Working paper

Smart specialization: theory and brief case studies

A Report to The European Commission, Directorate General JRC, JRC Seville

31 Dec 2018

The ‘Smart specialization’ (SS) project of the European Union is both an innovative project and an ongoing experiment on industrial and innovation policy, probably the biggest such experiment globally. This approach makes it possible to rediscover mechanisms that have been extremely successful creating wealth in the past, and may contribute importantly to the eradication of poverty also in the future. An important aspect of this project is that it emphasizes the importance of solving the problems of relative poverty and backwardness by interfering in the productive sector of the relatively poor areas, not by transfer of purchasing power from other and richer geographical areas. Rather than alleviating the symptoms of poverty through transfers (focusing on the poor as consumers), the Smart Specialization approach attacks the causes of poverty in the realm of production (focusing on the poor as producers). This reflects the original intention from Maastricht that the European Union should avoid becoming a ‘transfer union’. In the end, in the opinion of this author, a better understanding of smart and less smart specialization would also bring us closer to comprehend the uneven financial flows within the European Union, often originating in the productive sector.

Recognizing the importance of this project, not only inside the EU but also globally, this paper focuses on two issues. First a theoretical view, comparing the concept to other similar ideas over time – once extremely influential but now largely forgotten – and secondly with some brief case studies. The case studies come from two different countries and focus on two kinds of SS: the first set of three brief case studies focuses on how to increase income in the relatively poorest regions in a rich country (Norway), the second set of brief case studies focuses on using SS in order to raise the general wealth level of a country whose real wages were higher at the time of the Fall of the Berlin Wall in 1989 than now (Ukraine) .

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