Strategic Approaches to Regional Development

Smart Experimentation in Less-Favoured Regions

Iryna Kristensen, Alexandre Dubois, Jukka Teräs

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351620246
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The existence and persistence of regional disparities between European regions require context-tailored policies to promote structural change. This book explores the congruence between place-based development and regional competitiveness in the EU context.

Drawing on a range of social science disciplines, this book unpicks the complexity of regional transformation processes, aiming to enhance the applicability and transferability of theoretical approaches to innovation and place-based regional development in diverse European territorial settings. The contributors have a particular focus on less-favoured regions and on the application of Smart Specialisation – a strategic approach to innovation-based regional development – to the issues at hand.

The book comes at a critical moment, meeting the growing demand of academics, practitioners and policymakers with an interest in promoting regional economic growth and well-being.

1 Introduction

Unveiling the potential of less-favoured regions in regional policy

Iryna Kristensen, Alexandre Dubois and Jukka Teräs

Introduction

The ongoing globalisation processes have triggered a reconsideration of the relationship between the concepts of space and time in geography. Rodríguez-Pose describes the contemporary configuration of the global economic space as “becoming more ‘spiky’, peppered with economic agglomerations separated by ever growing economic ‘deserts’” (Rodríguez-Pose, 2011, p. 351). The possibility of networking through advanced information and communication technologies creates a flatter world (Rodríguez-Pose and Crescenzi, 2008) that essentially unfolds by creating bridges between the mountain tops (i.e. urban regions). But it also creates a steeper slope to climb for actors in the valleys, i.e. what will later be introduced as less-favoured regions, that strive to be part of these processes. Although the predicaments of the death of distance (Cairncross, 1997) or the annihilation of space (Castells, 1996; Massey, 1999) never materialised as potently as imagined a few decades ago, it is fair to acknowledge that urban economies have indeed become increasingly powerful in the global economy, often casting a shadow on their respective national economies, and that the processes of socio-economic marginalisation have heightened on the periphery of these centres.

Barca et al. (2012) refers to two sides of the space concept: on the one hand, space is rather ‘slippery’, marked by continuously intensified mobility of goods and people; on the other hand, however, it is rather ‘sticky’ and ‘thick’ due to an increasing resource concentration in large agglomerations. This reasoning presents a dilemma to policymakers as it implies that change and development processes are “non-linear, complex and continually emergent, popping up in unexpected ways from a variety of actors” (Shucksmith, 2009). This changing perception of space and geography, combined with the existence of regional disparities between European regions as well as the relative failure of public selective intervention, calls for a reconsideration of regional policy. The former generation of regional economic development approaches, largely based on neoclassical economic thinking (e.g. Solow, 1956), focused predominantly on external factors that may predict economic growth without sufficient consideration of the presence of knowledge asymmetries and the importance of region-specific assets.

The development and dissemination of good practices have become key components in the policy process at the transnational level, promoting policy transfer and learning (Bulkeley and Betsill, 2005); yet different policy concepts take root in different ways across the European territory (Böhme and Waterhout, 2008; Stead, 2012). Following the “best practices” logic of equal applicability of European Union (EU) policies in diverse regional settings, many policymakers tend to fall for the fallacy to ‘imitate success stories’ and eventually fail because differentiating factors such as local governance systems, administrative cultures and professional capacities are not sufficiently taken into consideration (Stead, 2012, p. 107). Barca refers to it as the “best practice syndrome” (Barca, 2009, p.114) developed by European authorities in an attempt to promote a one-size-fits-all blueprint of territorial governance arrangements, based on successes observed in a few regions.

Looking beyond endogenous development

Endogenous approaches to socio-economic development have increasingly paid attention to the interplay between local and extra-local interrelations and the role of endogenous forces and processes in facilitating territorial development (Lowe et al., 1995; Ray, 1998). The logic of such approaches lies in the ability of a territory “to think in terms of cultivating its own development repertoire” (Ray, 1999); this is understood as entailing “the idea of local ownership of resources and the sense of choice [. . .] in how to employ those resources [. . .] in the pursuit of local objectives” (Ray, 1999). In other words, “the well-being of a local economy can best be animated by basing development action on the resources – physical, human and intangible – that are indigenous to that locality” (Ray, 1998), which should be sustained and enriched by combining internal and external modes of cooperation (Mattes, 2012).

