2015 Jens Sà rvik and Alexander Kleibrink Alexander Kleibrink, Jens Sà rvik and Katerina Stancova S3 Working Paper Series No 08/2015 No. 07/2014 No. 08/2014 Mapping Innovation Priorities and Specialisation Patterns in Europe European commission Joint Research Centre Institute for Prospective Technological Studies Contact information Institute for Prospective Technological Studies Address: Edificio Expo, C/Inca Garcilaso, s n 41092 Seville, Spain E-mail: jrc-ipts-secretariat@ec. europa. eu Tel.:++34 9544 88318 Fax:++34 9544 88300 http://ipts. jrc. ec. europa. eu /http://www. jrc. ec. europa. eu /This publication is a Technical Report by the Joint Research Centre of the European commission Legal Notice This publication is a Technical Report by the Joint Research Centre, the European Commission†s in-house science service It aims to provide evidence-based scientific support to the European policy-making process. The scientific output expressed does not imply a policy position of the European commission. Neither the European commission nor any person acting on behalf of the Commission is responsible for the use which might be made of this publication JRC 95227 ISSN 1831-9408 (online Spain: European commission, Joint Research Centre, 2015  European union, 2015 Reproduction is authorised provided the source is acknowledged 1 Mapping Innovation Priorities and Specialisation Patterns in Europe Jens Sà rvik and Alexander Kleibrink European commission, JRC-IPTS, Seville (Spain S3 Working Paper Series nâ°08/2015 †January 2015 S3 Platform, JRC-IPTS Abstract Mapping public innovation priorities is important for policy makers and stakeholders, allowing them to explore the potential for collaboration and to better understand innovation dynamics. This working paper presents original data on innovation strategies for smart specialisation (RIS3) in European union (EU) regions and Member States, obtained from the Eye@RIS3 open data tool for sharing information on the areas identified as priority areas by 198 innovation strategies. It also contextualises these priorities and specialisation patterns with regard to the concept of †smart specialisationâ€. The most common RIS3 priority areas in the EU are energy, health, information and communication technologies, food, advanced materials, services, tourism, sustainable innovation advanced manufacturing systems, and the cultural and creative industries. The paper also explores the degree to which policy makers are creating unique portfolios of priorities or, in contrast, are imitating one another. We find that few regions have developed similar combinations of priorities However, there are groupings around a number of popular categories and connected to prioritised EU objectives. Finally, we compare the main areas of planned investment with sectoral data on firms, employment and patents, with the conclusion that the connection between priorities and the economic and innovation structures is weak Keywords: smart specialisation, prioritisation, innovation policy, open data, structural funds Acknowledgements The authors would like to express their gratitude to a number of colleagues for their kind comments, cooperation and contributions. Many thanks go to Sara Amoroso, Ales Gnamus, John Edwards and Katja Reppel. We are also very grateful to our colleagues who have been working on the development of the Eye@RIS3 tool and the database 2 1. Introduction This working paper presents the first comprehensive mapping of innovation priorities and specialisation patterns in Europe. It is based on an analysis of the current generation of innovation strategies for smart specialisation (RIS3), which are a cornerstone of the reformed European union EU) Cohesion Policy. For visualising this information, the European Commission†s S3 Platform has developed Eye@RIS3, an open data tool for gathering and diffusing information on the envisaged regional and national areas of smart specialisation (1 RIS3 are central to the European Commission†s effort to foster smart and sustainable growth European commission, 2010a. During the current programming period (2014†2020) of the European Regional Development Fund (ERDF), regional and national authorities should develop RIS3 in order to ensure effective and efficient investments in research and innovation (R&i)( European Commission, 2010b. One essential feature of RIS3 is the concentration of funding on a limited number of R&i priorities (2). The Eye@RIS3 tool provides information on these prioritised areas with the aim of facilitating searching for potential cooperation partners, making potential partners aware of one†s priorities and helping regions and countries to identify unique activity niches. We use these data to give an overview of the most common priority areas and to explore the extent to which policy makers develop unique niches and combine priorities in their RIS3. We also explore the extent to which different regions†and countries†priorities relate to existing innovation 2. Analytical background: why priorities matter for smart specialisation As part of the Europe 2020 Strategy, the European commission aims to foster smart sustainable growth within the European union. RIS3 have emerged as key processes for structural change towards more knowledge-intensive and higher added value activities, and were announced in the Innovation Union flagship (European commission, 2010a. For the current programming period 2014†2020), regional and national policy makers are required to develop RIS3 before investing ERDF resources in R&i (European commission, 2010b. The objective of developing RIS3 is mainly to leverage public and private funds towards smart specialisation priorities, which should be identified through an entrepreneurial discovery processes (3 According to Dominique Foray who coined the term, smart specialisation is †the capacity of an economic system (a region for example) to generate new specialities through the discovery of new domains of opportunity and the local concentration and agglomeration of resources and competences in these domains†(Foray, 2015. These are codified then in RIS3. According to the 1) http://s3platform. jrc. ec. europa. eu/map 2) Smart specialisation priorities are areas †to build competitive advantage by developing and matching research and innovation own strengths to business needs in order to address emerging opportunities and market developments in a coherent manner, while avoiding duplication and fragmentation of effortsâ€; see Article 2 (3) of the Common Provisions Regulation for the European Structural and Investment funds (Regulation (EU) No 1303/2013 of 17 december 2013 3) A process whereby national or regional managing authorities, together with stakeholders such as research institutions industry and social partners, identify and produce information about new activities and develop roadmaps to realise the potential 3 Common Provisions Regulation for the European Structural and Investment funds (ESIF), smart specialisation strategies are national or regional R&i strategic policy frameworks (or part of such frameworks). ) These strategies define priorities in order to build competitive advantage by developing and matching regions†or countries†strengths in R&i with business needs; this should allow emerging opportunities and market developments to be addressed in a coherent manner while avoiding duplication and fragmentation of efforts. RIS3 should be developed in an entrepreneurial discovery process and should include †upstream actionsâ€, to prepare regional R&i organisations for participation in Horizon 2020, and †downstream actionsâ€, to provide the means of exploiting and diffusing R&i results. Furthermore, RIS3 have to comply with the features of well -performing national or regional R&i systems with regard to the Innovation Union flagship (European commission, 2010a The concept of smart specialisation builds on knowledge