COMMISSION STAFF WORKING DOCUMENT Document accompanying the Commission Communication on Regional Policy contributing to smart growth in Europe 2020
Date: 2010-10-06
Institutions: European Commission
Subjects: EU regional policy, economic and social cohesion, economic growth, economic intelligence, financing method, innovation, management of resources, research and development

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EUROPEAN COMMISSION  

Brussels, 6.10.2010 
SEC(2010) 1183 

COMMISSION STAFF WORKING DOCUMENT 

Document accompanying the Commission Communication on 
Regional Policy contributing to smart growth in Europe 2020 

COM(2010) 553 final 

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COMMISSION STAFF WORKING DOCUMENT 

Document accompanying the Commission Communication on 
Regional Policy contributing to smart growth in Europe 2020 

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1. 

2. 

TABLE OF CONTENTS 

Introduction .................................................................................................................. 4 

New opportunities for regional innovation .................................................................. 5 

2.1. 

Innovation Clusters for regional growth ...................................................................... 5 

2.1.1.  The role of clusters in regional growth ........................................................................ 5 

2.1.2.  The need to support clusters......................................................................................... 7 

2.1.3.  Synergies around clusters............................................................................................. 8 

2.2. 

Constructing innovation friendly business environments for SMEs............................ 9 

2.2.1.  The crucial importance of entrepreneurship and SMEs and the role of Cohesion 

Policy............................................................................................................................ 9 

2.2.2.  Promoting entrepreneurial attitudes and innovative mindsets ................................... 12 

2.2.3. 

Improving the business environment: Starting, running and growing an innovative 
business ...................................................................................................................... 14 

2.2.4.  More focus on financial engineering support............................................................. 15 

2.2.5.  Synergies around SMEs support ................................................................................ 17 

2.3. 

Embedding lifelong learning in research and innovation .......................................... 19 

2.3.1.  Universities that contribute to regional growth.......................................................... 19 

2.3.2.  The European Institute of Innovation and Technology (EIT).................................... 21 

2.3.3.  Developing regional and attractive research infrastructures and centres of 

competence................................................................................................................. 23 

2.4. 

Creativity and cultural industries ............................................................................... 23 

2.4.1.  Cultural and creative industries (CCIs)...................................................................... 24 

2.4.2.  Design for user-centred innovation............................................................................ 27 

2.5. 

Digital Agenda ........................................................................................................... 28 

2.5.1.  Why does the EU need a Digital Agenda?................................................................. 28 

2.5.2.  Research and Innovation in ICT: a key action ........................................................... 29 

2.5.3.  Findings of the 2009 Strategic Report in relation to the digital priorities ................. 29 

2.6. 

Demand-pull for innovation: Public Procurement ..................................................... 32 

3. 

Increasing Synergies Between Policy Instruments .................................................... 32 

3.1. 

Main EU funding instruments.................................................................................... 32 

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3.2. 

3.3. 

Policy framework (synergies of design) .................................................................... 33 

Practical examples of synergies (synergies in action)................................................ 36 

3.3.1.  Research infrastructures and Research Potential ....................................................... 36 

3.3.2.  Synchronised support for innovation projects and take-up of research results.......... 37 

3.3.3.  Science and technology parks .................................................................................... 37 

3.3.4. 

Innovation, research systems and cluster initiatives .................................................. 38 

3.3.5. 

Improvement and internationalisation of innovation support services ...................... 39 

4. 

Towards smart specialisation strategies ..................................................................... 40 

4.1.  Why do we need smart specialisation? ...................................................................... 40 

4.2.  What is smart specialisation? ..................................................................................... 41 

How can regions develop a smart specialisation strategy? ........................................ 44 

Assessing smart specialisation strategies: preliminary thoughts ............................... 46 

A Smart Specialisation Platform................................................................................ 47 

Mapping Regional Innovation.................................................................................... 49 

Quantifying Cohesion Policy support to innovation.................................................. 53 

Innovation .................................................................................................................. 53 

SMEs and other businesses ........................................................................................ 55 

ICT ............................................................................................................................. 57 

4.3. 

4.4. 

4.5. 

5. 

6. 

6.1. 

6.2. 

6.3. 

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1. 

INTRODUCTION 

This Commission Working Document tries to provide clear guidance to national and regional 
governments for optimising the impact of European regional policy funding to inovation with 
the large amounts still available and align them with the new Europe 2020 vision. In order to 
do so the Commission wants to raise the awareness of Managing Authorities of new thinking 
regarding innovation support, including new opportunities and ways of maximising synergies 
across all Community Funds for innovation.  

It  complements  and  gives  further  insight  on  the  topics  raised  in  the  Communication  on 
"Regional Policy contributing to smart growth in Europe 2020" and includes the most relevant 
concepts  and  policy  tools  to  support  the  implementation  of  the  "Innovation  Union"  flagship 
initiative, particularly its regional dimension.  

In  this  sense,  it  describes  how  synergies  are  being  developed  at  Community  level  amongst 
Commission  departments,  groups  of  Member  States  responsible  for  various  innovation 
programmes and High Level Groups of experts to build consistency and critical mass for the 
purpose of delivering innovation on the ground.  

Such  concerted  efforts  are  equally  needed  in  each  Member  State  to  realise  the  capacity  to 
deliver  results  and  to  benefit  from  the  creative  and  innovative  potential  that  European 
cooperation can offer. 

This Commission Working Document includes further explanations on the concept of smart 
specialisation  strategies,  advanced  in  the  Barca  Report1  and  in  the  report  'The  role  of 
Community Research Policy in the Knowledge-Based Economy'2. Both reports have endorsed 
a  recommendation  to  European  Regional  Policy  to  reinforce  its  strategic  approach  and 
capacity  to  bring  innovation  into  the  regions.  This  concept,  which  is  also  supported  by  the 
European  Parliament  in  its  resolution  of  20  May  20103  and  has  been  avanced  by  many 
regions,  will  be  translated  operationally  through  appropiate  mechanisms  as  proposed  in  the 
Communication. 

It also introduces a synthetic indicator aimed at measuring the innovation potential of regional 
diversity  to  illustrate  the  need  for  regions  to  use  different  policy-mixes  and  to  establish 
territorial cooperation to realise smart growth.  

Finally,  the  last  section  provides  a  detailed  explanation  of  how  estimates  for  innovation, 
business  support  and  ICT  investment  through  the  European  Regional  Development  Fund 
(ERDF) and the European Social Fund (ESF) are estimated. 

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2 

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'An  Agenda  for  a  reformed  Cohesion  Policy'  by  Professor  Fabrizio  Barca,  June  2009, 
http://ec.europa.eu/regional_policy/policy/future/seminars/barca_sem_220609_en.htm 
Produced by the Expert Group on the ERA (European Research Area), chaired by Professor Luc Soete, 
in  November  2009,  http://www.kowi.de/Portaldata/2/Resources/fp/Report-Expert-Group-Role-CRP-in-
KbE.pdf. 
European  Parliament  P7_TA(2010)0189  -  Resolution  of  20  May  2010  on  the  implementation  of  the 
synergies  of  research  and  innovation  earmarked  Funds  in  Regulation  (EC)  No  1080/2006  concerning 
the European Fund of Regional Development and the Seventh Framework Programme for Research and 
Development in cities and regions as well as in the Member States and the Union 

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2. 

2.1. 

NEW OPPORTUNITIES FOR REGIONAL INNOVATION 

Innovation Clusters for regional growth 

2.1.1.  The role of clusters in regional growth 

Becattini  raised  the  issue  of  the  importance  of  place-based  economic  development  with  the 
notion of external economies that changed the approach to industrial policy.4 The prominence 
of  location  as  a  major  determinant  of  competitiveness  was  further  stressed  by  Porter  in  his 
seminal work on the notion of competitive advantage5 underlining the importance of clusters, 
so  acknowledging  that  the  business  environment  outside  companies  plays  a  vital  role  for 
unleashing  corporate  growth  potential  and  enhancing  regional  competitiveness.  Clusters  are 
'geographic  agglomerations  of  companies,  suppliers,  service  providers,  and  associated 
institutions  in  a  particular  field,  linked  to  externalities  and  complementarities  of  various 
types'6.  The  concept  of  clusters  and  cluster  policies  and  their  role  in  competitiveness  and 
innovation  has  been  further  described  in  detail  in  a  2008  Commission  Staff  Working 
Document.7  