This growing importance of localities and their interaction for economic growth has marked a shift in regional policymaking towards strategic mobilisation of diverse territorial assets for future growth and competitiveness (Barca et al., 2012). Increased interdependencies between various regional actors, which extend beyond locally based and territorially rooted interactions, have grown to become a significant precondition for enhancing existing or discovering new competitive advantages necessary for economic growth. In this light, the EU promotes smart specialisation strategies (S3) as an attractive approach to support economic transformation and differentiation based on local resources and comparative strengths. The S3 perception is now gradually being adopted by policymakers at all levels of government; however, although the concept has gathered significant momentum during the past few years, its applicability (as well as the long-term effects of its application) to diverse territorial settings remains debatable. Former practices have shown that, given the extent of territorial diversity, “no single model of how to implement local development or of what strategies or actions to adopt” (OECD, 2001) may be applicable to all regions, nor would it be desirable as a matter of fact. This is particularly true for the so-called less-favoured regions as their innovation capabilities deviate in many respects from those regions branded as “success stories” (Tödtling and Trippl, 2005). Due to varying contextual factors, whatever good practices developed “elsewhere” would not add much to policy learning without careful consideration of what constitutes “local circumstances” (Stead, 2012, p. 111).

Against this backdrop, the overarching objective of this book is to contribute to the ongoing debate on the congruence between place-based development and regional competitiveness in the context of Europe’s less-favoured regions. Throughout the book, it is shown that the added value of experimentation and testing activities, not least in relation to the ongoing implementation of S3, is about helping regions “to develop their own sources of economic dynamism” (Benner, 2014). The book aims to provide an outlook on the complexity of regional transformation processes taking place in less-favoured regions and enhance the applicability and transferability of theoretical approaches to innovation and place-based regional development in diverse European territorial settings.

What do we mean by ‘less-favoured regions’?

‘Less-favoured regions’ (LFRs) is an umbrella term that comprises an amalgam of very diverse regional settings. Although there is no clear-cut definition of what makes a region less favoured, this assessment is often made by supra-regional tiers of government on the basis that these regions are faced with a certain disadvantage that may hamper their future development prospects. Here, an attempt is made to roughly identify three main types of these disadvantages: sectoral, locational and institutional.

Certain regions have an economic profile or sectoral specialisation that is deemed ‘out of tune’ with the contemporary, global economic development processes. For instance, rural regions that still have a strong profile of commodity production, such as agriculture, forestry, fisheries or mining, are considered as not having the proper ‘tools’ for competing globally in an economy that is overly focused on knowledge and service industries. Poor endowment in R&D capabilities in these regions hampers the ability for regional actors to benefit from knowledge spillovers. Likewise, regions with a strong legacy of manufacturing industries that used to hold a prominent place in their respective countries’ development during the Industrial Revolution are considered backward and unfit as sites for future economic growth. They were considered remnants of another (industrial) age and became increasingly conceived as ‘shadow areas’ of urban–urban connectivity (Richardson, 2000, p. 58). The demotion of these regions from engines of growth to regions in transition has lasted for decades, with dire social consequences such as long-term structural unemployment. These regions can be found in old industrial nations, for instance the UK (Liverpool region, Wales), France (Nord-Pas-de-Calais), Belgium (Wallonia).

A second type of disadvantage is what Copus (2001) defined as ‘locational disadvantage’. Locational disadvantage refers to the way the geographical context of a region, whether linked to physical features or human development, affects the ability of these regions to compete ‘fairly’ with other regions. In the economic geography literature, this has often been referred to in terms of the centre–periphery paradigm. In that respect, ‘peripherality’ is considered a spatial theory that links geographical features, such as population distribution or physical distance, to the economic development processes (Anderson, 2000). Copus (2001) identified a number of different factors that contribute to the creation of such locational disadvantage: causal, e.g. increased transportation costs or lack of critical mass for firms and services; contingent, e.g. high cost of service provision to persons and businesses and low rates of entrepreneurship and innovation; and associated, e.g. dependence on primary industries, poorly developed local and interregional infrastructure. However, there now is a better understanding that there is no causal relationship between being peripheral in geographical terms and lagging behind in economic terms, as those can be fertile grounds for competitive and innovative firms (Virkkala, 2007). In addition, recent studies of social exclusion and poverty have shown that even the most ‘central’ regions are subject to pockets of socio-economic marginalisation that create a much more intricate patchwork of inner peripheries throughout the European territory (Madanipour et al. 2015, Copus et al., 2017).

Although the first two types are fairly old in the context of EU Cohesion Policy (ECP), a more recent typology of LFRs shares significant similarities with the former one. Indeed, the EU enlargement to embrace Central and Eastern European countries in 2004 has radically changed the landscape of what can be considered as an LFR. Suddenly, a large number of regions, including highly urbanised ones, affected by low levels of development, with high unemployment and low GDP compared to European standards, had to be catered for in cohesion policy. The focus on supporting the catching up of lagging regions and countries was a trigger for the ‘competitiveness turn’ of ECP in the mid-2000s.