accumulated from different Commission services as regards innovation policy development and implementation: the analysis of technological and scientific strengths and how to use them for growth by the Directorate-General Research and Innovation (DG RTD; DG Enterprise and Industry†s experiences with cluster policies sector-specific innovation policies and the Lead Market Initiative (European commission, 2009 and the work of DG Regional and Urban Policy (DG REGIO) and regional policy makers on regional innovation strategies (RIS) and regional innovation and technology transfer strategies and infrastructures (RITTS) in the early 1990s and continuing until 2006 It also builds on academic developments within the areas of regional and innovation policies including regional innovation systems, economic geography, institutional economics and evolutionary geography (e g. Asheim et al. 2007; Frenken and Boschma, 2007; Asheim et al. 2011 Boschma and Frenken, 2011. One of the conclusions derived from these theories is that innovation is systemic. The primary agents for innovation are companies, but their potential to innovate is affected by policies, which can make innovation more or less likely. The public sector can support innovation through many different measures, such as fostering skills, altering incentive structures through legislation, supporting research and development through subsidies, acting as lead customers for innovative solutions, etc. However, most innovation results from existing regional capabilities that transform into new industries in different forms The creation of new industries is influenced by the concept of †lead marketsâ€. These are countries and regions in which innovation designs are used first widely and demanded by consumers before they diffuse globally (Jänicke and Jacob, 2004; Beise, 2006. The concept of lead markets is related to the idea of choosing specialisation areas. Their starting point is, however, not research and technology or sectoral structures, but demand in certain product markets (which can be influenced by market access, legal frameworks impacting on private and public demand for innovative solutions, etc..The Lead Market Initiative brought demand-driven innovation policy instruments into EU innovation policy thinking (Aho et al. 2006). ) In its report on reindustrialising Europe to promote competitiveness and sustainability, the European parliament stressed again the need to develop lead markets "which aim to promote the market uptake of new products and services living up to societal needs"(European parliament, 2013: 14-15 This concept of market creation is also important in the context of RIS3 and should not primarily aim to identify and support single innovations produced by projects, but should ideally aim to (co -create new domains of activities where innovations can be developed and used to modernise traditional sectors or to stimulate the emergence of new market areas (Foray, 2015. Identifying 4 existing strengths in R&i, while considering their potential contribution to new domains and lead markets, is an important step in designing RIS3. Although, by definition, not all regions and states can become lead markets, prioritised areas should be considered in the context of EU-wide and global developments and market potentials. For this outward-looking perspective prioritisation is crucial. One of the main challenges when collecting data on these domains or prioritised areas is their multidimensional nature. They cover both existing capabilities, address specific target markets and are often related to more abstract EU policy objectives. In the next section, we describe how we dealt with this challenge when developing the Eye@RIS3 tool However, from historical experience with growth and regional and sectoral policies, we have learnt that policy makers are positioned not well to pick winners, whether companies/sectors or technologies. Therefore, R&i strategies should be developed jointly with entrepreneurs, academics and users/civil society to develop a better understanding of both future and private investment potential. This is something that has been emphasised in the context of smart specialisation through the concept of entrepreneurial discovery (Foray et al. 2009), which builds on the idea of entrepreneurial self-discovery processes in developing countries (Hausmann and Rodrik, 2003 The use of the term †smart specialisation†to describe a policy concept emerged in the Knowledge for Growth expert group. It was established in March 2005 by DG RTD to contribute to the Lisbon Strategy process for providing high-level advice on the contribution of knowledge to sustainable growth and prosperity. This expert group was chaired by Commissioner Potoä nik, and Dominique Foray was the Vice-chairman. It argued that research investments in Europe have been overly fragmented, have lacked critical mass and have been plagued by a †me too†syndrome, which manifested as regions making investments in very similar and fashionable areas such as information and communication technologies (ICT), and nano-and biotechnologies. These areas of investment were disconnected often from actual local capabilities, and, in many cases, based on hopes of developing future industries. Also DG REGIO observed this challenge in its work with RIS and RITTS, as well as DG Enterprise and Industry in the context of politically driven cluster initiatives. The lack of connections between these investments and existing capabilities was probably one of the greatest problems; recent related research underlines this issue by showing that regional innovation, in many cases, begins with a set of existing capabilities (Neffke et al 2011 The Barca Report contributed to the development of the concept through recommendations for the post-2013 regional development programmes. It emphasised the need to focus on fewer priorities to be more transparent, to make sure that programme success is verifiable and to better coordinate place-based policies (Barca, 2009. This transformed smart specialisation from a technology and research concept to a place-based concept attuned to regional policy (Mccann and Ortega-Argilã s, 2011. The innate message of this report was that, if regions opt for similar types of innovation priorities, the outcome will be fragmentation and lack of critical mass, which will prevent regions from developing economies of agglomeration and positive spill overs. In order to overcome these problems of fragmentation, mimesis and lack of critical mass, great importance has been given to urging regions to foster new activity sectors or industries, by investing in R&i in a limited number of areas with the greatest strategic potential Because smart specialisation was a challenging new concept for R&i policy, and because investments in R&i were expected to increase considerably in ESIF, DG REGIO and the Joint Research Centre set up the Smart Specialisation Platform at the Institute for Prospective 5 Technologies (IPTS) in 2012 to provide regions and Member States with guidance and hands-on support for the development of their RIS3. This guidance material, contains many suggestions as to how regions or Member States can identify the unique characteristics, challenges and assets that will help them achieve competitive advantage and fulfil their potential for excellence (4). However at the same time, it emphasises alignment with other EU objectives and the development of priorities that take into account some of these goals as well as synergies between different funding sources. These suggestions may foster herd behaviour once again. As smart specialisation is part of the ex ante conditionalities which must be fulfilled in order to qualify for ESIF, European regions and Member States are, as of 2012, identifying priorities for their RIS3 investments 3. Developing an open data tool for mapping innovation priorities Eye@RIS3 is