Searching through the Haystack:The Relatedness and Complexity of Priorities in Smart Specialization Strategies

Abstract

This article examines which economic domains regional policy makers aim to develop in regional innovation strategies, focusing in particular on the complexity of those economic domains and their relatedness to other economic domains in the region. We build on the economic geography literature that advises policy makers to target related and complex economic domains, and assess the extent to which regions actually do this. The article draws on data from the smart specialization strategies of 128 NUTS-2 regions across Europe. While regions are more likely to select complex economic domains related to their current economic domain portfolio, complexity and relatedness figure independently, rather than in combination, in choosing priorities. We also find that regions in the same country tend to select the same priorities, contrary to the idea of a division of labor across regions that smart specialization implies. Overall, these findings suggest that smart specialization may be considerably less place based in practice than it is in theory. There is a need to develop better tools to inform regions’ priority choices, given the importance of priority selection in smart specialization strategies and regional innovation policy more broadly.