Modern trends in European integration: “smart specialization” in the Baltic Sea region

The article is addressing only some though quite vital changes concerning EU’s single market perspectives in line with the contemporary division of labour and more coordinated political economies in the member states. The idea of a so-called “smart growth” and member states’ “specialization” coined into the EU integration sphere a decade ago is not only the strongest facets of modern political economy; the idea shall be an integral part of “hybrid-type” transitions in national socio-economic development.

Both European integration and the global development have been subject recently to constant transformations; actually all the changes, generally unexpected, seem to be permanent. Globalisation has brought enormous benefits to almost all countries and regions in the world -both in developed and less-developing economies; the process has been providing numerous opportunities for the EU member states as well. However, while the benefits are widely spread, the costs are often borne unevenly among the EU countries. Hence, the EU institutions, and mainly the European Commission highlighted the necessity to take up the challenges of economic modernisation; at the same time, the EU member states need to empower their regions and help them create additional and competitive value.
Generally, a positive reflection to modern challenges means embracing innovation, digitalisation, decarbonisation and developing perspective people’s skills. To be competitive in the world, the EU in general, and the states around the Baltic Sea region (BSR) in particular, have to develop their own so-called smart specialisation strategies.
Among the EU states and regions registered in the European 3S platform are all BSR states: three Baltic States joined as unified entities, others with several regions, e.g. Denmark with 5 regions, Finland with 18, Germany and Sweden with 12 each and Poland with 8 regions.

First steps…
Initially, the Commission suggested two main spheres and categories of smart specialisation for the member states’ strategic planning (suffice it to say that in post-pandemic period, the 3S priorities have changed significantly):
a) supporting industrial transition in the member states, i.e. making the states’ growth “more productive” either through new industries and/or manufacturing, and
b) supporting inter-regional partnerships (at least four EU member states can participate in multi-states’ cooperation) to develop competitive European “value chains” in growth.
The EU-S3 platform has been meant to provide advice to the member states and the regions for the design and implementation of their “smart specialisation strategies”. Such advices and support the EU states can receive in numerous activities: a) through providing guidance material and good practice examples; b) by assisting 3S strategy formation and policy-making; c) by facilitating peer-reviews and mutual learning; d) by supporting access to relevant data, and e) by training necessary decision-makers and national policy staff.
The 3S concept, conceived within the EU’s reformed cohesion policy was oriented towards member states’ “novel approach” characterized by the identification of strategic areas for perspective growth based on the analysis of the sectoral strengths and potentials in socio-economic growth, as well as on an enhanced region-wide entrepreneurial process. 3S is outward-looking and embraces a broad view of innovation including but certainly not limited to technology-driven approaches, supported by effective monitoring mechanisms.
Reference to: https://s3platform.jrc.ec.europa.eu/what-we-do

Science, research and innovation in 3S
During the whole 3S process, the research and innovation (R&I) has been regarded as a driving force in successful implementation in the states: thus, present Horizon Europe, the EU’s €95 billion research and innovation program for 2021-27 represent a good R&I impetus to growth.
For example, the first Horizon Europe grant agreements will take place this fall with the new calls soon to be launched.
The EU Research Commissioner Mariya Gabriel several times underlined the importance of valuable and mutually beneficial R&I cooperation between the states and EU institutions within the European single market.
However, in the EU strategic plan for 2020-24 there isn’t e single word about 3S; though in one of the six “broad political goals”, i.e. lobs and economy there are some hints to increased production. But this goal is to be treated carefully: “we need to rethink the way we produce and consume”, acknowledges the strategy’s website.
In the new EU’s concept of “industry 5.0” industry’s role is recognized in “achieving societal goals” and a “resilient provider of prosperity”
Source: https://ec.europa.eu/info/research-and-innovation/strategy/strategy-2020-2024_en

For example, R&I can help the states “to move quicker to circular economy” with lower negative effect of using natural resources and minimal waste. Besides, R&I will make industry greener while reducing poverty, inequality and protecting environment.
However, by acknowledging the EU’s role in supporting growth, creating quality jobs (specifically for young people and SMEs), creating “new home-grown businesses” and making the member states an attractive place for businesses and investment, the strategy doesn’t show the concrete ways to implement the goals. There is no doubt that 3S approach is really missing.