an interactive open data tool that gives an overview of the envisaged RIS3 priorities of regions and countries in Europe. The tool gives regional and national innovation communities visibility and an opportunity to be recognised by potential counterparts looking for collaboration in a particular area. The tool also allows comparisons of innovation specialisations across Europe to give a better understanding of emerging competitive niches. Eye@RIS3 has been developed as an open data tool to help strategy development and to facilitate interregional and transnational cooperation, rather than as a source of statistical data. The majority of data have been added by S3 Platform staff and a minority by policy makers themselves To have listed priorities in the Eye@RIS3 database does not mean that the particular strategy or priorities have been approved by the Commission as meeting the RIS3 ex ante conditionality criteria. Furthermore, the listed priorities have not been verified as being areas of strength. Rather listed priorities are areas that regions and Member States have identified as domains on which they will concentrate in the upcoming programming period. Many of the activities indicated by the regions and Member States in the innovation strategies are still too generic, as they are not orientated towards economic transformation and have not been developed in an entrepreneurial discovery process. Therefore, more than 60 regional and national governments have to implement Action Plans to fulfil the RIS3 ex ante conditionalities. The listed priorities might therefore still change in a substantial number of cases Currently, the data consist of 1 307 priorities from 20 EU countries, 174 EU regions, 6 non-EU countries and 18 non-EU regions. On average, the 218 regions or countries have six priorities each with the largest number of priorities for any region or country being 17 (5). Our sample covers around 65%of the EU€ s 271 NUTS2 regions, which is the main level at which RIS3 are adopted. In countries without regional RIS3, national data have been added. In total, the sample covers almost all of the EU-28 territory, with the exception of three Italian regions The database contains data at NUTS1, 2 and 3 levels, since there are large variations in our sample in terms of regional powers and administrative responsibilities for innovation and development policies. However, NUTS2 is by far the most common level at which RIS3 have been adopted 4) IPTS (2011), The RIS3 Guide 5) The data used in this paper were retrieved on 5 december 2014, at which time there was almost full coverage across EU Member States. Since then, additional data have been added 6 Regional and national innovation priorities are at the heart of the database. For each priority, we have information on four main categories, as follows:(1) a free-text description of the priority,(2 the R&i capability,(3) the business area and target market and (4) the connection to EU priorities The first category is a text field that contains a description of the priority area. This field is possibly the most important, since it reflects the wording and description used by the policy makers who wrote the strategies Many regional and national priorities are confined not to a single traditional sector, but merge cross-sectoral activities and specialised niches. Furthermore, many priorities connect certain regional and national capabilities with broader EU objectives. In order to take this into account each priority is described further through three main categories (with sub-categories for more specificity). ) The idea behind these three categories is to capture the R&i capabilities, the business areas and target markets, and the EU€ s prioritised policy objectives. Our approach cannot perfectly address each aspect of the priorities, but it ensures a user friendly tool that indicates in which directions regions and states want to develop their R&i priorities. A comprehensive list of these categories can be found in Appendices 1 and 2 The development of the categories †research and innovation capability†and †business areas and target markets†is based on NACE 1 and NACE 2 codes and OECD categories, with some modifications. For the category †EU objectivesâ€, the S3 Platform has created a list of 10 main objectives with around six sub-categories based on the themes emphasised in the Europe 2020 Strategy and the Innovation Union. These cover grand challenges and prioritised policy areas, such as creative and cultural industries, key enabling technologies (KETS)( 6), social innovation and the Digital Agenda. The database also contains information on the source of each entry With regard to data quality, there are a number of caveats. First of all, the data are not yet suitable for econometric analyses, since all entries must be confirmed and double-checked against the final versions of strategies. However, the database is continuously being updated with the aim of having up-to-date information. When the negotiations of Operational Programmes and the implementation of Action Plans are finalised, the data can be validated fully. It must be kept in mind that, originally the main rationale for developing the tool was to increase transparency and to stimulate contacts between regions and Member States in the field of R&i 4. Mapping of priority areas In this final section, we map the R&i priorities of 20 EU countries, 174 EU regions, 6 non-EU countries and 18 non-EU regions. We first give an overview of the major areas in which policy makers want to invest and identify patterns. In the second part, we analyse the degree to which regions are planning to invest in the same type of categories. Finally, we compare these priorities with the underlying economic structure in order to explore the extent to which regional priorities reflect actual regional capabilities 6) These are constituted of the six categories of Advanced manufacturing, Advanced materials, Industrial biotechnology Micro/Nano-electronics, Nanotechnology and Photonics 7 4. 1 Most common categories of priorities In this section, we discuss the 10 most common priority categories, as well as their share of the total number of priorities. In general, we observe that priorities in the main categories are more common than any of the priorities in the sub-categories. There are two main reasons for this. First it is difficult to encode multifaceted innovation priorities at more finely grained levels. Second when policy makers encode their priorities, they often resort to broader categories but provide more details in the free-text description The most common priority in the main categories of †research and innovation capability†and †business areas and target marketsâ€, is manufacturing and industry (see Tables 1 and 2), probably because this sector encompasses large parts of the economy. Moreover, an important goal of smart specialisation is to stimulate R&i activities linking industry and research, in order to create structural change. With regard to the sub-categories, food, power generation/renewable sources health, biotechnology and motor vehicles are the most common priorities (see Tables 4 and 5 Some of the more top-down policies within the main category †EU objectivesâ€, such as sustainable innovation, public health and security, KETS (7) and Digital Agenda, are much more common than others (see Table 3). Thematic objectives, from Operational Programmes, set the targets for these broader EU objectives, which also influence planned investments Table 1: Number of priorities within the main category †research and innovation capability†Name of priority category No of observations %of total priorities Manufacturing and industry 452 34.6 %Information and communication technologies (ICT) 157 12.0 %Energy production and distribution 138 10.6 %Agriculture, forestry and fishing 112 8. 6 %Human health and social work activities 100 7. 