As  stressed  in  the  Europe  2020  strategy,  clusters  are  an  important  tool  for  improving  the 
business  environment,  especially  for  SMEs  and  are  explicitly  highlighted  under  the  new 
Flagship Initiative “An industrial  policy for the globalisation era”. Cluster initiatives can be 
the  bridge  towards  a  modern  industrial  policy  and  facilitate  the  change  towards  regional 
competitiveness, based on the upgrading of traditional economic activities through innovation 
while  facilitating  the  emergence  of  new  products,  processes  and  services  which  are 
competitive  on  the  global  market.  Clusters  are  an  important  component  of  regional  smart 
specialisation  strategies,8  since  they  offer  policymakers  the  opportunity  to  better  streamline 
different policies towards the objective of stimulating growth through innovation.9  

Cluster  initiatives  offer  'policymakers  the  possibility  of  addressing  business  demand 
collectively and ensuring a cost-efficient way to address  a  critical  mass  of  recipients  with  a 
substantial policy impact through public-private partnership'.10 In the US as well as in Europe, 
cluster initiatives are usually initiated by local and regional stakeholders that know best their 
own  competitive  advantage  in  the  region  and  have  privileged  contacts  with  the  regional 
business community and academia.11 In addition, clusters can provide a fertile combination of 

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Becattini,  G,  1979:  "Dal  settore  industriale  al  distretto  industriale".  Rivista  di  Economica  e  Politica 
Industriale, 5 (1) 
Porter, M., 1998: "Clusters and the New Economics of Competition". Harvard Business Review 
Porter,  M.,  1990:  "The  Competitive  Advantage  of  Nations".  New  York:  The  Free  Press  and  London: 
Macmillan 
European  Commission  (2008)  “The  concept  of  clusters  and  cluster  policies  and  their  role  for 
competitiveness  and  innovation:  Main  Statistical  results  and  lessons  learned”,  Commission  Staff 
Working  Document  SEC  (2008)2637  that  was  annexed  to  the  Commission  Communication  COM 
(2008)652  final  of  17.10.2008  entitled  “Towards  world-class  clusters  in  the  European  Union: 
Implementing  the  broad-based  innovation  strategy  in  the  EU”.  Both  documents  are  available  at 
http://ec.europa.eu/enterprise/policies/innovation/policy/clusters/ 
"European Cluster Memorandum": 6 
European  Commission  SEC  2008  (2637):  Towards  world-class  clusters  in  the  European  Union: 
Implementing the broad-based innovation strategy: 31 
Landabaso,  Mikel,  Rosenfeld,  Stuart.  2009:  "Public  policies  for  industrial  districts  and  clusters"  in 
Becattini  Giacomo,  Bellandi  Marco,  De  Propris  Lisa  (eds)  2009,  A  Handbook  of  Industrial  Districts, 
Edward Elger, Nottingham: 744 
Sallet  Jonathan,  Paisley  Ed,  Mastermann  Justin,  2009:  "The  Geography  of  Innovation.  The  Federal 
Government and the Growth of Regional Innovation Clusters", Science Progress: 6 and OECD, 2009: 
"Regions Matter – Economic Recovery, Innovation and Sustainable Growth", Paris: 12 

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entrepreneurial dynamism and contribute to the building of a knowledge-based economy, in 
line with the Europe 2020 strategy.12  

To have an impact on regional growth, clusters should build on local strengths, help to create 
synergies  between  businesses,  universities  and  research  entities  and  respond  to  market 
opportunities.  The  facilitation  of  interaction  among  stakeholders  in  a  cluster  is  vital  for  its 
innovation  impact,13  since  intangible  factors14,  such  as  access  to  tacit  knowledge  and 
opportunities  for  networking,  become  more  important  assets  than  those  associated  with 
proximity of suppliers15. The market alone does not always appear to maximise this potential. 
Therefore,  public  policy  initiatives  have  a  facilitating  role  to  play16  as  acknowledged  by 
company  managers  working  in  a  cluster-like  environment.17  Bodies,  such  as  cluster 
organisations that manage cluster initiatives should assess their results, analyse their impacts 
and bottlenecks and report these to public authorities.  

Moreover,  clusters  offer  a  fertile  environment  for  SMEs  to  innovate  and  develop  linkages 
with  large  companies  and  international  partners.18  It  is  widely  acknowledged  that  cluster 
initiatives help to ‘glue’ Multinational Companies (MNCs) and SMEs, and root them to the 
regions  through  the  favourable  "local  collective  competition  goods"19  created  in  cluster 
environments.  Clusters  can  speed  the  transfer  of  technology  and,  when  MNCs  relocate,  to 
help to keep and develop it in the region. In lagging and rural regions especially, clusters are 
therefore  a  useful  tool  for  local  development  policies.20  Accordingly,  clusters  can  be  an 
important policy tool for regional development, as long as they foster and build on regional 
strengths, while maintaining global connections and openness to new knowledge and change. 

As part of their on-going efforts to further boost competitiveness, research and innovation in 
their  region,  managing  authorities  for  European  regional  policy  should  continue  to  support 
cluster initiatives, particularly those which have been proved to make efficient use of public 
support or those clusters which have a real potential to become clusters of excellence and so 
more  competitive  in  international  markets.  Key  areas  that  could  be  supported  in  this  case 
include  internationalisation  of  cluster  firms,  commercialisation  of  R&D  results,  cooperation 
activities  across  sectors,  specialised  training  of  the  workforce,  marketing  activities,  and 
integration of new concepts such as open innovation. Cluster organisations play a key role not 
only by representing and managing the cluster, but also by providing specialised business and 
innovation support services to the firms in the cluster. Furthermore, they act as a bridge when 
it  comes  to  transnational  cooperation  by  facilitating  transnational  cooperation  between  the 
firms in the cluster and other innovation actors. 

Managing  authorities  should  continue  to  use  clusters  as  building  blocks  for  new  regional 
strategies to revitalise rural areas and contribute to regional cohesion, and to address emerging 
areas which have a high economic potential for their regions. However, the selection of new 
cluster  initiatives  should  be  built  upon  a  detailed  analysis  of  existing  strengths,  assets  and 

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20 

European Commission SEC (2008) 2637 
OECD, 2007: "Competitive Regional Clusters", OECD Reviews of Regional Innovation: 32 
IAREG,  2010:  "Intangible  Assets  and  Regional  Economic  Growth",  Policy  Guide,  FP7  Collaborative 
Research Project 216813. 
Rosenfeld,  Stuart.  2009:  "Generating  Local  Wealth,  Opportunity,  and  Sustainability  through  Rural 
Clusters", Volume 1, March 2009: 30 
OECD, 2009: "Regions Matter – Economic Recovery, Innovation and Sustainable Growth": 14 
European Commission, SEC (2008) 2637 : 34 
OECD, 2009: "Regions Matter – Economic Recovery, Innovation and Sustainable Growth": 55 
Sallet, Paisley, Mastermann, 2009: 10 
Rosenfeld,  Stuart,  2009:  "Generating  Local  Wealth,  Opportunity,  and  Sustainability  through  Rural 
Clusters", Volume I, March 2009: 21. 

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potential  of  the  region.  Recent  studies  such  as  those  developed  by  the  European  Cluster 
Observatory21 are useful for this purpose. 

The  importance  of  clusters  for  synergetic  growth  has  been  stressed  by  the  Community 
Strategic  Guidelines  on  Cohesion  (CSGs)  for  the  period  2007-2013,  explicitly  encouraging 
Member  States  and  regions  to  promote  strong  clusters,  as  a  means  of  cooperation  among 
businesses  and  between  businesses  and  public  research  /  tertiary  education  institutions  –  a 
knowledge triangle in their economic reform strategies.  

2.1.2.  The need to support clusters 

The ERDF Regulation for 2007-2013 includes explicit support to business networks, public-
private partnerships and clusters. In  this  context, from the € 86bn of Cohesion Policy funds 
allocated to innovation in the EU-27 for the period 2007-2013 considerable amounts will go 
to supporting cluster initiatives and the related infrastructure. The ERDF has proved to be a 
good  vehicle  to  support  the  framework  conditions  and  develop  projects  that  address  ´grass 
roots´ problems and opportunities.22  

The  revised  EU  Community  Framework  for  State  aid  for  Research  and  Development  and 
Innovation  also  recognises  the  potential  usefulness  of  public  support  by  allowing  certain 
targeted support measures for cluster development23. 

In  particular,  the  Commission  recommends  that  Operational  Programmes  for  innovation 
should  focus  on  activities  where  regions  have  a  comparative  advantage,24  on  infrastructure 
such  as  science  parks  and  incubators25  as  well  as  networking  activities  needed  to  create  the 
links between regional authorities, businesses and universities. 

Corallia – The Hellenic Technology Clusters Initiative, a RegioStar 2009 finalist 

Corallia, provides support for the development of state-of-the-art, industry-driven innovation clusters, 
and acts as a hub for industry, research centres and venture capitalists involved in innovation activity. 

