Smart specialisation has helped with innovation strategies, but more is needed

Smart specialisation has made a real difference to the way European regions are designing their innovation strategies, creating or reinforcing cooperation at all levels, especially with local industry, but there is room for improvement, to better help regions catch the train of globalisation, according the European Commission.

There are four main challenges to promoting regional innovation under the smart specialisation programme, the Commission said, setting out a plan to shape a broader approach to boosting innovation-led growth in the EU. The objective is to make smart specialisation a comprehensive tool to help all regions seize the opportunities brought by technological change, digitisation and industrial modernisation.

Challenge 1: Boosting innovation capacity in less-developed and industrial transition regions

The Commission has highlighted the specific needs of less-developed regions in relation to innovation capacity and connection with global value chains. EU-funded pilot projects in two Polish regions showed promising results, especially as regards the development of competitive clusters and the reform of the business environment.

Regions in industrial transition face different challenges. Trailing behind in terms of innovation in a globalised context, they do not benefit from the same EU financial support as less-developed regions, although they may be unable to attract sufficient investment to develop new comparative advantages and move up the value chain. Often carbon intensive, they can combine lack of an appropriate skills-base, high labour cost and deindustrialisation.

To drive the industrial modernisation of these regions, the Commission will promote an EU-funded pilot action to help a number of volunteer regions revamp their innovation systems on the basis of their smart specialisation strategies.

This pilot action will provide on-demand support from Commission experts as well as technical assistance actions supported by the European Regional Development Fund (ERDF), in order to facilitate the combined use of existing EU instruments with the aim of accelerating innovation uptake, removing investment barriers, facilitate reskilling and preparing for industrial and societal change.

These partnerships should be in place by March 2018. By the end of 2018, each partnership should have defined a set of actions to foster economic transformation, identifying possible funding opportunities at European, national and regional level.

This hands-on support could be complemented by guidance from Commission investment envoys on the ground on opportunities to combine EU funds and instruments, such as the European Fund for Strategic Investments and Cohesion Policy funds.

Challenge 2: Increasing cooperation in innovation investment across regions

To develop innovative products and expand beyond local markets to create – or rebuild – European value chains, regions and their local industrial spheres need to join forces and pool their resources, in tight partnership with innovation actors and researchers.

Interregional investment networks in industrial renewal already exist. The Vanguard initiative involves 30 EU regions which jointly develop high value added projects, on the basis of matching smart specialisation priorities.

This initiative has served as model for thematic Smart Specialisation platforms, under which 100 regions with matching assets can develop project pipelines, share research infrastructure (testing facilities, data centres or labs) and benefit from the expertise of Commission experts.

The Commission now proposes to go one step further and build on existing networks and platforms, with an EU-funded pilot action by the end of 2017 in order to scale-up interregional innovation projects. Small projects will have the opportunity to integrate large investment pipelines, bringing together EU funds in the most efficient way.

Five to ten thematic partnerships will be created with policy-makers, researchers, businesses and other innovation actors. High value added economic sectors will be targeted, such as bioeconomy, big data, health or connected mobility as well as traditional sectors with innovative manufacturing processes.

The smart specialisation thematic platforms will act as the coordination structure where selected partnerships can work with teams established within the Commission, involving experts from several Commission departments.

Challenge 3: The need to reform regional innovation systems

As a prerequisite for member states to benefit from Cohesion Policy funding in research and innovation, smart specialisation has proved to be a powerful incentive for regions to carry out reforms and improve multi-level governance.

Today, broader reform efforts of regional research and innovation systems require particular attention to three cross-cutting issues. These are the quality of public research, efficient industry-science cooperation with the right support for technology transfer, and a business-friendly environment.

Reforms should be complemented by investments in the right skills, education and training to better match today's and tomorrow's job market demands, in line with the New Skills Agenda. The Commission says it will step up its efforts to encourage member states to make full use of available EU support to facilitate the design and implementation of reforms. For example, on-demand assistance from the Structural Reform Support Service can help improve the business environment and break down silos between administrative bodies.

The Horizon 2020 Policy Support Facility will help member states address obstacles in their research and innovation systems, including those related to an effective implementation of smart specialisation strategies.

Challenge 4: Facilitating synergies between EU policies and instruments

Currently there is a substantial number of regional, national and European policy instruments supporting research and innovation, growth and competitiveness or promoting interregional cooperation.

Efforts have already been undertaken to promote and simplify combinations and synergies between the European Fund for Strategic Investment under the Juncker Plan, Horizon 2020 and Cohesion policy funds. The Commission will work with national and regional authorities and help them combine the funds, in particular by providing further clarifications on synergies as regards state aid and public procurement.

To boost interregional cooperation, the Commission will continue to work with the European Parliament and Council in the context of the ongoing discussions on the mid-term review of the Multiannual Financial Framework to further facilitate transnational investments, such as the implementation of operations outside an EU funds programme area. The Commission will also provide stakeholders with a comprehensive mapping of support actors and facilities to foster cross-regional industrial partnering and access to competences.

Simplifying synergies and aligning rules between different EU funding instruments is high on the Commission's agenda in the framework of the discussion on the future of the EU finances which the Commission launched on 28 June. A High Level Group on Simplification for the beneficiaries of EU funds recently published its final conclusions for the post-2020 framework, with ideas to facilitate further combinations between EU funds.