7 %Services 93 7. 1 %Creative and cultural arts and entertainment 60 4. 6 %Tourism, restaurants and recreation 51 3. 9 %Transporting and storage 40 3. 1 %Construction 38 2. 9 %Grand total 1 299 99.4 %7) This is a top-level domain that brings together the six key enabling technology domains of Advanced manufacturing systems, Advanced materials, Industrial biotechnology, Micro/Nano-electronics, Nanotechnology and Photonics as sub -categories 8 Table 2: Most common priorities within the main category †business areas and target markets†Name of priority category No of observations %of total priorities Manufacturing and industry 462 35.3 %Human health and social work activities 154 11.8 %Energy production and distribution 128 9. 8 %Information and communication technologies (ICT) 98 7. 5 %Tourism, restaurants and recreation 74 5. 7 %Transporting and storage 73 5. 6 %Services 69 5. 3 %Agriculture, forestry and fishing 65 5. 0 %Creative and cultural arts and entertainment 52 4. 0 %Construction 42 3. 2 %Grand total 1 287 98.5 %Table 3: Most common priorities within the main category †EU objectives†Name of priority category No of observations %of total priorities Sustainable innovation 284 21.7 %KETS 267 20.4 %Public health and security 192 14.7 %Digital Agenda 152 11.6 %Cultural and creative industries 81 6. 2 %Blue growth 53 4. 1 %Service innovation 49 3. 7 %Specific local policy priority 46 3. 5 %Social innovation 24 1. 8 %Aeronautics and space 21 1. 6 %Nature and biodiversity 15 1. 1 %Grand total 1 184 90.6 %By comparing the three main categories detailed in Tables 1 to 3, differences in how the priorities are described can be observed. For example, ICT, services, creative industries, and agriculture forestry and fishing are described most frequently as R&i capabilities, whereas health-,tourism -and transport-related priorities are described more frequently as target markets. These observations could be interpreted to emphasise the importance of support for economic areas that in turn, could function as a means of renewal for other sectors, whereby the knowledge from these sectors would stimulate renewal in more traditional sectors (with the possible exception of agriculture Food production is the most common priority of the sub-category of †business areas and target markets†and is related to agriculture (see Table 5). With regard to priorities within the sub -category of EU-objectives, these also partly reflect the ambition to invest in sustainable innovation KETS, health and ICT (see Table 6 9 Table 4: Most common priorities within the sub-category of †research and innovation capability†Name of priority category No %of total priorities Power generation/renewable sources 83 6. 4 %Biotechnology 56 4. 3 %Motor vehicles and other transport equipment 55 4. 2 %Human health activities (medical services) 47 3. 6 %Machinery and equipment 41 3. 1 %Basic pharmaceutical products and pharmaceutical preparations 35 2. 7 %Food, beverage and tobacco products 33 2. 5 %Crop and animal production, hunting and related service activities 30 2. 3 %Computer, electronic and optical products 28 2. 1 %Nanotechnology and engineering 26 2. 0 %Grand total 805 61.6 %Table 5: Most common priorities within the sub-category of †business areas and target markets†Name of priority category No %of total priorities Food, beverage and tobacco products 88 6. 7 %Human health activities (medical services) 71 5. 4 %Energy distribution 46 3. 5 %Power generation/renewable sources 43 3. 3 %Machinery and equipment n e c. 38 2. 9 %Motor vehicles and other transport equipment 36 2. 8 %Basic pharmaceutical products and pharmaceutical preparations 28 2. 1 %Biotechnology 25 1. 9 %Other manufacturing 24 1. 8 %Computer, electronic and optical products 23 1. 8 %Grand total 742 56.8 %Table 6: Most common priorities within the sub-category of †EU-objectives†Name of priority category No %of all priorities Public health and well-being 98 7. 5 %Sustainable energy and renewables 92 7. 0 %Advanced manufacturing systems 90 6. 9 %Advanced materials 79 6. 0 %Industrial biotechnology 54 4. 1 %Eco-innovations 45 3. 4 %Smart green and integrated transport systems 31 2. 4 %Resource efficiency 26 2. 0 %Food security and safety 25 1. 9 %Development of regional cultural and creative industries 24 1. 8 %Sustainable agriculture 24 1. 8 %Grand total 837 64.0 %The most common priorities are similar for the sub-categories †research and innovation capabilities†and †business areas and target markets†and are as follows: energy, biotechnology, health and food However, their roles seem to differ (see Tables 4 and 5). Power generation, biotechnology and 10 motor vehicles are described more often as capabilities, whereas food, health and energy distribution are more important as markets. They seem to be related to the sub-categories of EU -objectives of health, sustainable energy and advanced manufacturing and materials As part of this review, we have performed also a search of the priority names/descriptive text fields in order to identify the most common themes and their frequency (see Table 7). The most common themes that emerged were energy, health food, ICT and materials. This is very similar to the categories identified above, but with an increased importance of food and tourism Table 7: Most common names/descriptions Name No %of all priorities Energy 160 12.2 %Health 147 11.2 %Food 119 9. 1 %Materials 109 8. 3 %Information and communications technologies (ICT) 107 8. 2 %Tourism 93 7. 1 %Service 97 7. 4 %Sustainability 92 7. 0 %Creative sectors 67 5. 1 %Manufacturing 58 4. 4 %Overall, the most commonly cited priority categories are energy, health food, materials and ICT 4. 2 Distribution of different priority combinations We have explored also the extent to which regions have the same combinations of priorities and whether or not these combinations follow a standardised set of choices. Initially, to attain a more detailed picture, we analysed the commonalities among sub-categories. In order to carry out this analysis, we created a search scheme consisting of the six most common sub-categories. Some overlaps exist between the †capabilities†and †markets†categories, since these use the same category names in the Eye@RIS3 database; we have merged these in a umbrella terms. The most common sub-categories are summarised in Table 8 Table 8: Most common priority sub-categories Name No %of total priorities Public health and well-being 98 7. 5 %Sustainable energy and renewables 92 7. 0 %Advanced manufacturing systems 90 6. 9 %Food, beverage and tobacco products 88 6. 7 %Power generation/renewable sources 83 6. 4 %Advanced materials 79 6. 0 %11 We use this scheme of the most common priority sub-categories to explore how many of the regions have chosen these priorities and the extent to which their priorities belong to any of these categories. Figure 1 illustrates the distribution of regions and countries according to their share of priorities related to the most common priority sub-categories A typical pattern is to have 30-39%of priorities connected to any of the six most common sub -categories, which is true for around 23%of the regions and countries in our sample. A value of 0 indicates regions and countries have no priorities related to the most common sub-categories. This subset includes many regions that may have encoded only priorities at the broader category level At the other end of the spectrum all of the priorities in five regions are related to the most common sub-categories. Out of these, four have either one or two priorities. There is one region with 4 priorities of which all are connected to the most common ones. When reviewing this region more closely, the priority mix seems to be fairly broad in its definitions Figure 1: Share of regions and countries and degree of correspondence with most common sub -categories Note: This figure is based on data from 218 regions and countries from the Eye@RIS3 