The project has yielded tangible results through the establishment and operation of the 'mi-Cluster' in 
Microelectronics  and  Embedded  Systems  and  has  led  to  a  notable  increase  in  annual  turnover, 
exports,  patent  applications  and  new  jobs.  Mi-cluster  company-members  have  strengthened  the 
production value-chain of the ecosystem and have increased involvement in joint research efforts. The 
cluster  actively  cooperates  with  other  cluster  initiatives  in  the  EU,  such  as  the  Foundation  Sophia-
Antipolis. 

ERDF co-funding of EUR 3.289 million; 

More information: http://www.corallia.org/el.html  

Cohesion  Policy  also  provides  an  important  impetus  in  supporting  transnational  and  cross-
border cooperation between clusters26 as mutual policy learning helps to advance faster and 
readjust cluster policies towards new emerging needs and challenges.27 This is crucial to help 
them to become the world class clusters that Europe needs. 

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http://www.clusterobservatory.eu/index.php?id=1&article=25 
Technopolis Group, 2008: "Analysing ERDF co-financed innovative projects", April 2008: 18 
Official  Journal  of  the  European  Union,  30.12.2006:  "Community  Framework  doe  State  Aid  fro 
Research and Development and Innovation – Aid for innovation Clusters" pp.18. 
European Commission, SEC (2008) 2637 : 33 
European 
Commission, 
http://ec.europa.eu/regional_policy/sources/docoffic/2007/working/innovation_incubator.pdf 
European Commission, SEC (2008) 2637: 40 
European Commission, , SEC (2008) 2637: 36 

Innovation-Based 

Incubators" 

"Smart 

Guide 

on 

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Medicon  Valley  Alliance,  as  part  of  the  Øresund  science  region  (RegioStars  Winner  2008  in  the 
cluster category) 

Following  completion  of  the  new  bridge  linking  Sweden  and  Denmark  in  2000,  with  the  financial 
support  of  Cohesion  Policy,  a  development  opportunity  arose  in  the  Øresund  region.  The  Medicon 
Valley  Alliance  –  a  network  of  firms,  universities,  hospitals  and  public  authorities  and  the  Øresund 
Science Region capitalised on existing links between the area’s universities and the biomedical sector. 

As  a  result  the  Øresund  region  is  now  one  of  the  leading  biomedical  regions  in  Europe  and  today 
accounts for 60% of all Scandinavian life science exports. Even more impressive, it is now one of the 
top 10 EU regions for biotechnology and applied microbiology, immunology and oncology. 

More  information:  http://showcase.homesandcommunities.co.uk/case-study/medicon-valley-alliance-
denmarksweden.html 

Synergies around clusters 

2.1.3. 
In  particular,  with  the  Regions  for  Economic  Change  Initiative28  the  Commission  assists 
trans-national  networks  of  regions  in  their  efforts  to  improve  their  regional  innovation 
systems, in which cluster policies may play a prominent role. It encompasses communication 
activities  such  as  a  web  site,  a  database  of  case  studies  and  the  RegioStars  Awards  scheme 
(with  CityStars  categories).  In  2011,  the  RegioStars  awards  will  also  be  conferred  to 
Networking and Cluster initiatives supporting regional growth and SMEs access to markets. 
The  initiative  aims  to  promote  mutual  policy  learning  and  to  highlight  examples  of  good 
practices in programmes co-funded by EU Cohesion Policy. 

In  addition,  regional  policy  makers  are  encouraged  to  use  complementary  Community-
funding instruments for fostering excellence at regional, national and EU-level with the aim 
of  developing  more  world-class  clusters  in  the  EU,  as  has  been  outlined  in  the 
Communication  “Towards  world-class  clusters  in  the  European  Union:  Implementing  the 
broad-based innovation strategy”,29 and further analysed in the accompanying Staff Working 
Document30. The big leverage potential of scientific research expenditure by clusters is widely 
acknowledged both by EU and US academics, better delivering on the promise of more jobs, 
new businesses and transformative technologies.31  

Under the Competitiveness and Innovation Framework Programme (CIP), several instruments 
have  been  set  up  to  support  cluster  excellence.  The  European  Cluster  Alliance32  fosters 
cooperation and mutual learning aimed at developing better cluster policies in the EU. It is an 
open cooperation platform that currently brings together more than 70 regional and national 
ministries  and  innovation  agencies  in  charge  of  cluster  policies.  The  European  Innovation 
Platform  for  Clusters33  facilitates  transnational  cooperation  between  cluster  organisations  in 
view of developing and testing new or better innovation support tools for cluster firms. Two 
partnerships  have  been  established:  for  eco-innovative  industries  (EcoCluP)  and  for  the 
biotechnology  sector  (ABCEurope).  The  European  Cluster  Excellence  Initiative34  is 
developing  Europe-wide  standards  for  cluster  management  in  order  to  accelerate  the 

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http://ec.europa.eu/regional_policy/cooperation/interregional/ecochange/index_en.cfm 
European  Commission,  COM  (2008)  652:  "Towards  world-class  clusters  in  the  European  Union: 
Implementing the broad-based innovation strategy" 
European Commission, SEC (2008) 2637 
Sallet, Paisley, Mastermann, 2009: 7 
http://www.proinno-europe.eu/eca  
http://www.europe-innova.eu/cluster-ip 
http://www.cluster-excellence.eu/ 

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professionalisation  of  cluster  organisations.  Finally,  the  European  Cluster  Observatory35 
provides information and analysis on clusters in Europe. In particular, it provides analysis and 
a mapping of cluster strengths for 38 sectors across EU regions using a common methodology 
based  on  employment  statistics.  Furthermore,  an  open  “European  Cluster  Cooperation 
Forum” will be established under the European Cluster Observatory by 2011. Building upon 
the  policy  cooperation  of  the  European  Cluster  Alliance  and  taking  into  account  the 
discussions  of  the  informal  Competitiveness  Council  of  July  2010,  this  measure  will  allow 
policy makers to share experience on cluster policies and evaluation practices from national 
and regional initiatives. 
Under the 7th Framework Programme for Research and Development (FP7), the “Regions of 
Knowledge”36 programme focuses on supporting transnational cooperation between regional 
research-driven  clusters,  comprising  the  ‘triple  helix’  of  research  entities,  businesses  and 
public  authorities,  with  a  view  to  designing  Joint  Action  Plans  and  fostering  future 
cooperation between EU clusters37.  

At EU level, interaction between different EU initiatives should be strengthened. For instance, 
public  authorities  involved  in  INTERREG  and  “Regions  of  Knowledge”  projects  should  be 
encouraged to become active members of the European Cluster Alliance to benefit from the 
policy dialogue carried out at EU level. In addition, cluster managers in such projects should 
be  invited  to  participate  in  the  European  Club  of  Cluster  Managers38  aimed  at  discussing 
problems and solutions of mutual interest. 

The forthcoming recommendations of the high level European Cluster Policy Group39 as well 
as the Group of experts40 working on “Synergies between FP7, the Structural Funds and CIP” 
which was recently established under FP7 will provide further suggestions for action on how 
to  better  exploit  synergies  between  EU  policy  instruments  so  as  to  increase  their  impact  to 
develop more world-class clusters in the EU. 

2.2. 

Constructing innovation friendly business environments for SMEs 

2.2.1.  The  crucial  importance  of  entrepreneurship  and  SMEs  and  the  role  of  Cohesion 

Policy 

As  stressed  in  the  Europe  2020  strategy,  entrepreneurship  is  necessary  to  ensure  “that 
innovative ideas can be turned into new products and services that create growth, quality jobs 
and  help  address  European  and  global  societal  challenges”.  Moreover,  an  environment  in 
which  small  and  medium-sized  enterprises  (SMEs)41  can  prosper  is  crucial  to  achieve  the 
smart,  sustainable  and  inclusive  growth  that  we  are  aiming  for  and  will  be  promoted  by 
several of the EU 2020 strategy's flagship initiatives. 

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41 

www.clusterobservatory.eu  
http://ec.europa.eu/research/fp7/index_en.cfm?pg=know  
http://cordis.europa.eu/fp7/capacities/regions-knowledge_en.html  
Organised as part of the European Cluster Excellence initiative http://www.cluster-excellence.eu/  
http://www.proinno-europe.eu/project/ecpg  
ftp://ftp.cordis.europa.eu/pub/fp7/docs/wp/capacities/regions/q_wp_201001_en.pdf  
Companies classified as SMEs are defined officially by the EU as those with fewer than 250 employees 
and which are independent from larger companies. Furthermore, their annual turnover may not exceed 
€50  million,  or  their  annual  balance  sheet  exceed  €43  million.  SMEs  may  be  divided  into  three 
categories  according  to  their  size:  micro-enterprises  have  fewer  than  10  employees,  small  enterprises 
have  between  10  and  49  employees,  and  medium-sized  enterprises  have  between  50  and  249 
employees. 
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-
See 
definition/index_en.htm 

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Entrepreneurship  is  a  major  driver  of  innovation,  competitiveness  and  growth.  Due  to  their 
strong  presence  in  key  sectors  such  as  services  and  knowledge-based  activities,  smaller 
enterprises and the entrepreneurs who manage them play a central role in the EU economy.  

