prior to the Horizon 2020 Wales had 9 priority sectors which were seen by the Welsh Government as being criCcal to the success of the naCon in terms of jobs and overall economic impact. Tourism, Life Science, ICT, Financial and professional Services, Food and Farming, Energy and Environment, Crea9ve Industries, Construc9on, Advanced Materials-‐Manufacturing. •  Life Sciences and Health (PaCent data records, Wound healing, e-‐
health); Low carbon energy and environment (Smart living, eco innovaCon, low carbon energy); Advanced engineering and materials ( Photonics, Smart aerospace); ICT (High performance compuCng, Broadband infrastructure, Trust and Security) Employment LQ of Priority Sectors in Wales 1.2 1 0.8 Life Sciences 0.6 Advanced En ICT 0.4 0.2 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sector Based Approach Europe-‐ ‘Picking Winners’ •  Policy is not new and is forced as a result of constrained resources. •  Logic suggests that regions will specialize in what they do best resulCng in compeCCve advantage over others. •  In reality this has oeen proved to be very diﬀerent and there appears to very much a follow my leader approach to idenCfy/selecCng sectors. •  DuplicaCon of sectors across diﬀerent regions is taking place based on a limited set of best-‐pracCce case studies and fashionable sectors (Hospers, 2006 ; MarCn & Sunley, 2003 ). Sector Specilis9on Across RDAs (2008-‐ 2010) 40 35 30 25 20 EU (60) UK (12) 15 10 5 0 ICT Biotech CreaCve Industries Food and Drink Financial Services Aerospace and Renewable Tech AutomoCve Sectors Selected by the Regions • 
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85% ICT 82%Biotechnlogy 80% Advanced Manufacturing 50% Renewable Energy Some QuesCons •  Are these sectors really going to bring compeCCve advantage? •  How did regions come to choose these sectors? •  Where is the evidence to say that a region has a nichie competency in this area? Future Research INTERIM •  This approach will seek to establish a bridge between the methods of calibraCon and esCmaCon something not achieved to this point. To evaluate the performance of this new technique in impact analysis European Structural funds for both sectors and regions will be analyzed. The model will provide the ﬁrst and most comprehensive evaluaCve tool for the new Smart SpecializaCon agenda in line with Europe 2020.