database. The y-axis is the share of all regions and countries in the database (n=198. The x-axis depicts the degree of correspondence of regional and national priorities with the most common sub-categories While some priority categories are more popular than others, we do not find that every region and country intends to invest in the same categories. In order to check the robustness of this finding we conducted an additional two-step analysis as follows:(1) we calculated the frequency of the most common combinations of sub-categories among all priorities; and (2) we counted the number of regions and countries whose priorities are among these most common combinations With regard to the frequency of the most common combinations, we find a total of 480 combinations that were used by the regions and countries for 1 076 priorities, with at least one 0 %10 %20 %30 %40 %50 %60 %0%-33%34%-66%67%-100 %Sh ar e o f re gi o n s & c o u n tr ie s in s am p le Degree of correspondence with most common sub-categories 12 data entry among the sub-categories. The most common combinations of the subcategories are listed in Table 9 Table 9: Most common combinations of sub-categories EU objectives Capabilities Target market Occurrences Sustainable energy and renewables Power generation /renewable sources Energy distribution 5. 4 %Public health and well -being Human health activities Human health activities 5. 2 %Advanced manufacturing 5 %Sustainable energy and renewables 4. 8 %The distribution of the most common combinations of the subcategories is illustrated in Figure 2 Figure 2: The number of priorities with the same type of sub-category combinations Let us now examine the distribution of regions and countries according to their share of priorities related to the most common combinations of sub-categories, as mentioned above. The majority of regions and states do not have any of these combinations (see Figure 3), while in 22.5%of regions and states up to one-fifth of the priorities are related to the most common combinations 0 5 10 15 20 25 30 1 1 6 3 1 4 6 6 1 7 6 9 1 1 0 6 1 2 1 1 3 6 1 5 1 1 6 6 1 8 1 1 9 6 2 1 1 2 2 6 2 4 1 2 5 6 2 7 1 2 8 6 3 0 1 3 1 6 3 3 1 3 4 6 3 6 1 3 7 6 3 9 1 4 0 6 4 2 1 4 3 6 4 5 1 4 6 6 N u m b er o f o b se rv at io n s Combination of sub-categories 13 Figure 3: Distribution of regions and countries and their share of priorities among the most common sub-category combinations Note: This figure is based on data from 218 regions and countries from the Eye@RIS3 database. The x-axis is the share of all regions and countries in the dataset (n=198. The x-axis depicts the degree of correspondence of regional and national priorities with the most common sub-categories Looking at sub-category data, we found that, grosso modo, regions and countries have not chosen the same sets of priorities, but rather have more individual priority combinations To complete this robustness check, we carried out the same type of analysis for main category data. In total, there were 231 combinations of 1 307 encoded priorities. The by far most common combinations of main categories are illustrated in Table 10 Table 10: Most common combinations of main categories EU objectives Capabilities Target market Occurrences KETS Manufacturing and industry Manufacturing and industry 16 %Sustainable innovation Energy production and distribution Energy production and distribution 6. 2 %Digital Agenda Information and communication technologies Information and communication technologies 6 %Public health and security Human health 5. 6 %As expected, there is a higher frequency in the priority combinations based on these main categories than based on the sub-categories. Among these main category combinations, there are fewer combinations and more priorities belonging to each of these combinations, as illustrated in Figure 4 0 %10 %20 %30 %40 %50 %60 %70 %0. 00 0. 01-0. 09 0. 1-0. 19 0. 2-0. 29 0. 3-0. 39 0. 4 -0. 49 0. 5-0. 59 Sh ar e o f al l r eg io n s an d c o u n tr ie s in t h e sa m p le Degree of correspondence with most common combinations of sub-categories 14 Figure 4: The number of priorities with the same type of category combinations In Figure 5, we also examine the distribution of regions and countries according to their share of priorities among the most common combinations of main categories. Once more, the commonalities are greater than they are in the sub-category combinations. In slightly more than 30%of the 218 regions and countries more than half of the priorities are related to the most common combinations of main categories. However, when looking at individual regions which have a large proportion of their priorities related to the most common category combinations, they are actually also quite elaborate, which indicates that regions and countries have developed rather individual sets of priorities 0 50 100 150 200 250 1 9 1 7 2 5 3 3 4 1 4 9 5 7 6 5 7 3 8 1 8 9 9 7 1 0 5 1 1 3 1 2 1 1 2 9 1 3 7 1 4 5 1 5 3 1 6 1 1 6 9 1 7 7 1 8 5 1 9 3 2 0 1 2 0 9 2 1 7 2 2 5 N u m b er o f o b se rv at io n s Combinations of top categories 15 Figure 5: Distribution of regions and countries and their share of priorities among the most common top category combinations Note: This figure is based data from 218 regions and countries from the Eye@RIS3 database. The y-axis is the share of all regions and countries in the database (n=198. The x-axis depicts the degree of correspondence of regional and national priorities with the most common top categories We found no evidence to substantiate our original hypothesis, which predicted copycat behaviour and similar priority combinations among regions and countries. A caveat of our analysis is the quality of the strategy documents encoding the priorities; our observations could have been affected by reviewing strategies that had not been finalised With this said, we do find priority clusters around a number of popular categories. This could, to a small extent, be an outcome of our coding and interpretation of data. However, in general, we do find a correlation between EU objectives and the chosen priorities. A relatively high proportion of priorities are related to renewable energies, sustainability, the Digital Agenda and KETS. This could reflect the fact that smart specialisation priorities are influenced by other types of activities funded by ESIF. The requirement for EU regions and Member States to allocate funding to the thematic objectives (TOS) of †strengthening R&i for regional growth†(TO1), †enhancing the access to and use of ICT€ (TO2), †enhancing SME competitiveness†(TO3) and †supporting the shift to a low carbon economy†(TO4) could explain the popularity of sustainability, renewable energies and ICT. The intention to invest large amounts of money into health and healthy ageing could be explained by the major societal challenge of ongoing demographic change, and the fact that many regions are service providers in this area and have significant public procurement potential for innovative solutions Another interesting finding is that tourism is shared a widely innovation priority. Although there are some good examples of service innovation related to tourism, the high popularity of this priority in the RIS3 context could also be explained by the desire of many regions and Member States to continue using ERDF to subsidise their existing tourism industries and infrastructures, despite 0 %5 %10 %15 %20 %25 %Sh ar e o f al l r e gi o n s an d c o u n tr ie s in t h e sa m p le Degree of correspondence with most common combinations of top categories 16 Box: Most common R&i priorities in Europe ï Energy ï Information and communication technologies (ICT ï Health ï Food ï Advanced materials ï Services ï Tourism ï Sustainable innovation ï Advanced manufacturing systems ï Cultural and creative industries tourism (and culture) not figuring prominently among the ERDF Thematic Objectives. There is a risk that these investments stem from political priorities, rather than from a real discovery process and a realistic assessment of R&i and business potentials 4. 