The EU non-financial business economy counts over 20 million enterprises. More than 99% 
of  those  businesses  are  SMEs.  They  provide  two  thirds  of  the  private  sector  jobs  and 
contribute to more than half of the total value-added created by businesses in the EU. Nine out 
of  ten  SMEs  are  micro  enterprises  with  less  than  ten  employees.  Hence,  the  mainstay  of 
Europe's economy is micro firms, each providing work for two poeple on average.  

Between  2002  and  2008,  the  number  of  SMEs  increased  by  2.4  million  (13%),  while  the 
number  of  large  enterprises  only  increased  by  2,000  (5%).  The  new  Member  States  show 
higher  birth  and  death  rates  of  enterprises  than  the  old  Member  States.  Most  new  firms  are 
created  in  the  service  sector  and  are  micro  enterprises.  The  contribution  of  SMEs  to 
employment growth between 2002 and 2008 (83%) was much larger than could be expected 
from  their  share  in  total  employment  (67%).  However,  with  the  onset  of  the  financial  and 
economic crisis in 2008, there is evidence that the above cited positive developments have, at 
least temporarily, come to a halt.42 

In a globalising economy, with large incumbent firms outsourcing and off-shoring production 
and jobs to low cost locations, SMEs are an important source of job creation in the EU as well 
as a means to consolidate existing jobs in the regions where they are located. According to a 
Eurobarometer survey conducted in summer 200943 innovative companies were more likely to 
declare an average annualised growth of more than 20% over the preceding three years (25% 
as  against  14%  for  non-innovative  companies).  In  other  words,  innovative  companies  were 
more likely to be high-growth companies.  
More  and  more,  "soft  companies"44  and  universities  are  providing  tailor-made  R&D  based 
services  through  technical  consulting  and  co-development  with  businesses  in  close 
consultation with clients and suppliers. 

Member  States  have  committed  themselves  to  implementing  alongside  the  European 
Commission  the  Small  Business  Act  for  Europe  (SBA),45  which  is  a  unique  and 
comprehensive framework. It includes the “SME Test” at European46 and national level. Its 
objective  is  to  verify  to  what  extent  regulatory  and  policy  proposals  affect  small  businesses 
and adapt these measures to make them more SME friendly. The “SME test” is complemented 
by  the  “business  panels”  of  the  Enterprise  Europe  Network  which  convey  the  opinion  of 
SMEs on forthcoming EU legislation impacting on them.  

To  make  business  environment  friendlier,  both  for  existing  SMEs  and  for  prospective 
entrepreneurs,  the  Commission  in  cooperation  with  the  Member  States  is  facilitating  the 

42 

43 

44 

45 
46 

SME  Performance  Review.  Annual  Report  2009.  See  http://ec.europa.eu/enterprise/policies/sme/facts-
figures-analysis/performance-review/pdf/dgentr_annual_report2010_100511.pdf 
report,  September  2009, 
Flash  Eurobarometer  No  271,  "Access 
http://ec.europa.eu/enterprise/policies/finance/files/survey_access_to_finance_analytical_report_en.pdf 
"Exploding  the  Myths  of  UK  Innovation  Policy:  How  ‘Soft  Companies’  and  R&D  Contracts  for 
Customers Drive the Growth of the Hi-Tech Economy", January 2010. David Connell, Jocelyn Probert. 
Centre for Business Research, University of Cambridge. 
See http://ec.europa.eu/enterprise/policies/sme/small-business-act/ 
See http://ec.europa.eu/enterprise/policies/sme/small-business-act/sme-test/index_en.htm 

finance",  Analytical 

to 

EN 

10 

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identification  and  exchange  of  good  SME  policy  measures,  as  evidenced  by  the  SBA 
Database of Good practices.47 
Innovation processes in crafts and SMES48 are characterised by on-going permanent processes 
and  less  technical-driven  inventions.  In  most  of  them  this  involves  using  available 
technologies  in  new  ways;  based  on  the  experience  and  knowledge  of  staff,  long  lasting, 
costumer  and  supplier  relations  and  existing  networks  and  clusters.49  The  value  added  of 
Cohesion  Policy  to  them  is  mainly  the  accessible  support  it  offers,  based  on  proximity, 
innovation business services and opportunities for technology transfer. 

SMEs, and especially micro-enterprises, are heavily dependent on their regional environment 
where  proximity  plays  a  key  role, 
tacit  knowledge  for 
innovation. SMEs  need  policy  support  in  tapping  into  the  necessary  outside  resources, 
principally  access  to  knowledge,  in  the  form  of  advice  through  innovation  support  services 
and tailored counselling, technology or qualified human capital, to face up to the new forms 
of competition that are developing in the global economy. EU policy support to innovation-
friendly  business  environments  is  needed  through  appropriate  place-based  policies50  and 
smart regional specialisation. 

in  particular  regarding 

Units for Intellectual Property Promotion (UIPP), Portugal 

The  Portuguese  Institute  of  Industrial  Property  (INPI)  launched  an  ERDF  co-funded  project  (2001-
2007), the UIPP Project, which was aimed at bringing the National Patent Office closer to companies 
and universities. It provided services to researchers and students as well as to SMEs for pre-diagnosis 
of IPR needs. 

included 

training,  awareness  activities  and  seminars,  IPR  advertising  and 
Eligible  costs 
dissemination,  technical  assistance  and  advice  by  specialists.  UIPP  promoted  partnerships  and 
established a network between 2 business associations, 10 universities, 7 technological centres and 3 
science and technology parks. 

Between 2001 and 2007, the number of hi-tech patent applications to the EPO per million inhabitants 
increased from 0.4 to 7.5 in Portugal (European Innovation Scoreboard).  

More information: http://www.innovaccess.eu/documents/20081211brussels/11-Dinis.pdf  

http://www.proinno-europe.eu/metrics  

SMEs  are  accordingly  at  the  core  of  Cohesion  Policy,  which  is  aimed  primarily  at  creating 
jobs and raising productivity by making regions and businesses more competitive. A thriving 
SME  sector  is  not  only  essential  for  growth,  job  creation  and  innovation  but  also  for  social 
and  economic  cohesion.  For  the  period  2007-2013,  the  Community  Strategic  Guidelines  on 
Cohesion51  emphasize  the  key  role  of  SMEs,  notably  when  it  comes  to  increasing  and 
improving their investment in R&TD, facilitating innovation and promoting entrepreneurship. 
Cohesion Policy in fact provides the largest financial Community support to SMEs, including 
through financial engineering instruments such as JEREMIE. 

47 

48 

49 
50 

51 

http://ec.europa.eu/enterprise/policies/sme/best-
practices/database/SBA/index.cfm?fuseaction=welcome.detail 
Innovation  policy  at  regional  level:  Crafts  and  SME  priorities  for  the  new  Innovation  Strategy  – 
Discussion paper from UEAPME secretariat (3 June 2010). 
Ibidem. 
See "An Agenda for a reformed Cohesion Policy – A place-based approach to meeting European Union 
challenges and expectations", Fabrizio Barca, April 2009, 
http://ec.europa.eu/regional_policy/policy/future/barca_en.htm  
See http://ec.europa.eu/regional_policy/sources/docoffic/2007/osc/l_29120061021en00110032.pdf 

EN 

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Support and activities of Cohesion Policy targeted to SMEs are not just about funding but also 
about  innovative  governance  and  strategies.  Cohesion  Policy  can  provide  an  integrated 
approach  to  address  the  needs  of  SMEs.  It  covers  all  phases  of  business  creation  and 
development.  This  is  particularly  important  when  it  comes  to  ensuring  that  newly  created 
businesses  become  dynamic  and  sustainable.  Cohesion  Policy  programmes  bring  funding 
closer to the real concerns of SMEs through partnerships.  

All actors, including businesses and their organisations should participate in the planning and 
monitoring  process.  In  global  competitive  markets,  SMEs  need  to  anticipate  new 
developments and Cohesion Policy can help them to adapt to structural and industrial change 
and  to  diversify  both  their  product  range  and  client  base.  Cohesion  Policy  is  used  by  many 
Managing  Authorities  to  improve  the  competitiveness  of  SMEs,  in  part  through  promoting 
tailor-made packages for networking and cooperation.  

This support often provides the initial platform for an increased number of SMEs to access the 
FP7 or the CIP. 

