The last decade has witnessed a Europe-wide experiment with designing and implementing place-based strategies for boosting innovation and competitiveness. So-called ‘smart specialisation strategies’ (S3) start from the premise that difficult decisions must be made to prioritise the investment of time and resources for innovation within regions. These decisions are place-specific, depending on the structural characteristics and capacities of each region. To make such decisions effectively requires combining the collective intelligence of firms, universities, research centres, governments, and other regional actors in a dynamic process of ‘entrepreneurial discovery’.
Much has been written about this experiment, with analysis and debate focused both on the concept of S3 itself and its application in specific cases across (and beyond) Europe. At Orkestra, we contribute to this experiment with research aimed at understanding and supporting the development of the Basque Country S3, alongside other regional experiences. Following participation in the pioneering FP7 Smartspec project (2013-2016), in 2016 we conducted a first comprehensive study of the implementation of the Basque S3, which had been launched in 2014 with the publication of the 2020 Science, Technology, and Innovation Plan. This was followed by a series of policy briefs focusing on specific dimensions of S3 implementation such as multi-level governance, cross-border cooperation and the role of clusters. In 2019 we then conducted a second comprehensive study to capture the ongoing evolution of the S3 implementation.
One of the key things that we have learnt through this longitudinal analysis of S3 in the Basque Country concerns the key role of institutions in supporting the multi-actor and dynamic processes that are required for S3 to work effectively, and the need for institutional dynamism to respond to emerging needs. In a paper recently published in Regional Studies we argue that the Basque case highlights the existence of two distinct levels of institutions supporting the collective processes needed to foster entrepreneurial discovery.
Firstly, there is an overall governance architecture and ‘rules of the game’: an overarching framework established to bring together the key actors and enable them to begin a dynamic discovery process. In the Basque case this was led and shaped ‘top-down’ by the regional government. It provided an initial set of broad thematic priorities and a governance framework that identified ‘by who’ and ‘how’ the strategy would be taken forward. It also facilitated the development of a general evaluation framework for the strategy and provided for coherence at a regional level, acknowledging the need to work across silos within government and to engage with other levels of government.
Linked to this overall architecture, a second level of institutions has emerged around the micro-processes that are being nurtured to particularise and valorise the S3 priorities in real time. Structured around steering groups for specialisation areas (e.g. clean energy or creative industries), these emergent discovery processes have had space to forge their own paths and to progressively seek greater granularity in terms of the specific activities developed. They involve more and different actors in distributed leadership roles; they are supported by activity-specific evaluation processes; and they play a critical role in fostering experimentation to keep the strategy alive.
Above all, the Basque experience with S3 highlights the significant institutional innovations that are necessary, at both the macro and micro levels, for static government plans to become replaced by living, multi-actor strategies. More dynamic regional innovation strategies require breaking down barriers: between different actors, between different departments of government, and between policy design and policy delivery. The two levels of institutional changes that we have observed in the Basque Country move in the direction of breaking down these barriers, providing foundations for the profound changes necessary if regional innovation policies are to shape responses to our biggest societal challenges.
Indeed, experimentation continues as we move towards the next generation of S3 in a fast-changing policy environment. Alongside the climate crisis, the COVID-19 pandemic and the war in Ukraine are contributing to heightened uncertainty and demonstrating the vulnerability of many traditional socioeconomic activities and supply chains in which European regions are embedded. From an innovation policy perspective, this accentuates the need to adopt a clearer directionality in innovation towards meeting urgent environmental and social sustainability challenges.
This is very much the thrust of the Partnerships for Regional Innovation (PRI) pilot action and Playbook recently launched by the European Commission. This brings together 63 regions, 7 cities and 4 member states to co-develop and test tools that better connect their regional strategies and policies to green and digital transitions.
The PRI Playbook establishes long-term societal wellbeing as its ‘guiding star’ and emphasises the need for a whole-of-government ‘strategic policy framework’, an ‘open discovery process’, and a ‘policy and action mix’ tailored to place-specific opportunities and challenges. The institutional changes already experimented in the Basque Country, and in many other regions, over the last decade of S3 implementation will need to evolve further to put this theory into practice and inject greater directionality into regional innovation policy. It is exciting then that the Basque Country has been selected as one of the regions that will participate in the PRI pilot action, and at Orkestra we are looking forward to accompanying the next stage of this journey with our research.
Mari Jose Aranguren
Mari Jose Aranguren is the General Director at Orkestra and Professor in Economics at Deusto University. She has worked at Orkestra since its beginning in 2006. Mari Jose is a recognised expert in the area of competitiveness and territorial strategy, cluster and networks, and the analysis and evaluation of policies, having published several books and articles in specialised national and international journals of impact.
Kevin Morgan, Senior Associated Researcher at Orkestra, is Professor of Governance and Development at the School of Planning and Geography, Cardiff University. He has been a Professor at the School of Planning and Geography at Cardiff University since 1994. Before that he was Senior Lecturer and Lecturer at the School of City and Regional Planning, Cardiff University. Prior to Cardiff he was a Research Fellow at the Science Policy Research Unit, University of Sussex (1986-1989) and at the School of Urban and Regional Studies, University of Sussex (1982-1986).
James Wilson is Research Director at Orkestra-Basque Institute of Competitiveness and teaching faculty at Deusto Business School.His research interests are in policy-relevant analysis of territorial competitiveness and socio-economic development processes.