3 Comparing priorities to economic structure Having examined the direction of change for regions and countries in their structural processes, we will now examine data on their actual economic structure. This helps us to better understand the extent to which regional and national priorities focus on areas where strong or growing capabilities already exist. For this, we have used Eurostat data on the number of organisations, employment data and patent applications in absolute terms, as well as growth figures in absolute and relative terms. We have compared these data with the most common RIS3 priorities to determine how the priorities relate to the economic structure. This analytical exercise does not allow regional matching but looks at EU totals For this comparison, we have created a list of the 10 most common priorities (see Box), which is based on the mapping described in the previous sections. It is based on a combination of main categories, sub-categories and free-text descriptions. The reason for combining this information is that neither the broader main categories, such as manufacturing and industry, nor the sub -categories of KETS adequately separate the different sectors alone, they do not capture the many priorities in the areas of ICT creative industries, tourism and services When comparing the absolute numbers of firms by sector with RIS3 priority combinations, we see some overlap in food and beverage service activities and possibly in activities relating to services. However, few regions specifically mention any of the other major sectors†legal services, engineering or head offices†in the text descriptions of their priorities. Likewise, few regions mention priorities in retail trade, but some do mention transportation and construction. It seems as though the choices of RIS3 priorities are reflected not strongly in the data on local units in absolute numbers We also looked at the sectors that, in absolute numbers, grew the most between 2008 and 2010 Construction, real estate and related services are large sectors, but they do not correlate strongly with RIS3 priorities. The only sectors where we see a direct correlation between the growth of related businesses and RIS3 priorities are ICT and computer programming; this is possibly linked to other scientific activities since RIS3 deal with R&i The greatest overlaps between the relative growth of a sector (i e. how much it has grown in proportion to its original size) and RIS3 priorities are as follows ï energy and the †manufacture of coke ††and †electricity, gas, steam and air conditioning supply†ï sustainable innovation and †remediation and waste management ††ï health and †manufacturing of basic pharmaceuticals ††ï food and the †manufacture of beverages†17 ï services (to some extent) and †civil engineering†After looking at the number of local units in absolute terms, growth in absolute terms and relative growth, we found that regional priorities overlap with the largest sectors mainly in terms of relative growth (see Figure 6 Figure 6: Relative growth of top sectors, number of local units (2008†2010 Source: SBS data by NUTS 2 regions and NACE Rev. 2 (from 2008 onwards), number of local units However, the number of local units and their growth can be affected by sectoral structure Therefore, we have looked also at the number of employees per sector (NACE code categories) and growth of employment. We found that there were some connections between the RIS3 priorities of food, services and advanced manufacturing and ï †food and beverage service activities†ï the †manufacture of food products†ï †services to buildings and landscape activities†(possibly ï the †manufacture of fabricated metal products, except machinery and equipment†There was quite a strong link between regional priorities and the sectors with the largest growth in employment in 2010 (illustrated in Figure 7), there being overlaps in most sectors except for †mining support services actionsâ€, †mining of metal ores†and †veterinary activitiesâ€. The main overlaps were found to be with services, sustainable innovation and ICT priorities 0 %10 %20 %30 %40 %50 %60 %70 %80 %90 %100 %G ro w th in n u m b er o f lo ca l u n it s Manufacture of coke and refined petroleum products Electricity, gas, steam and air conditioning supply Mining support service activities Remediation activities and other waste management services Retail trade not in stores, stalls or markets Manufacture of basic pharmaceutical products and pharmaceutical preparations Postal and courier activities Manufacture of beverages Manufacture of tobacco products Civil engineering 18 Figure 7: Sectors with highest average growth in 2010 Note: Eurostat employment data for 2010, SBS data by NACE Rev. 2 for the EU-28 (and Norway) with missing data for Croatia, Greece, France, Italy, The netherlands and Slovakia. No data were available for the wholesale and retail sectors Finally, we examine Eurostat patent data covering patent applications to the European Patent Office (EPO), in terms of both absolute numbers and growth in absolute and relative numbers There were relatively few connections between regional priorities and the growth of the number of patent applications. For patent applications in absolute numbers (Figure 8), we find overlaps between ï health and †medical and veterinary science, hygiene†ï ICT and †electric communication technique†and †computing, calculating, counting†ï energy and †generation, conversion or distribution of power†There are fewer connections between patents and regional and national priorities than there are with main sectors in terms of number of firms. This is not surprising, since patents are not highly relevant to some of the main priority areas, such as tourism, services, and the creative and food industries According to our analyses, priority choices correlate with existing specialisations mainly in terms of relative growth of the number of firms and employment, and the absolute number of patent applications. Nonetheless, the connections between priorities and economic and innovation structures seem weak overall. This may be a result of a mismatch in the statistical categories we compare or due to lacking patent data categories and lack of easily assignable NACE codes for sustainable innovation 0 %2 %4 %6 %8 %10 %12 %14 %16 %18 %20 %G ro w th r at e o f em p lo ym en t Mining support service activities Mining of metal ores Office administrative, office support and other business support activities Activities of head offices; management consultancy activities Remediation activities and other waste management services Veterinary activities Waste collection, treatment and disposal activities materials recovery Information service activities Computer programming, consultancy and related activities Administrative and support service activities 19 On the other hand, priority choices could simply be based more on future plans than on existing or growing areas of activity. The priorities may emphasise political ambitions and efforts towards structural change in the framework of EU objectives rather than reflecting the largest sectors of a particular region. In this optimistic view, regions could be investing in emerging and niche sectors thus avoiding a lock in in incumbent sectors To better understand the relationship between priorities and economic and innovation structures we would have to perform more detailed comparative analyses of regional and national priorities and indicators of regional economic structure, such as labour, organisations, publications and patents Figure 8: Patent applications in absolute numbers (2010 Source: Patent applications to EPO at the national level by IPC sections and classes (Eurostat 0 1, 000 2, 000 3, 000 4, 000 5, 000 6, 