2.2.2.  Promoting entrepreneurial attitudes and innovative mindsets 

Small  businesses  depend  on  entrepreneurs  –  the  individuals  who  have  the  ideas  and  are 
willing to take the risks necessary to get firms off the ground. According to a Eurobarometer 
survey  on  entrepreneurship,  conducted  in  December  2009,52  the  preference  for  self-
employment is lower in Europe than in, for example, the US. 45% of all Europeans would like 
to  be  self-employed  compared  to  55%  of  Americans.  In  Slovakia,  Belgium,  Denmark,  the 
Czech  Republic  and  Sweden  only  one  third  of  the  population  or  less  declares  an  interest  in 
being an entrepreneur. 

The important role of early entrepreneurship education was stressed again in the Europe 2020 
strategy,  pointing  out  that  Member  States  will  need  to  focus  school  curricula  on  creativity, 
innovation  and  entrepreneurship.  In  some  Member  States,  entrepreneurship  is  already 
included in the national curricula for secondary school and is an objective in their education 
systems. 

The  Commission  has  outlined  a  set  of  recommendations  aimed  at  enhancing  the  role  of 
education in creating a more entrepreneurial culture in European societies.53 Starting from an 
early  age,  education  should  stimulate  young  people's  awareness  of  entrepreneurship  as  an 
option for their future, and help them to be more creative and self-confident in whatever they 
integrate 
undertake.  At  a 
entrepreneurship as an important part of the curriculum.  

later  stage,  universities  and 

institutes  should 

technical 

In  2007,  the  Commission  published  the  “Oslo  Agenda  for  Entrepreneurship  Education  in 
Europe”54  conceived  as  a  menu  from  which  all  stakeholders  can  pick  actions  at  the 
appropriate level. Efforts currently focus on increasing coordination between different actors 
so  as  to  develop  more  systematic  strategies  at  national  and  regional  level.  A  progression 
model  has  been  designed  to  help  Member  States  and  stakeholders  to  develop  policy  in  the 
area of entrepreneurship education.55 

52 

53 

54 

55 

Flash  Eurobarometer  No  283  "Entrepreneurship  in  the  EU  and  beyond",  Analytical  report, 
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/eurobarometer/index_en.htm 
Implementing  the  Community  Lisbon  Programme:  Fostering  entrepreneurial  mindsets  through 
education and learning, COM(2006) 33 final, 13.2.2006. 
http://ec.europa.eu/enterprise/policies/sme/promoting-entrepreneurship/education-training-
entrepreneurship/policy-framework/index_en.htm 
Recommendation  of  the  European  Parliament  and  of  the  Council,  of  18  December  2006,  on  key 
competences for lifelong learning, Official Journal L 394 of 30.12.2006 

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A sense of initiative and entrepreneurship is also defined as one of the eight key competences 
in  the  European  Framework  for  Key  Competences  for  Lifelong  Learning.56  It  involves 
creativity,  innovation  and  risk-taking,  as  well  as  the  ability  to  plan  and  manage  projects  in 
order to achieve objectives. These are obviously important competences even for people who 
finally  do  not  opt  to  set  up  their  own  businesses,  which  will,  for  example,  allow  them  to 
develop innovative ideas in the companies or organisations in which they are employed. The 
2010  Joint  Education  Report57  indicated  that  there  is  an  increasing  number  of  examples  of 
promoting  entrepreneurship  through  partnerships  with  enterprises  or  the  development  of 
student-run mini-businesses.  

‘Developing Entrepreneurship Studies’ – Estonia 

This  project  was  run,  with  financial  support  from  the  European  Social  Fund,  by  the  Foundation 
‘Innove’ and partners (six vocational schools and the Estonian Chamber of Commerce and Industry) 
between September 2005 and August 2008. 

It  resulted  in  the  development  of  three  new  entrepreneurship  modules  which  can  be  adapted  to 
different vocational education and trining curricula: 

- a 40-hour basic module, targeting students in vocational schools following basic education; 

- a 40-hour entrepreneurship module for students in post-secondary vocational education; 

-  an  80-hour  Optional  module:  Evaluation  of  Business  Performance  and  Managing  Entrepreneurial 
Challenges for students in vocational secondary education. 

In addition, CIP funded campaigns such as the European SME Week58 have been launched by 
the  Commission  to  promote  the  image  of  entrepreneurship.  The  European  Enterprise 
Awards59  have  also  been  organised  since  2006  to  identify  and  reward  excellence  among 
public authorities in promoting entrepreneurship and small business at national, regional and 
local  level.  Every  year,  more  than  300  initiatives  in  each  of  the  participating  countries  (the 
Member States and Norway) compete in the national rounds of the competition. A high-level 
European jury selects the best entries. It is a fact that almost half of the intiatives that have 
been shortlisted for the awards so far have been co-financed by Cohesion Policy funds. 

ifex:  Initiative  for  Start-ups  and  Business  Transfer  –  Baden-Württemberg,  Germany,  a  European 
Enterprise Awards Winner in 2006. 

Via  its  online  portal,  ifex  is  a  one-stop  agency  for  information  on  start-up  and  business  transfer 
policies, giving access to a large network of over 1,400 support service providers. It provides tailor-
made  educational  and  support  services  to  specific  target  groups,  including  schools,  universities, 
women, ethnic and minority groups. 

Due  to  the  success  of  the  project,  ifex  became  a  permanent  Unit  in  the  State  Ministry  of  Economic 
Affairs and also manages the nation-wide “German Agency for Women’s Start-ups” on behalf of three 
federal Ministries. 

ifex  has  demonstrated  over  the  past  12  years  how  to  build  an  innovative  and  successful  regional 
support  infrastructure,  in  cooperation  with  all  regional  support  service  providers  and  in  spite  of 
shrinking  public  budgets.  Its  support  measures  have  already  been  successfully  transferred  to  other 
German and European regions with impressive results. 

56 
57 
58 
59 

Ibidem. 
http://ec.europa.eu/education/lifelong-learning-policy/doc1532_en.htm 
http://ec.europa.eu/enterprise/policies/entrepreneurship/sme-week/index_en.htm 
http://ec.europa.eu/enterprise/policies/sme/best-practices/european-enterprise-awards/index_en.htm 

EN 

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Since 2009, the exchange programme for entrepreneurs, Erasmus for Young Entrepreneurs60 
is aimed at fostering the entreprenurial spirit in the EU, creating new enterprises and helping 
to internationalise the existing ones, via the exchange of experience and knowledge between 
experienced  and  new  entrepreneurs.  By  May  2010,  2,200  entrepreneurs  had  been  registered 
and 190 exchanges completed. 

2.2.3. 

Improving  the  business  environment:  Starting,  running  and  growing  an  innovative 
business 

New knowledge and new ideas are created every day across Europe. Transferring them into 
real  innovation  -  a  new  economic  activity  that  creates  jobs  and  wealth  -  is  facilitated  by 
supporting those that have been inspired by new ideas and knowledge.  

Promoting business incubators and growth of small innovative businesses is singled out in the 
Europe  2020  strategy  as  a  way  of  creating  growth  through  knowledge.  Given  the  huge 
diversity of regions across the EU and the great complexity of innovation processes Regional 
Policy has an important role here. Based on the lessons learned from over the past 25 years, in 
particular  through  the  BIC  Network,61  the  Commission  has  published  a  Smart  Guide  on 
Innovation-Based  Incubators.62  An  innovation-based  incubator  is  a  business  development 
centre for new entrepreneurs and SMEs that intend to develop innovative ideas.The aim of the 
guide  is  to  give  local  stakeholders  in  a  region,  including  the  Managing  Authorities  of 
Cohesion Policy funds, an insight into the scope for innovation-based incubators and the steps 
needed to set up successful ones. 

Innovatum Technology Park – Västra Götaland Region, Sweden 

The  ERDF-supported  Innovatum  Technology  Park  is  a  development  centre  packed  with  research 
projects and inspirational activities. It consists of a science centre, a project arena and an incubator, 
which  is  conducive  for  innovative  ideas  in  its  three  areas  of  focus:  production  technology,  clean 
technology  and  creative  industry.  Innovatum  provides  a  network  of  professional  advisors,  access  to 
external financing and guidance on managing a business to entrepreneurs. Since 2003, more than 40 
companies have developed and several of them are now working with international brands in global 
markets. 

Incubator Technology Centre – Wrocław, Dolnośląskie, Poland  

The gap between high levels of scientific potential and low levels of innovation in business is 
being  bridged  in  the  Lower  Silesia  region  of  Poland  by  the  Incubator  Technology  Centre, 
which provides a place for businesses to interact with the academic community in the form of 
the  University  of  Wrocław,  the  Wrocław  University  of  Technology,  and  the  Wrocław 
University of Environmental and Life Sciences. 

