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

The ideas of a so-called “smart growth” and member states’ “specialization” have been introduced into the EU integration perspectives about a decade ago. It was regarded both as one of the strongest facets of modern EU’s political economy, and a specific economic modernisation tool in the member states’ growth patterns; both shall be within the integral part of “hybrid-type” transitions in socio-economic development. Examples from the Baltic States attempts show similarities and specifics in approaches to 3S. 

The idea of smart specialisation strategies (3S) seemed from the beginning quite a perspective and resolute approach to resolve 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 in 3S 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 EU member states.

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 concept of “smart specialisation” emerged after the global financial crisis that has had dramatic consequences for European and the Baltic States too. In three 3S denominations, the “smart” growth means that the EU states have to explore mainly innovative approaches to development based on the outcomes and perspectives of the 4th technological revolution.
More in: https://www.weforum.org/focus/fourth-industrial-revolution.
Another “S”- specialisation – is about the states and regions’ optimal capacities in using available resources (natural, human, etc.) in achieving competitive advantages in Europe and globally.
Then, finally, the “strategic” aspect in growth means defining the best perspective vision for any state/region in the long-term perspective.
It is important to note that a uniting factor in 3S is a strategic economic growth in any state shall be achieved –generally – through support from science, research and innovation.
More in: Sparitis O. and Eteris E. Modern European science policy: challenges and opportunities for Latvian perspective growth. – SIA Medicinas Publish. 2019. – 124 pp.

Smart specialisation strategies: key elements
Each EU state which joined the 3S platform is obliged 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

Science, research and innovation in 3S
During the whole 3S historic 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 already in the fall of 2021 with the new calls for the interested partners.
The EU research Commissioners 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. In that sense, there is no doubt that 3S approach is really missing in national growth strategies.

The 3S specific aspects in the Baltic States
During last five years, the three Baltic States have seen some common and specific approaches to “smart specializations”. For example, Estonian 3S approach includes: e-health; bio-technology (incl. healthy food, medicine, diagnostics, therapy and bio-banking); ICT industry and robotics; as well as other ICT’s application (incl. cybersecurity, robotics, e-governance and “big data”); materials technology, and rational use of natural resources.
However, the Latvian 3S approach seems rather different concentrating on: knowledge intensive bio-economy; biomedicine and medical technologies; smart materials, technology and engineering; advanced ICT; and smart energy;
Finally, 3S in Lithuania has been slightly different too, including: agricultural innovations and food technologies; sustainable energy; new materials, production processes and technologies; health- and bio-technologies; transport, logistics and ICT; inclusive and creative society.
More on 3S composition in the EU’s sub-regional integration in: Eteris E. EU’s macro-regional cooperation: smart specialisation approach. In:
http://www.baltic-course.com/eng2/modern_eu/?doc=154109

General links: = Commission’s website on 3S platform: https://s3platform.jrc.ec.europa.eu/s3-platform; = More on the EUSBSR in: https://s3platform.jrc.ec.europa.eu/s3-in-baltic-sea-region
On energy and gas: https://www.baltictimes.com/the_fate_of_natural_gas_in_the_european_green_deal/

 

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