000 N u m b er o f p at en t ap p lic at io n s Medical or veterinary science; hygiene Electric communication technique Measuring; testing Basic electric elements Computing; calculating; counting Vehicles in general Engineering elements or units; general measures for producing and maintaining effective functioning of machines or installations; thermal insulation in general Conveying; packing; storing; handling thin or filamentary material Organic chemistry Generation, conversion, or distribution of electric power 20 5. Conclusion EU regions and Member States have been required to develop smart specialisation strategies. For this, they had to select a limited number of investment priorities, via an entrepreneurial discovery process, that reflect regional capabilities, future market potentials and EU-prioritised policy areas in order to overcome potential problems of fragmentation, imitation and lack of critical mass This working paper has presented data from the Eye@RIS3 database, an open data tool which gathers information on the innovation priorities of regions and states in the EU and in neighbouring countries. The purpose of this tool is to give an overview of specialisation patterns and to facilitate communication between countries and regions. Currently, the dataset covers 1 307 priorities from 20 EU countries, 174 EU regions, 6 non-EU countries and 18 non-EU regions; this constitutes around two-thirds of Europe†s 271 NUTS2 regions. On average, each of the 218 regions and countries has six priorities. The most common priority areas are energy, health, ICT, food, advanced materials, services, tourism, sustainable innovation, advanced manufacturing systems, and the cultural and creative industries In order to explore the extent to which regions and countries are developing similar portfolios of priorities, we explored combinations of both main category and sub-category priority data. We found that very few regions and countries have developed similar combinations. Our evidence suggests that there is no significant †copycat†behaviour among regions and countries Having said this, we do find clusters of popular priorities that resemble broader EU objectives These clusters are renewable energy, sustainability, the Digital Agenda and KETS. In addition, many regions and countries seek to concentrate funding on (public health and healthy ageing, thus addressing societal challenges. In devolved administrative systems, local and regional authorities often have related health powers and spending responsibilities Finally, we compared Eye@RIS3 data with Eurostat data on numbers of local units in different sectors, employment and patent applications. The chosen innovation priorities somewhat reflect growth in employment, the relative growth of the number of local units and the absolute number of patent applications. However, the overall relationship between priorities and the economic and innovation structure seems weak. This could be explained by either a mismatch or a lack of relevant data or it might simply indicate that priorities are geared towards future potential rather than existing areas of activity. The regional priorities might also emphasise political ambitions and efforts towards structural change connected to EU objectives A potential risk of basing priority decisions mainly on future potential is that regional and national policy makers might opt for priorities that are not backed up by local capabilities. This will, however depend on how priorities are aligned in subsequent steps and put into practice with the help of regional stakeholders engaged in an entrepreneurial process of discovery. In the coming years priorities that are defined more broadly should be broken down, making them more specific and application oriented. This is the main thrust of the many Action Plans agreed for the fulfilment of the RIS3 ex ante conditionalities To better understand the relationship between priorities and economic and innovation structure, we need more studies aimed at comparing regional priorities with regional economic structure and performance indicated by regional data on labour, organisations, publications and patents 21 References Aho, E.,Cornu, J.,Georghiou, L, . and Subira, A. 2006). Creating an innovative Europe. Report of the Independent Expert Group on R&d and Innovation Asheim, B.,Boschma, R, . and Cooke, P. 2007). Constructing regional advantage: platform policies based on related variety and differentiated knowledge bases, Regional Studies 45 (7: 893†904 Asheim, B. Lawton Smith, H, . and Oughton, C. 2011). Regional innovation systems: theory, empirics and policy, Regional Studies 45 (7: 875†891 Barca, F. 2009. An agenda for a reformed cohesion policy: a place-based approach to meeting European union challenges and expectations, Independent Report prepared at the request of Danuta Hà bner, Commissioner for Regional Policy, European commission, Brussels Beise, M. 2006. Die Lead-Markt-Strategie: Das Geheimnis weltweit erfolgreicher Innovationen Springer-verlag: Berlin Boschma, R. and Frenken, K. 2011. Technological relatedness and regional branching, in: Bathelt H.,Feldman, M. P, . and Kogler, D. F. eds.),Dynamic Geographies of Knowledge Creation and Innovation, Routledge: London: 64-81 European commission (2009. Lead Market Initiative for Europe. Mid-term progress report. SEC 2009) 1198 final European commission (2010a. Europe 2020 flagship initiative Innovation Union. SEC (2010) 1161 COM (2010) 546 European commission (2010b. Regional policy contributing to smart growth in Europe, SEC (2010 1183 and Annex IV of the general SF draft regulation, COM (2011) 615 European parliament (2013. Report on reindustrialising Europe to promote competitiveness and sustainability (2013/2006 (INI. Brussels: Committee on Industry, Research and Energy Foray, D.,David, P, . and Hall, B. 2009). Smart specialisation: the concept, Knowledge Economists Policy Brief 9. Available online: http://ec. europa. eu/invest-in -research/pdf/download en/kfg policy brief no9. pdf Foray, D. 2015. Smart specialisation: opportunities and challenges for regional innovation policy Routledge: Abingdon Frenken, K. and Boschma, R. 2007. A theoretical framework for evolutionary economic geography industrial dynamics and urban growth as a branching process, Journal of Economic geography 7 635†649 Hausmann, R. and Rodrik, D. 2003. Economic development as self-discovery, Journal of Development Economics 72 (2: 603†633 IPTS (2011. The RIS3 Guide. Available online: http://s3platform. jrc. ec. europa. eu/s3pguide Jänicke, M. and Jacob, K. 2004. Lead markets for environmental innovations: a new role for the Nation State, Global Environmental Politics 4 (1: 29†46 22 Mccann, P. and Ortega-Argilã s, R. 2011. Smart specialisation, regional growth and applications to EU Cohesion Policy, Economic geography Working Paper, Faculty of Spatial Sciences, University of Groningen: Groningen Neffke, F.,Henning, M, . and Boschma, R. 2011). How do regions diversify over time? Industry relatedness and the development of new growth paths in regions, Economic geography 87 (3: 237†265 23 Appendix 1: Categories and sub-categories for †research and innovation capabilities†and †business areas and target markets†Agriculture, forestry and fishing Agricultural services Crop and animal production, hunting and related service activities Fishing and aquaculture Forestry and logging Construction Construction of buildings Civil engineering Specialised construction activities Creative and cultural arts and entertainment Amusement and recreation activities Creative, arts and entertainment activities Gambling and betting activities Libraries, archives, museums and other cultural activities Sports activities Energy production and distribution Energy distribution Power generation/renewable sources Human health and social work activities Human health activities (medical services Residential care