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This paper discusses the ways that European regional policy has been re-shaped in order to build on the role played by entrepreneurship in driving regional innovation. The various lines of re-thinking which have helped to reform the policy draw heavily on modern theories of entrepreneurship and innovation, and these insights have contributed significantly to many of the elements of new policy logic and framework. Yet, these ideas also derive both from worldwide, rather than EU-specific insights, and also from a wide range of academic fields. Setting the EU agenda within the broader global context is therefore also important in order to help identify both the commonalities and differences between policy approaches in different types of places.

Based on a seminal policy paper (Foray et al., 2009), the Smart Specialisation Strategies (S3) approach was integrated into the reformed cohesion policy of the European Union for 2014–20. This large-scale European experience provides a unique case study of a new type of industrial policy particularly oriented towards the modernisation of industrial sectors. In this paper, we briefly review the fundamentals of the S3 approach. We identify and discuss the main properties of S3 that make it particularly suited to the problem of sectoral modernisation in the context of a mature economy. In the final part, we describe the designing of this policy, which represents a crucial point: whilst the objective of modernising traditional sectors is not in itself anything new, the way of proceeding within the S3 framework is relatively new and innovative.

We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity.

Purpose – The purpose of this paper is to focus on the distinction between smart specialisation and smart specialisation policy and it studies under what conditions a smart specialisation policy is necessary. Design/methodology/approach – A conceptual framework is built based on historical evidence of successful dynamics of structural changes at regional level qualified as “smart specialisation”. The identification of market and coordination failures that are likely to impede the occurrence of spontaneous process of smart specialisation makes a good case for a smart specialisation policy. Findings – The paper highlights important design principles for the policy process that should help to minimise potential risks of policy failures and policy capture. Research limitations/implications – The paper does assess the effect of smart specialisation on innovation and growth at regional level because it is too early to observe and measure effects. The paper confines itself to conjectures about the effects of such a policy. Practical implications – The paper makes recommendations and explains some of the practicalities about the implementation of the policy at regional level. Originality/value – The paper is one of the first dealing with the topic of smart specialisation policy.

En este libro nos planteamos un reto y una propuesta: el reto es la reactivación sostenible de la España Despoblada, compuesta por territorios con graves problemas de despoblación, envejecimiento y desequilibrio económico; la propuesta, que para hacer frente con éxito a esta problemática se requiere un ecosistema de colaboración, innovación y emprendimiento que consensue un modelo socioeconómico adecuado para la reactivación sostenible. Dicho ecosistema se ha venido desarrollando en el Consorcio UNED de la provincia de León arrojando resultados positivos que se pueden resumir a modo de decálogo para el desarrollo territorial sostenible: La Investigación, a través de un análisis y diagnóstico inicial que parte de hipótesis y premisas adecuadas al reto planteado y se basan en una visión que supera la de la Teoría Económica ortodoxa. La Transferencia, con una «escucha activa» que trata de dar soluciones operativas a los problemas del territorio. La Gobernanza, vía un ecosistema de innovación colaborativa con un modelo mixto de gestión. La Tecnología, en base a plataformas interoperables basadas en estándares que facilitan el trabajo colaborativo y la producción de contenidos digitales. La Oportunidad de la visión europea a través de los Fondos “Next Generation” El Emprendimiento de base social y tecnológica a través de un único Centro de Innovación Territorial que trata de evitar duplicidades y despilfarro de recursos públicos. Los Prototipos, que ofrecen respuestas ágiles basándose en una innovación abierta y multidisciplinar. El Patrimonio, a través de una puesta en valor de los recursos que aprovecha las potencialidades de las industrias creativas y culturales. El Catalizador del turismo sostenible e inteligente que aprovecha las capacidadestecnológicas y colaborativas del ecosistema para ofrecer «productos integrales que ponen en valor el territorio». La Medición de Resultados, en base al modelo de retorno social de la inversión que, de forma fácil de comprender por el ecosistema, permite retroalimentar los procesos promoviendo la mejora continua. [Texto de la editorial]

The paper examines the nature, rationale, and logic of the reforms to EU Cohesion Policy. A particular focus of the paper is on the concept of smart specialization and the use of this concept to help facilitate a results-oriented policy agenda. On the one hand, the arguments underpinning the reforms in part relate to modern thinking regarding the role of industrial policy. On the other hand, they also partly relate to advances in our understanding of the relationships between economic geography, technology, and institutions. At the same time, the specific features of the EU context also heavily influence the nature and logic of the changes, whereby legal and institutional matters linking Cohesion Policy to other EU policies all play an important role.

In this paper, we investigate the use of interactive effect or linear factor models in regional policy evaluation. We contrast treatment effect estimates obtained using Bai (2009) with those obtained using difference in differences and synthetic controls (Abadie and coauthors). We show that difference in differences are generically biased, and we derive support conditions for synthetic controls. We construct Monte Carlo experiments to compare these estimation methods in small samples. As an empirical illustration, we provide an evaluation of the impact on local unemployment of an enterprise zone policy implemented in France in the 1990s.

We study the long-run effects of one of the most ambitious regional development programs in U.S. history: the Tennessee Valley Authority (TVA). Using as controls authorities that were proposed but never approved by Congress, we find that the TVA led to large gains in agricultural employment that were eventually reversed when the program’s subsidies ended. Gains in manufacturing employment, by contrast, continued to intensify well after federal transfers had lapsed—a pattern consistent with the presence of agglomeration economies in manufacturing. Because manufacturing paid higher wages than agriculture, this shift raised aggregate income in the TVA region for an extended period of time. Economists have long cautioned that the local gains created by placebased policies may be offset by losses elsewhere. We develop a structured approach to assessing the TVA’s aggregate consequences that is applicable to other place-based policies. In our model, the TVA affects the national economy both directly through infrastructure improvements and indirectly through agglomeration economies. The model’s estimates suggest that the TVA’s direct investments yielded a significant increase in national manufacturing productivity, with benefits exceeding the program’s costs. However, the program’s indirect effects appear to have been limited: agglomeration gains in the TVA region were offset by losses in the rest of the country. Spillovers in manufacturing appear to be the rare example of a localized market failure that cancels out in the aggregate.

This article develops an evolutionary framework of regional resilience with a primary focus on the structural properties of local knowledge networks. After presenting the network-based rationales of growth and structuring of clusters, we analyze under which structural conditions a regional cluster can achieve short-run competitiveness without compromising long-run resilience capabilities. We show that the properties of degree distribution (the level of hierarchy) and degree correlation (the level of structural homophily) of regional knowledge networks should be studied to understand how clusters succeed in combining technological lock-in with regional lock-out. We propose simple statistical measures of cluster structuring to highlight these properties and discuss the results in a policy-oriented analysis. We conclude showing that policies for regional resilience should focus on ex-ante regional diagnosis and targeted interventions on particular missing links, rather than ex-postmyopic applications of policies based on an unconditional increase of network relational density.

The economic convergence of U.S. regions has slowed greatly, and rates of long-term nonemployment have even been diverging. Simultaneously, the rate of nonemployment for working age men has nearly tripled over the last 50 years, generating a social problem that is disproportionately centered in the eastern parts of the American heartland. Should more permanent economic divisions across space lead U.S. economists to rethink their traditional skepticism about place-based policies? We document that increases in labor demand appear to have greater effects on employment in areas where not working has been historically high, suggesting that subsidizing employment in such places could reduce the rate of not working. Proemployment policies, such as a ramped-up Earned Income Tax Credit, that are targeted toward regions with more elastic employment responses, however financed, could plausibly reduce suffering and materially improve economic performance.