ERDF contribution: EUR 3 917 000 

The  Enterprise  Europe  Network63  partners  provide  business  partnering  services  for 
technology  development  and  knowledge  transfer  as  well  as  for  market  access  abroad,  they 

60 
61 

62 

63 

http://www.erasmus-entrepreneurs.eu/ 
The European Business and Innovation Centres (BICs) are support organisations for entrepreneurs and 
innovative SMEs. The first BICs were created in 1984, co-funded by the ERDF as 'Innovative Actions'. 
The today more than 200 BICs are coordinated and supported by the European Business and Innovation 
Centre Network (EBN), http://www.ebn.be/. 
The Smart Guide to Innovation-Based Incubators (IBI)", 
http://ec.europa.eu/regional_policy/sources/docoffic/2007/working/innovation_incubator.pdf/. 
http://www.enterprise-europe-network.ec.europa.eu/index_en.htm 

EN 

14 

   EN 

                                                 
 
provide  information,  feedback  and  tailor  made  advice  for  business,  including  on  innovation 
and  technology  transfer,  and  it  practically  encourage  SMEs  to  participate  in  EU  funding 
programmes.  An  increasing  number  of  centres  back  up  other  innovation  support  providers, 
including private consulting SMEs and public-private initiatives, in raising the quality of their 
services by encouraging the take-up of results from European pilot actions. This vast pool of 
expertise  brings  together  577  business  support  organisations  (including  chambers  of 
commerce  and  industry,  technology  transfer  centres,  research  institutes  and  regional 
development  agencies)  from  45  countries,  and  helps  SMEs  on  a  daily  basis  to  seize  the 
unparalleled business opportunities in the Single Market. 

While the creation of a company is always a challenge, the decision taken by an entrepreneur 
to  go  crossborder  is  even  more  so.  The  first  difficulty  is  to  find  relevant  and  helpful 
information  presented  in  a  user  friendly  way.  The  Commission,  with  the  support  of  the 
national  administrations,  has  launched  the  “Your  Europe  portal”64  an  online  practical  guide 
explaining each step of the process and the specific rules and procedures to be followed for 
doing business in another Member State. 

XPER- REGIO: European Enterprise Award in 2007 

21 Lower Bavarian Municipalities got together in a strategic alliance to support entrepreneurship in 
small rural areas with EUR 3 million support from the ERDF, which led to total private and public 
expenditure of EUR 13.2 million in the region. The result was the creation of 170 new firms and 400 
jobs. 

2.2.4.  More focus on financial engineering support 

The studies conducted for the ex-post evaluation65 of Cohesion Policy show that there is a role 
for non-repayable grants as well as for the various forms of financial engineering, including 
loans and venture capital. Currently, grants are by far the most common financial instrument 
for  business  support.  Loans  are  widespread  but  account  for  a  small  proportion  of  total 
assistance,  venture  capital  is  confined  to  a  few  regions  (mainly  in  the  UK  or  in  Germany). 
They also show that there is a role for both "direct" financial grants and "indirect" support in 
kind  (for  example  networking,  clustering,  innovation  systems)  and  a  tailored  package  of 
combined support can be more efficient than support through a instrument.  

Small  businesses  often  have  difficulties  financing  their  growth  and  innovations.  The 
Commission  is  working  with  the  Member  States  to  stimulate  the  provision  of  loans  and 
venture capital for SMEs. Getting an innovative firm off the ground and expanding it requires 
money, but financing SMEs is a risky proposition. To solve this, Europe needs more investors 
and banks willing to take the risk, and European entrepreneurs need a better understanding of 
the  concerns  of  investors  and  banks  in  order  to  be  able  to  provide  assurances  about  the 
soundness  of  their  proposal.  The  Commission  has  organised  a  series  of  workshops66  and 
developed self-assessment on-line tools for business plans and investor readiness.67  

64 
65 

66 
67 

http://ec.europa.eu/youreurope 
Over 67,000 SMEs received support under the 'Supporting business development programme, leading 
to the creation of nearly 200,000' jobs and 'Investing in research and innovation lerd to almost 38,000 
R&D  projects  receiving  support  with  the  creation  of  over  13,000  new  long  term  research  jobs' 
http://ec.europa.eu/regional_policy/policy/impact/index_en.htm.  
http://ec.europa.eu/enterprise/newsroom/cf/itemlongdetail.cfm?item_id=2069&tpa_id=127&lang=en 
http://ec.europa.eu/enterprise/policies/innovation/support/eu-support-for-innovation/index_en.htm#h2-
support-services-for-innovators 

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Financial  engineering  in  Cohesion  Policy  offers  Member  States,  through  their  national  and 
regional Managing Authorities, the opportunity to use part of their Cohesion Policy allocation 
of  funding  to  indirectly  finance  SMEs,  through  financial  intermediaries.  The  intermediaries 
leverage  public  money  with  their  own  funding  to  support  SMEs  through  equity,  loans  and 
guarantees. Resources invested in SMEs and repaid by them need to be reinvested by Member 
States or by the regions, again for the benefit of SMEs. In this way it is possible to create, by 
the  end  of  2015,  a  sustainable  legacy  of  several  billion  EUR  to  be  invested  in  a  revolving 
manner for the benefit of SMEs and start ups. 
JEREMIE, Joint European Resources for Micro-to medium Enterprises,68 is the joint initiative 
of the Commission with the European Investment Fund (EIF) designed to increase the use of 
financial engineering instruments within the framework of cohesion policy, to improve access 
to  finance  for  SMEs  expansion  and  investment  in  innovation,  as  well  as  for  financing  new 
business  creation.  JEREMIE  Holding  Fund  agreements  signed  so  far,  in  15  Member  States 
(EL,  FR,  ES,  IT,  UK,  PL,  RO,  BG,  HU,  SK,  LV,  LT,  CY,  MT,  SL),  either  at  national  or 
regional  level,  provide  for  a  total  amount  of  some  EUR  3.1  billion  (2/3  is  managed  by 
national or regional financial institutions acting as holding funds; remaining 1/3 by EIF). The 
JEREMIE  Networking  Platform69  was  launched  in  March  2009  as  a  tool  for  Managing 
Authorities  and  other  institutions  to  promote  the  exchange  of  information,  experience  and 
good  practice  about  the  initiative  and  financial  engineering  for  SMEs  in  general,  and  to 
facilitate the practical implementation of JEREMIE. 

There  are  also  many  financial  engineering  instruments  for  SMEs  implemented  without 
holding funds in other regions, e.g. Scotland (UK), Toscana, Emilia Romagna, Lazio, Veneto, 
Molise, Sardegna, Piemonte (IT). 

Through the financial instruments of CIP, the Commission is making it easier for SMEs to get 
loans from banks, by providing guarantees. It is also facilitating venture capital investment in 
SMEs. These financial instruments are managed by the European Investment Fund (EIF) and 
the  funds  are  allocated  through  banks  and  other  financial  institutions.  More  than 
EUR 1 billion  has  been  earmarked  for  this  purpose  for  the  period  2007-2013.  This  amount 
will enable financial institutions to provide about EUR 30 billion of new funding to SMEs, as 
each euro spent from the EU budget enables private investors to provide EUR 6 of risk capital 
or a bank to provide EUR 50 worth of loans. These funds will therefore benefit an estimated 
400 000  SMEs  in  the  EU.  The  financial  instruments  cover  the  different  needs  of  SMEs, 
whether  start-up  or  established  companies.  The  High  Growth  and  Innovative  SME  Facility 
provides risk capital for innovative SMEs in their early stages and in their expansion phase. 
The SME Guarantee Facility provides loan guarantees to encourage banks to make more debt 
finance  available  to  SMEs,  including  microcredit  and  mezzanine  finance,  by  reducing  the 
exposure of banks to risk. 
The Risk-Sharing Finance Facility (RSFF)70 was developed at the explicit request of the EU 
Council  of  December  2005  asking  the  European  Commission  (EC)  and  the  European 
Investment  Bank  (EIB)  to  propose  a  financing  facility,  with  risk-sharing  elements,  for  the 
support  of  additional  investments  in  Research,  Development  and  Innovation  (RDI)  in  the 
order of EUR 10 billion for the period 2007-2013. The RSFF is an innovative debt-financing 
instrument jointly  set  up  by  the  EC  and  the  EIB which  provides  loans  and  guarantees  for 
private companies or public institutions with a higher financial risk profile. 