activities Social work activities without accommodation Information and communication technologies (ICT Computer programming, consultancy and related activities Information service activities Motion picture, video and television programme production, sound recording and music publishing activities Programming and broadcasting activities Publishing activities Telecommunications Manufacturing and industry Basic metals and of fabricated metal products Basic pharmaceutical products and pharmaceutical preparations Biotechnology Chemicals and chemical products Coke and refined petroleum products Computer, electronic and optical products Electrical equipment Food, beverage and tobacco products Furniture Handicrafts Machinery and equipment n e c Motor vehicles and other transport equipment 24 Nanotechnology and engineering Printing and reproduction of recorded media Repair and installation of machinery and equipment Rubber and plastic products Textiles, wearing apparel and leather and related products Wood and paper (except for furniture Other manufacturing Other nonmetallic mineral products Mining and quarrying Extraction of crude petroleum and natural gas Mining of coal and lignite Mining of metal ores Mining support service activities Other mining and quarrying Public administration, security and defence Defence Public administration, justice, judicial, public order, fire service and safety activities Services Activities auxiliary to financial services and insurance activities Activities of head offices and management consultancy activities Advertising and market research Architectural and engineering activities, technical testing and analysis Education Employment activities Financial service activities, except insurance and pension funding Insurance, reinsurance and pension funding, except compulsory social security Legal and accounting activities Office administrative, office support and other business support activities Rental and leasing activities Scientific research and development Security and investigation activities Services to buildings and landscape activities Travel agency, tour operator and other reservation service and related activities Other professional, scientific and technical activities Tourism, restaurants and recreation Accommodation (hotels, camping Rental and leasing activities Restaurants and catering industry Travel agency, tour operator and other reservation service and related activities Transporting and storage Air transport and related services Postal and courier activities Rail transport and related services Road transport and related services 25 Warehousing and support activities for transportation (logistics storage Water transport and related services Water supply, sewerage, waste management and remediation activities Sewerage Waste collection, treatment and disposal activities, materials recovery and remediation activities Water collection, treatment and supply Wholesale and retail trade Retail trade Wholesale trade 26 Appendix 2: Categories and sub-categories for EU priorities Aeronautics and space Aeronautics Aeronautics and environment Bio-fuels and energy efficiency Remotely piloted aircrafts Safety and security Space Transport and logistics Blue growth Aquaculture Blue renewable energy Coastal and maritime tourism Fisheries Marine biotechnology Offshore mining, oil and gas Shipbuilding and ship repair Transport and logistics (including highways of the seas Cultural and creative industries Development of regional cultural and creative industries Support to link cultural and creative industries with traditional industries Digital Agenda Automated driverless vehicles Basic broadband: coverage in rural areas Cleaner environment and efficient energy networks (e g. smart grids E-commerce and SMES online e-Government (e g. e-Procurement, e-Participation e-Health (e g. healthy ageing e-Inclusion (e g. e-Skills, E-learning High speed broadband: last mile networks(>30mbps High speed broadband: middle mile and backhaul ICT trust, cyber security and network security Intelligent inter-modal and sustainable urban areas (e g. smart cities New media and easier access to cultural contents (e g. heritage Open data and sharing of public sector information KETS Advanced manufacturing systems Advanced materials Industrial biotechnology Micro-/nano-electronics Nanotechnology Photonics 27 Nature and biodiversity Biodiversity Ecotourism Nature preservation Public health and security Ageing societies Food security and safety Public health and well-being Public safety and pandemics Service innovation New or improved organisational models New or improved service processes New or improved service products (commodities or public services Social innovation New organisational models and social relations that meet social needs New products or services that meet social needs Social innovation with regard to child care Social innovation with regard to education, skills and training Social innovation with regard to environmental issues Social innovation with regard to health, well-being and elder care Social innovation with regard to social inclusion Sustainable innovation Eco-innovations High-speed railroad transportation systems Resource efficiency Smart green and integrated transport systems Sustainable agriculture Sustainable energy and renewables Sustainable land and water use Sustainable production and consumption Waste management Specific local policy priority Europe Direct is a service to help you find answers to your questions about the European union Freephone number(*:*00 800 6 7 8 9 10 11 *Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billed A great deal of additional information on the European union is available on the Internet It can be accessed through the Europa server http://europa. eu /How to obtain EU publications Our priced publications are available from EU Bookshop (http://bookshop. europa. eu where you can place an order with the sales agent of your choice The Publications Office has a worldwide network of sales agents You can obtain their contact details by sending a fax to (352) 29 29-42758 European commission Joint Research Centre †Institute for Prospective Technological Studies Title: Mapping Innovation Priorities and Specialisation Patterns in Europe Authors: Jens Sà rvik and Alexander Kleibrink Spain: European commission, Joint Research Centre 2015 †27 pp. †21.0 x 29.7 cm EUR †Scientific and Technical Research series †ISSN 1831-9408 (online Abstract Mapping public innovation priorities is important for policy makers and stakeholders, allowing them to explore the potential for collaboration and to better understand innovation dynamics. This working paper presents original data on innovation strategies for smart specialisation (RIS3) in European union (EU) regions and Member States, obtained from the Eye@RIS3 open data tool for sharing information on the areas identified as priority areas by 198 innovation strategies. It also contextualises these priorities and specialisation patterns with regard to the concept of †smart specialisationâ€. The most common RIS3 priority areas in the EU are energy, health, information and communication technologies, food, advanced materials, services, tourism sustainable innovation, advanced manufacturing systems, and the cultural and creative industries. The paper also explores the degree to which policy makers are creating unique portfolios of priorities or, in contrast, are imitating one another. We find that few regions have developed similar combinations of priorities. However, there are groupings around a number of popular categories and connected to prioritised EU objectives. Finally, we compare the main areas of planned investment with sectoral data on firms, employment and patents, with the conclusion that the connection between priorities and the economic and innovation structures is weak

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