Smart specialisation strategy (3S) returns to the EU agenda

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The ideas of the so-called “smart growth” and member states’ abilities in “specialization” have been introduced into the EU integration perspectives already over 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. It seems that recently the 3S ideas have had some new impetus to rebound…  

   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. It was first mentioned in 2017, in the initial Europe-2020 strategy where 3S has been tailored as a specific assistance tool for EU regions in more progressive growth “through modern challenges”; hence the 3S placement in the EU-wide cohesion and regional policies.
However, it was deemed as a cutting-edge technology transfer; instead of expecting an unrealistic overhaul of regional productive processes in line with futuristic technologies, the S3 encompasses sectors like traditional crafts, social innovation, or green energy. This way, the EU regions that lack sound scientific or industrial basis can still innovate and benefit from the EU financial support.
At the same time, niche sectors overlooked by private investors could receive a needed support by the EU support in strategic investing in areas where regions can excel; this way the EU pursued creating more resilient and competitive member states economies with sustainable growth and job creation.

Historical digest 
Initially, the Commission suggested two main spheres and categories in 3S: 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 could participate in multi-states’ cooperation) to develop competitive European “value chains” in growth.
The EU-wide 3S 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 advises and support the EU states could receive in numerous ways: a) by providing guidance and learning by good examples; b) by assisting strategy’s formation and policy-making; c) by facilitating peer-reviews and mutual assistance; d) by supporting access to relevant data, and e) by training necessary decision-makers and national policy staff.
The 3S concept 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.
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   While the foundational principles of S3 – specialization, prioritization and knowledge-based development – remain vital, the substantial global shifts of recent years required a fresh 3S examination. New modern challenges have become a major concern for national and sub-regional governance; thus new EU-wide innovative agenda identified such issues as reducing fossil fuel reliance, enhancing global food security, embracing digital transformation, advancing healthcare, and achieving circularity; these urgent challenges demand immediate attention and revision of the initial S3 ideas and priorities.
At the same time, S3 have become an important part of regional regulatory and administrative frameworks: i.e. issues of identifying the right policy mix for S3, sustaining the entrepreneurial discovery process, as well as monitoring and evaluating public measures linked to S3, are still at the forefront of the EU-wide regional policies.

3S priorities
The S3 key priorities, as was underlined above, are based on harnessing the inherent strengths of each region, fostering collaboration among businesses, research institutions, public authorities and civil society. Through a bottom-up approach, the EU empowers regions to design and implement their own specific growth, research and innovation strategies, aligning with local expertise, EU political guidance and global market demands. Emphasizing the importance of research and development, skills and entrepreneurship, 3S suggests a harmonized and dynamic EU-wide socio-economic system.
S3 priorities are defined according to competitive advantage, resources, institutional frameworks and conditions in the regions and countries: hence, regional and/or national 3S identify domains, areas and economic activities where the regions in question have competitive advantages or the opportunities to generate innovative and sustainable growth.
3S priorities on the ground are set through an inclusive, multi-level and interactive process: in this way private and public stakeholders can figure out the best ways forward, coherently with the unique conditions of their regions and socio-economic “composition”.
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= Italian region of Puglia: the EU funds supported the enterprise Tersan-3 to start and scale its activity. The EU-Italian partnership allowed Tersan-3 to practically implement the ideas of waste reduction and circular economy, assisted by solid science-based approach, refined organic waste to create natural fertilizers for agriculture while extracting clean energy from the by-product of its industrial process; residual energy then is redistributed into the local grid. With EU funding it has been able to grow, perfect its process and hire staff for research and development with the aim of creating bespoke fertilizers for different crops.
In this way, generally, the EU funds can allow small local firms with good ideas enter highly competitive markets by replacing venture capitals in sectors and territories that are overlooked by usual market actors. Besides the EU support assist technology transfer issues in areas that the market forces generally ignore.

   = Example from Slovakia: about one billion euros of EU funding has been supporting the creation of a modern system for early warning of neurodegenerative diseases; the project has in reality revolutionized the Alzheimer’s diagnosis. By analysing speech patterns, the project developed apps and software designed to detect various causes of cognitive impairment, including that of Alzheimer’s. This breakthrough enables early therapy and slowing disease progression. The project’s output includes an Alzheimer’s-dedicated app, called EWA, and the BRAINTEST app assessing memory, attention, and IQ.

   = In Lithuania, the Kaunas-based enterprise Inno Hemp is set to revolutionize the production of single-use packaging leading the shift from plastics to bio-degradable hemp fiber. Although the Hemp’s produced bio-plastic is not a new technology in itself, although with the help of about € 28 million in the EU funding, Inno Hemp boosts its potential with circular economy solutions. The project offers consumers not only the material, but also ways to ensure that these products are later not brought to nature, but back to people where they can use them again, says Inno Hemp director. And adds: “we provide not only the material, but also the service package, where the customer knows the full life cycle of the product, i.e. from the production of the material until the product is produced”.
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Bottom line
The 3S can be regarded as a strategic game-changer designed to invest in regions’ specific “capabilities”: i.e. it is a roadmap for an economically dynamic with which the EU can play a vital role in facing present and future global challenges such as fossil fuel reliance, enhancing global food security, embracing digital transformation, advancing healthcare and achieving circularity, etc.
Revised EU Cohesion Policy for up to 2027 contributes to the EU-wide strengthening economic, social and territorial cohesion by “correcting imbalances between countries and regions”; it also delivers on the Union’s political priorities, especially the green and digital transition.

   Recently adopted the so-called 3S “joint action plan” includes the following five actions oriented towards: – more competitive and smarter EU states; – greener and low carbon transitions to a net zero carbon economy; – more connected EU states and regions by enhancing mobility; – more social and inclusive member states’ growth; and – fostering sustainable and integrated development of all EU territories.
Existing EU funds are having the following priorities in the action plan: – the European Regional Development Fund, ERDF supports investments all mentioned policy objectives; but first two are of the main concern; – the European Social Fund+ has the fourth priority as the main direction of support; – the Cohesion Fund supports second and third policy objectives; – the Just Transition Fund, JTF provides support under dedicated specific objectives according to article eight of the JTF regulation; – the Interreg programs have 2 additional policy objectives at their disposal (art. 14, Interreg regulation): “better cooperation governance” and “safer and more secure Europe”.



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