These different types of disadvantages highlight different mechanisms that may contribute to the detachment of these regions from contemporary growth processes. Tödtling and Trippl (2005) deemed that their resulting innovation capabilities may be “assigned to specific types of problem regions, such as peripheral regions (organisational thinness), old industrial areas (lock-in) and some metropolitan regions (fragmentation)”.

Broadening the scope of smart specialisation thinking

Regional policy is a central means for implementing the Europe 2020 strategy, the EU’s ten-year jobs and growth strategy that was launched in 2010 to create the conditions for smart, sustainable and inclusive growth (European Commission, 2010). In its current approach, regional innovation policy tries to emphasise the role played by geography in promoting economic development (McCann and Ortega-Argilés, 2013). The concept of smart specialisation, which was originally developed to address the gap between Europe and other global competitors (namely, the USA and Japan) in R&D investment (Foray and van Ark, 2007), is currently the cornerstone of the EU’s bottom-up approach to regional innovation. Much of the literature focuses on investigating practical cases of the implementation of smart specialisation. However, some alternative approaches have already been proposed to refine the current smart specialisation concept, e.g. Benner’s proposal of the concept of ‘smart experimentation’ (Benner, 2014).

However, and as shown throughout this book, the scope of territorial innovation initiatives taking place in LFRs is much wider than just smart specialisation implementation. Instead, the analysis of smart specialisation should be enriched by covering additional methods and approaches to promote innovation and growth –beyond the scope of the policy instrument. Moreover, the search for good methods for, approaches to and practices in regional innovation should also be extended to regions outside the EU.

This book thus proposes to highlight the learning processes emerging from the experimentation with various methods and approaches to promote innovation and growth in LFRs, both inside and outside Europe. Although many of the experiences showcased stem from the implementation of smart specialisation strategies, it includes a more comprehensive set of methods for and approaches to regional innovation policy.

Less-favoured regions and the making of EU Cohesion Policy

The fate and development of LFRs has long been the main focus of EU Cohesion Policy. However, the discourse and perception of the potentials and challenges inherent in these regions’ development has evolved along with the changing institutional context of EU policymaking. Indeed, although the design and implementation of ECP may have changed over time, its main historical ambition has remained “to promote economic convergence by assisting less favoured regions, namely, by means of investments funded by EU Structural and Cohesion Funds” (Medeiros, 2017).

The first reference to LFRs was made in the founding Treaty of Rome in 1957. At that time, the challenge posed by the development of LFRs was associated with the goal of economic cohesion at the national level (“strengthen the unity of their economies”) and the ambition to reduce the growing disparities by “mitigating the backwardness of the less favoured regions” (Faludi, 2004; Faludi, 2011). Early on, the agenda promoting regional development in LFRs was thus paired with the greater ‘cause’ of the recovery from the aftermath of WWII on European post-war economies.

In the 1986 Single European Act, the focus on economic cohesion was augmented by a reference to social cohesion, although this changed little how issues related to the development of LFRs were apprehended. LFRs were addressed in terms of backwardness. The accession to the EU of Austria, Finland and Sweden in 1995, relatively rich countries compared to the EU average, but with extensive mountainous and sparsely populated areas, changed the perception of the characteristics of LFRs away from mere economic backwardness to more complex territorial development factors such as topography and remoteness to decision centres. The accession to the EU of Central and Eastern European countries in 2004 shifted the perception of LFRs back to economic backwardness, as these countries were much poorer and much more unstable institutionally. In that regard, cohesion policy aimed at closing the gap between poor and rich European countries and regions at the same time (Margaras, 2016).

The Treaty of Amsterdam in 1997 then further specified the ‘objects’ of cohesion policy, i.e. its main beneficiary regions: least-favoured regions, rural areas, areas affected by industrial transition and regions that suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross-border and mountain regions (Faludi, 2011).

A major policy development from this era was the shift from a redistributive to a growth-oriented paradigm of cohesion policy. The rationale for this shift was laid down in the Green Paper on Territorial Cohesion. This new paradigm aims at supporting the ‘harmonious development’ of all places, and the role of public policy is to help these territories to make be...

Table of contents

• Cover Page
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• List of Boxes
• List of Graphs
• Notes on Contributors
• Foreword by Arne Isaksen
• Acknowledgements
• 1 Introduction: Unveiling the Potential of Less-Favoured Regions in Regional Policy
• Part I Shifting perspectives: Reframing regional innovation processes in less-favoured regions
• Part II Smart specialisation in practice: Territorial challenges and opportunities
• Part III Operationalising smart diversification
• Index