68 
69 
70 

http://www.eif.europa.eu/what_we_do/jeremie/index.htm 
http://ec.europa.eu/regional_policy/funds/2007/jjj/jeremie_network_en.htm 
http://www.eib.org/products/loans/special/rsff/index.htm?lang=en  

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The  RSFF  targets  a  variety  of  beneficiaries  such  as  European  RDI-intensive  entities 
(including SMEs) and research infrastructures, irrespective of their size and ownership, which 
contribute to the objectives of the EC 7th Framework Programme for Research, Technological 
Development  and  Demonstration  activities  (FP7)  and  to  the  objectives  of  the  EIB  i2i 
programme,  therefore  allowing  financial  support  from  the  generation  of  knowledge  until 
commercial  innovation  activities.  The  financing  may be  provided  either  to  entities  active  in 
the field of RDI or to individual RDI-related projects, often at a demonstration stage. 

Launched  in  June  2007,  more  than  EUR  7  billion  of  loans  have  already  been  approved  by 
May  2010  under  the  RSFF  scheme,  covering  20  Members  States  and  2  FP7  Associated 
Countries. In the first part of 2010, an Independent Experts Group (IEG) has assessed the first 
three  years  of  RSFF  implementation,  concluding  on  the  fact  that  the  RSFF  is  a  uniquely 
innovative demand-driven instrument, successfully introduced in the research funding of the 
EU within FP7 and having dramatically expanded the financing for RDI.  

Given the similarity between different types of EU financial instruments for SME-financing 
with  guarantees  (loans)  and  venture  capital  the  Commission  has  initiated  inter-departmental 
coordination meetings in order to ensure an efficient use of scarce public funds through such 
instruments. The impact of EU funds can be maximised by concentrating on the strengths of 
each of these and improving the awareness at regional and national level about their existence. 
As an example, among others, the RSFF interim-evaluation IEG recommends  for the  future 
programming  period  (post  2013),  as  a  complement  to  the  existing  RSFF  facilities,  the 
development  of  new  forms  of  public  private  Risk-Sharing  Financial  Facility  to  meet  RDI 
needs in regional development areas: a RSFF programme for research and innovation with a 
dedicated  SME  &  Midcap  windows  drawing  upon  the  experience  of  the  existing  JEREMIE 
financial programme. 

2.2.5. 

Synergies around SMEs support 

Research and development belong to the core business of many small innovative enterprises, 
notably those providing knowledge-intensive services. The majority of SMEs, however, often 
lack  the  financial  resources,  the  capacity  and  the  in-house  expertise  to  develop  R&D 
strategies and to do research. It is difficult for them to find a competent partner or advice to 
develop  their  ideas  and  to  access  programmes  which  co-fund  research  and  innovation 
activities.  Even  though  the  7th  Framework  Programme  for  Research,  Technological 
Development  and  Demonstration  (FP7)  with  an  overall  budget  of  EUR 50  billion  for  the 
period  2007-2013  is  not  primarily  targeted  at  SMEs,  their  participation  has  been  strongly 
encouraged: SMEs are entitled to a higher funding rate of 75% for research activities while it 
is  50%  for  large  enterprises.  The  themes  of  the  Cooperation  Programme  include  a  budget 
target of 15 % participation of SMEs, which is equivalent to some EUR 5 billion. SMEs and 
SME  associations  which  need  to  outsource  research  are  supported  through  the  programme 
"Research for the Benefit of SMEs" with an overall budget of EUR 1.3 billion.  

SMEs in research projects serve as an important conduit for positive externalities in the form 
of  knowledge  spill-overs71,  making  the  social  return  on  R&D  investment  larger  than  the 
private  return,  so  providing  an  opportunity  for  efficient  public  action.  They  are  often  the 
interface  between  research  and  the  market  transforming  new  ideas  and  developments  into 
successful business because they are flexible enough to react to changing circumstances and 
to  seize  new  opportunities  faster  than  larger  companies.  According  to  a  recent  study  on  the 

71 

The  impact  of  publicly  funded  research  on  innovation:  An  analysis  of  European  Framework 
Programmes  for  Research  and  Development.  Robert  Fisher,  Wolfgang  Polt,  Nicolas  Vonortas.  PRO 
INNO Europe Paper No. 7.2009 

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European  Research  Framework  Programmes,72  SMEs  benefit  the  most  in  terms  of  gaining 
products and services out of their FP involvement. The participation of SMEs in EU projects 
allows  them  to  access  complementary  knowledge,  extend  their  networks,  acquire  new 
customers and become more visible at international level.  
The impact study on SME participation in the thematic programmes of FP5/673 confirms that 
their  participation  in  the  Framework  Programmes  has  had  a  positive  impact  on  the  R&D 
projects  concerned  as  well  as  on  the  SMEs  themselves,  especially  on  their  R&D  and 
technology.  Based  on  this  evidence,  the  impact  study  suggests  developing  a  proper  SME 
strategy for the Framework Programme. 

SMEs  need  R&D&I  support  programmes  that  are  conceived  from  their  perspective  and 
tailored  to  their  needs,  including  simple  and  straight-forward  rules  for  participation  and 
financing. A coherent and effective support package should encompass the whole innovation 
cycle  from  the  conception  of  an  idea  through  research  and  development  to  exploitation  and 
commercialisation. It should target both technical and non-technical research and innovation, 
including  service  innovation,  and  have  a  clear  orientation  towards  the  market.  National  and 
regional support measures co-financed by Cohesion Policy funds could further assist SMEs in 
internationalising  their  knowledge  network  by,  among  other  things,  providing  support  and 
advice to access European research and innovation programmes. 

The  funding  of  innovation  vouchers  or  exploratory  awards  can  help  SMEs  in  exploring 
innovation and or international R&D projects. Such micro-grants can be ideal instruments to 
accelerate the take-up of technological and organisational innovation. 

After the R&D phase, there is often a need for further grant support, e.g. for demonstration 
activities to prove the viability of a new idea, before financing instruments like venture capital 
get  involved  and  companies  can  commercially  exploit  the  research  results.  Mutually 
complementary  and  better  coordinated  support  schemes  at  regional,  national  and  European 
level  have  the  potential  to  foster  the  whole innovation  cycle  in  SMEs  while  ensuring  better 
use  of  scarce  resources  and  opening  new  opportunities  to  facilitate  transnational  R&D 
activities. According to a recent study on SMEs and Internationalisation74 at company level, 
innovation and internationalisation go hand in hand, one reinforcing the other. 

72 
73 

74 

Ibidem. 
Impact  assessment  of  the  participation  of  SMEs  in  the  Thematic  Programmes  of  the  Fifth  and  Sixth 
Framework  Programmes  for  RTD  –  DG  Research,  April  2010,  to  be  published  presumably  in  June 
2010.  
Internationalisation of European SMEs, Final Report – DG Enterprise and Industry, December 2009, to 
be published presumably in May 2010 

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Estonia's  small  enterprises  have  received  innovation  vouchers  from  Enterprise  Estonia  for 
implementing 149 innovation projects. 

The total amount of grants financed from ERDF is now close to 8.75 million kroons. 

The  Innovation  Voucher  Grant  programme  that  opened  in  February  2010  is  the  simplest  way  for 
enterprises  to  launch  co-operation  with  research  institutions  for  the  purpose  of  implementing 
innovative ideas.  

A  significant  number  of  new  co-operation  projects  between  the  private  sector  and  universities  have 
emerged  

Enterprises have begun to view universities as partners capable of providing the services that SMEs 
need. 

More information: 
http://hei.eas.ee/index.php?option=com_content&view=article&id=636:enterprise-estonia-gave-
innovation-vouchers-for-149-small-enterprises-last-year-&catid=41:news 

Companies  face  specific  challenges  relating  to  introducing  service  innovations.  As  a  large 
share  of  innovation  support  in  the  EU  is  still  provided  with  a  strong  focus  on  technology 
development  and  transfer  or  organised  in  R&D  projects,  most  service  companies  as  well  as 
manufacturing  companies  innovating  through  the  services  provided  around  their  products, 
find little assistance from the traditional innovation support services. It is therefore necessary 
to adapt innovation  policies to address these challenges. The EPISIS INNO-Net75 facilitates 
transnational  cooperation  between  policy-makers  and  innovation  agencies  with  regard  to 
service innovation with the aim of testing new policy approaches in this area. In adddition, the 
European Knowledge Intensive Services Innovation Platform76 experiments with better tools 
and  instruments  to  support  service  innovation  in  specific  industrial  areas  such  as  renewable 
energy,  sustainable  construction,  ICT,  mobile  services,  satellite  enabled  services,  creative 
industries and audiovisual services. 
The INNO-Partnering Forum,77 an initiative under PRO INNO Europe, has been launched to 
identify, develop and exploit synergies between public innovation funding agencies in Europe 
and to propose new approaches to improve the quality, efficiency and effectiveness of SME 
innovation support in Europe. All agencies can be associated in this learning process through 
open calls to pilot activities. 

In this context, it should also be mentioned that the Commission has published a "Handbook 
on Community State Aid Rules for SMEs", including temporary state aid measures to support 
access to finance in the current financial and economic crisis, which should be useful for the 
Managing Authorities of Cohesion Policy Funds.78 

2.3. 

