What kind of regional opportunities are there in the region?

Phase 4 – Priority setting

Identifying and selecting the priority areas for regional specialisation.

The selection of priorities plays a key role in the RIS3 process. In fact, the whole Smart Specialisation concept is built around the process of identifying and selecting the right priorities and channelling resources towards them.

What kind of priorities?

As a result of this phase, regions should formulate a set of priorities. It’s crucial that these priorities have objectives that are concrete and achievable. The priorities should be based on present and future competitive advantage and potential for excellence, as derived from the analysis of the region and its potential for innovation-driven differentiation.

Two main types of priorities are:

  • Technological, sectoral and cross-sectional priority areas.
  • Horizontal, supporting priorities, such as financing of newly founded technology companies.

The priorities should also be defined precisely. Rather than prioritising healthcare or green energy, regions should have more detailed descriptions of their priorities. As an example, these could be concentrating on wood-based solutions for eco-construction or on innovative solutions to reduce city congestion.

For practical purposes, priorities can still be labelled simply. For example, aquaculture and urban health tech are possible. Yet, at least in the strategy, priorities should be well defined, as demonstrated by the region of Galicia:

Development of the Galician aquaculture sector to convert the region into an international reference for the generation of new technology-based products and services applied to aquaculture.

How should the priorities be selected?

The selected set of priorities should focus on existing strengths of the regional economy and emerging opportunities within. Thus, the selection process needs to be based on versatile qualitative and quantitative information of the regional context.

To find the best opportunities for the region it’s vital to gain entrepreneurial knowledge, which can only be acquired by engaging regional stakeholders. The entrepreneurial discovery process enables policymakers to identify opportunities that could have been missed otherwise. Hence, it is important to engage stakeholders. This can be done, for example, through workshops, seminars, surveys and crowdsourcing.

During the priority selection process, it is important to narrow down the number of priorities. With fewer priorities, it’s easier to generate clusters for the priority areas that allow greater benefits. The benefits include the possibility of agglomeration and scale benefits, such as economies of scale, and knowledge spillovers in knowledge production and distribution. Selecting too many priorities easily leads to the fragmentation of efforts that provide a little competitive advantage.

There are several key criteria for narrowing down the priorities:

  • The existence of key assets and capabilities (such as skill and labour pools) for each of the proposed priority areas.
  • The diversification potential of these areas, so no overlapping priorities.
  • Critical mass and/or critical potential within each sector.
  • The international position of the region as a local node in global value chains.

At the same time, typical mistakes should be avoided in the selection. The typical mistakes include:

  • Spreading the money across the most powerful lobbies to preserve the status quo rather than focusing on future opportunities.
  • Imitating other regions, which can easily lead to a situation where there are (too) small clusters in multiple regions that are doing the same things. This takes agglomeration benefits and inter-regional comparative advantage out of the equation for all regions and thus is disruptive.

To avoid these two mistakes, it’s again important to have an open participatory process that is supported by robust evidence of the regional economy and its surroundings. The process shouldn’t be taken over by interest groups or locked into supporting traditional activities in the region.

To validate the priorities in the region and to present commitment, the chosen priorities should be validated in the regional constituency, like in the regional council.

Example priorities from regions

Helsinki-Uusimaa, Finland

  • Urban cleantech
  • Human health tech
  • Welfare city
  • Digitalising industry
  • Smart citizen

Read more about Helsinki-Uusimaa’s RIS3.

Galicia, Spain

  • Aquaculture
  • Tourism-ICT
  • Active ageing

Read more about Galicia’s RIS3.

Tools for Priority setting

Our platform provides three tools to support organising the EDP process and analysing the region and its potential.

4.1 EDP focus groups

The EDP workshops tool provides help throughout the EDP process. Through this online tool, RIS3 facilitators are able to organise and manage EDP event creation and communicate related issues.

4.2 Extroversion analysis

This method is applied in order to detect possible industry segments in which the regional/national entity presents increased extroversion, in terms of exports, the attraction of FDI, or other forms of regional openness.

4.3 Related variety analysis

This method will allow for calculating the Related/Unrelated variety entropy indexes. It will compare 2-digit and 5-digit sector shares (%) and will estimate the entropy index for a regional/national entity. The method will enable estimating whether specialisation or diversification objectives should be given priority