Smart Specialization Policy in the EU: Relatedness, Knowledge Complexity and Regional Diversification

32 Pages Posted: 5 Jul 2017

See all articles by Pierre Alexandre Balland

Pierre Alexandre Balland

Utrecht University - Department of Economic Geography

Ron A. Boschma

Utrecht University - Faculty of Geographical Sciences

Joan Crespo

University of Toulouse 1

David L. Rigby

University of California, Los Angeles (UCLA) - Department of Geography

Date Written: June 21, 2017

Abstract

Smart specialization has become a hallmark of the EU’s Cohesion Policy. Envisaged as a bottom-up initiative identifying local knowledge cores and associated competitive advantages, the operationalization of smart specialization has been rather limited, as a coherent set of analytical tools to guide the policy directives remains elusive. To tackle the weak underpinning of smart specialization policy, we propose a policy framework around the concepts of relatedness and knowledge complexity. We use EPO patent data to provide evidence on how EU regions develop new technologies in the period 1990-2009. We find that diversifying into more complex technologies is highly attractive but difficult for EU regions to accomplish. Regions can overcome this diversification dilemma by developing new complex technologies that build on local related capabilities. We use these findings to construct a policy framework for smart specialization that highlights the potential risks and rewards for regions of adopting competing diversification strategies. We show how potential costs of alternative strategies in regions may be assessed by making use of the relatedness concept, and how potential benefits of various smart specialization strategies can be derived from estimates of the complexity of technologies. A series of case-studies of different types of regions illustrate the utility of this policy framework.

Keywords: smart specialization, knowledge complexity, technological relatedness, regional diversification, EU Cohesion Policy

JEL Classification: O25, O38, R11

Suggested Citation

Balland, Pierre Alexandre and Boschma, Ron A. and Crespo, Joan and Rigby, David L., Smart Specialization Policy in the EU: Relatedness, Knowledge Complexity and Regional Diversification (June 21, 2017). Available at SSRN: https://ssrn.com/abstract=2995986 or http://dx.doi.org/10.2139/ssrn.2995986

Pierre Alexandre Balland (Contact Author)

Utrecht University - Department of Economic Geography ( email )

Heidelberglaan 2
Utrecht
Netherlands

HOME PAGE: http://paballand.com

Ron A. Boschma

Utrecht University - Faculty of Geographical Sciences ( email )

Postbus 80.115
3508 TC Utrecht
Netherlands
+31 30 2532896 (Phone)
+31 30 2532037 (Fax)

Joan Crespo

University of Toulouse 1 ( email )

Place Anatole France
Toulouse Cedex, F-31042
France

David L. Rigby

University of California, Los Angeles (UCLA) - Department of Geography ( email )

Los Angeles, CA
United States

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