3S strategy: past and present
By the end of 2017, the Commissioner for the EU regional/cohesion policy fundamentally re-designed initial 3S guidelines proposing five new steps which the EU-27 member state and/or region should take in order to implement 3S and (at the same time) get a share “in a value chain in a globalised economy”. These steps included: embracing innovation, increasing digitalisation, reducing pollution (so-called decarbonisation process), developing new skills, and breaking down barriers to investment. It has to be noted that implementation of these vital priorities in national budgeting was dramatically tarnished during last years’ events concerning the spread of COVID-19 pandemic, as well as introducing additional common European priorities concerning climate change measures and sustainability.
The 3S approach in the EU states during last 5-6 years has already facilitated mutual learning, data gathering, analysis, and networking opportunities in about 170 EU regions and 18 national governments. Various EU regions joined forces and pooled resources on the basis of matching smart specialisation priorities in high valued added sectors; for example, partnerships among EU states and/or regions have been developed in the fields of 3D printing, medical technology, smart grids, solar energy, sustainable buildings, high-tech farming, etc.
More active smart specialisation approach has appeared in all EU regional policy programs already in 2014. Since then, such approach improved the way regions designed their innovation strategies, by closely involving local businesses and researchers.
Over 120 smart specialisation strategies have been developed since; more than € 67 billion from the European Structural and Investment Funds and national/regional funding have been available to support these and other 3S initiatives.
The Commission predicts that the 3S achievements would bring 15 thousand new products to markets, create 140 thousand new start-ups and 350 thousand new jobs in the years to come.
See “smart specialisation in action”, in:
http://ec.europa.eu/regional_policy/sources/docgener/guides/smart_spec/strength_innov_regions_en.pdf
Note: about the S3 Platform and the strategy’s implementation in such spheres as good practice examples, strategy formation and policy-making, mutual learning and access to relevant data, as well as policy-making training, see: http://s3platform.jrc.ec.europa.eu/home

Specific attention in the EU is given to developing regional smart specialisation strategies (R3S). These strategies aim at making innovations as the driving force for growth in all EU regions. As part of the previous EU-2020 strategy to create a smart, sustainable and inclusive economy, regional governments have been designing economic transformation agendas that are concentrate on existing strengths, competitive advantages and national resources’ potential. These strategies provide a focus for policy support in the member states, help to use European Structural & Investment Funds and aim to stimulate private investment for sustainable growth. See: national/regional innovation strategies for smart specialisation factsheet.

The 3S idea seemed quite a perspective and resolute solution for the EU’s integration paths which was approved a decade ago: the EU institutions (through the EU Cohesion Policy) agreed on an “initial design” of better national policies for boosting innovation-driven growth in the member states and regions through the use of “smart specialisation” strategies. In a report commissioned in 2012 by the Organisation for Economic Co-operation and Development (OECD) in cooperation with the EU some important steps have been envisioned supported by the then EU’s political guidance. Some practical aspects of coordination with the states’ governance in 3S’ implementation have been included in the work of two European Commissioners responsible for: a) industry and entrepreneurship, and b) research, science and innovation.
However, the present Commission college team in force from 2019 has almost “forgotten” about this important facet in European integration; modern EU’s priorities were directed towards other –not less important- priorities, such as digitalisation, sustainability, climate change measures, etc. whish became visible during the last decade. Suffice to say that the latest states’ assessments concerning 3S implementation are dated some three-four years ago (according to data from the EU’s websites)…
The member states’ economic and political freedom is unlikely to endure long periods if the single market continues to “defend” itself by imposing so-called universal (but, in fact directed from the Commission) approaches to the European market. The latter is going to survive only as a “market” of best, smart, specific and competitive goods and services produced in all 27 member states.

Smart specialisation strategies: key elements
Each EU state which joined the 3S platform shall have to follow the following key principles:
• Smart specialisation is a place-based approach, meaning that it builds on the assets and resources available to regions and the states and on their specific socio-economic challenges in order to identify unique opportunities for development and growth;
• In endorsing a national 3S, the state must make priorities in the budget and choices for investment. Member states and regions ought to support only a limited number of well-identified priorities for knowledge-based investments and/or clusters, as “specialisation” means focusing on competitive strengths and realistic growth potentials supported by a critical mass of activity and entrepreneurial resources;
• Setting 3S priorities should not be a top-down, picking-the-winner process; it should be an inclusive process involving all interested partners “centered on entrepreneurial discovery” , which is an interactive process in which market forces and the private sector are discovering and producing information about new activities, followed by national governance’s assessment of the outcomes and empowering those participants which are most capable of realizing the 3S;
• The strategy should embrace a broad view of innovation, supporting technological as well as
practice-based and social innovation. This would allow each region and the EU states to shape
policy choices according to their unique socio-economic conditions;
• Finally, a good 3S strategy must include a sound monitoring and evaluation system as well as a
revision mechanism for updating the strategic choices and their implementation.

References to the EU Joint Research Center’s document at: https://s3platform.jrc.ec.europa.eu/documents/portlet_file_entry/20125/S3-Key-Elements.pdf/23a14b4c-f871-9a77-7e93-0b19e4b910f1

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