Embedding lifelong learning in research and innovation 

2.3.1.  Universities that contribute to regional growth 

Higher education institutions and research centres need to work together with  enterprises to 
bring innovation to the market. In the past decade many universities in Europe have formally 
incorporated regional economic development into their mission statements.  

75 
76 
77 
78 

http://www.proinno-europe.eu/episis  
http://www.europe-innova.eu/web/guest/innovation-in-services/kis-innovation-platform/about 
http://www.proinno-europe.eu/project/inno-partnering-forum 
http://ec.europa.eu/competition/state_aid/studies_reports/sme_handbook.pdf 

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A number of them are increasingly developing an important role in the commercialisation of 
research  by  expanding  the  entrepreneurial  mindset  and  soft  skills,  such  as  creativity  in 
graduates  and  by  involving  businesses  communities  in  innovation.  They  develop,  for 
example,  creative  design  for  important  products  and  services;  they  support  services  for 
intellectual  property  rights  (IPR)  or  are  available  to  assist  businesses  through  'innovation 
vouchers'.79  In  this  way  they  are  strongly  embedded  in  regional  development,  helping  to 
create partnerships for regional growth. 

Combined Universities in Cornwall (CUC)  

CUC  is  an  ERDF  supported  partnership  of  regional  universities  and  colleges  working  together  to 
cooperate  with  SMEs  in  line  with  the  region's  decision  to  invest  in  higher  education  as  a  driver  of 
economic  regeneration.  The  CUC  graduate  placement  scheme,  ´Unlocking  Cornish  Potential´,  for 
example, provides shorter project placements and uses grants of up to GBP 6,000 to reduce the risk of 
employing  a  graduate.  The  ESF  also  supports  a  small  team  which  markets  the  scheme  to  business. 
Some 70 % of the 485 graduates placed since 2004 have been offered permanent jobs at the end of 
their placement.  

The  EU  Forum  for University  Business  Dialogue80  has  recently  stressed  the  importance  of 
effective  cooperation  between  universities  and  business  for  regional  development  and  has 
called for a stronger involvement of regional authorities in this partnership. To achieve closer 
cooperation, university programmes should involve more strongly students in activities linked 
to innovative businesses (incubators, start-ups, spin-offs). 

Better  and  closer  cooperation  between  university  and  business  is  a  key  element  in  the 
modernisation agenda of higher education and in making higher education more open to the 
needs  of  society.  More  intense  cooperation  stimulates  exchange  and  sharing  of  knowledge 
among both the business and academic communities. Exposure to real problems and solutions 
through relevant curriculum and placements enriches student learning and prepares them for 
future employment, to cope with a changing environment and to face future challenges. 

University-business  cooperation  is  crucial  for  the  success  of  the  knowledge  triangle  and  to 
boost Europe's innovation capacity. The main goal of fostering more effective links between 
university and enterprise is directed at challenges with social relevance, which would in turn 
enhance the efficiency of public investment in higher education and research.  

Twente (NL), a University embedded in its regional economy 

The University of Twente is a good example of a university embedded in its regional economy taking a 
joined-up  approach  to  knowledge  transfer.  The  university  has  a  knowledge  park  and  business 
accelerators  communicating the knowledge it possesses to the business community. After supporting 
entrepreneurship,  for  over  10  years,  the  university  developed  the  TOP  programme  (Temporary 
Entrepreneurial  Positions),  University  Student  Enterprises  and  a  growth  programme  for  owner 
managers have also been developed. Included in these modules are training and networking activities. 

The University of Twente has actively participated in the ERDF Programme of Innovative Action for 
the region supported by Cohesion policy. 

More information: http://www.universiteittwente.nl/en 

79 

80 

'Availability  and  Focus  on  Innovation  Voucher  Schemes  in  European  Regions',  EC  November  2009 
http://www.europe-innova.eu/c/document_library/get_file?folderId=122731&name=DLFE-6403.pdf 
COM(2009) 158 and SEC(2009) 425: A new partnership for the modernisation of universities: the EU 
Forum for University Business Dialogue 

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Knowledge  transfer  between  universities  and  industry,  however,  raises  the  question  of 
intellectual property rights. To support universities and to provide a more coherent framework 
for  knowledge  transfer  activities  the  Commission  has  adopted  a  Recommendation  on  the 
management of intellectual property in knowledge transfer activities and a Code of Practice 
for  universities  and  other  public  research  organisations.81  The  "Responsible  Partnering" 
initiative also provides a guide82 to better practice in this area. 

Education, training, lifelong learning and mobility, as indicated in the Europe 2020's Flagship 
Initiative "Youth on the Move", are vital to developing capacity of regions to innovate. 

To reinforce the knowledge base and promote excellence, the EU needs to foster world-class 
education systems and curricula, a sufficient number of internationally-recognised universities 
and  research  institutes,  a  highly  skilled  population  whose  skill  sets  are  constantly  up-dated, 
geographical  and  inter-sector  mobility,  excellent  research  infrastructure  and  policies  that 
recognise and support social and non-technological innovation. 

National  and  regional  authorities  should  consider,  in  particular,  how  regional  policy  can 
contribute to modernising higher education institutions as well as supporting lifelong learning 
plans to ensure a high level of up-to-date skills within SMEs. 

2.3.2.  The European Institute of Innovation and Technology (EIT) 
The  EIT83  is  the  first  initiative  aimed  at  boosting  EU  competitiveness  by  fully  integrating 
higher  education,  research  and  business  (the  Knowledge  Triangle)  to  generate  and  promote 
innovation of a world-class level. It is emerging as an identified brand of European excellence 
in knowledge and innovation. Its role as a pioneer goes beyond education and encompasses 
other important areas such as new models of governance for innovation (leadership, business-
orientated  management  and  results-driven),  funding  (inter  alia  via  the  establishment  of  the 
EIT  Foundation)  and  simplification  (e.g.  the  use  of  lump  sums  and  flat  rates  on  the  way  to 
establishing an outcome-based system).  

The  EIT  is  intented  to  deliver  world-leading  innovation  through  new  types  of  creative 
collaboration and interaction between actors in the knowledge triangle, with entrepreneurship 
and  the  education  of  entrepreneurs  as  key  drivers  and  linking  factors  between  the  various 
sides of the triangle.  

The  core  of  EIT  activities  is  the  development  of  Knowledge  and  Innovation  Communities 
(KICs)  to  tackle  major  societal  challenges  (e.g.  climate  change,  energy).  KICs  attempt  to 
integrate the entire "innovation chain", from education and research to entrepreneurship and 
commercialisation, with a constant focus on excellence, strong ("CEO"-style) leadership and 
management, delivery and impact.  

The  work  of  each  KIC  is  intended  to  be  regionally  embedded  in  4-6  innovation  hotspots  or 
"co-location  centres",  each  in  different  locations  across  the  EU,  which  will  link  top-ranked 
universities,  globally  renowned  research  institutes  and  world-leading  companies,  interacting 
with  each  other  in  the  different  places.  The  principal  characteristic  of  KICs  –  and  the  co-
location  centres  of  which  they  are  composed  –  is  to  be  highly  integrated,  legally  and 
financially structured transnational public-private entities.  

81 
82 

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C(2008) 1329 
http://www.responsible-partnering.org/; developed by leading associations from academia and industry 
(EUA, EARTO, EIRMA and ProTon Europe) 
Regulation (EC)294/2008, 11.03.2008; http://eit.europa.eu/ 

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Accordingly,  the  EIT  has  an  important  role  to  play  in  the  EU  Innovation  landscape,  by 
encouraging a step change in mentality across the Union, functioning as a model and "living 
example" of the knowledge triangle to strengthen the EU's innovation capacity and the impact 
of innovation on the economy and society. 

Managing  and  regional  authorities  can  explore  the  funding  opportunities  in  KICs  which  are 
autonomous  partnerships  bringing 
research 
organisations, companies and other stakeholders in the innovation process.  

together  higher  education 

institutions, 

At present, three KICs have been selected, in three priority areas: sustainable energy, climate 
change  and  ICT,  with  co-location  centres  in  each  case  in  different  Member  States.  The 
Climate-KIC has identified regional partners and designated them as Regional Innovation and 
Implementation Communities (RICs) able to coordinate funding streams at city and regional 
levels. 

The Climate KIC explores potential regional partners and funding opportunities under the EIT 

The  Regional  Innovation  and  Implementation  Communities  (RIC),  led  by  the  Hungarian  Bioenergy 
Competence  Centre  OBEKK,  forms  a  network  of  six  major  European  regions  (with  a  combined 
population of over 26 million), which share a clear and demonstrable commitment to tackling climate 
change. They comprise Central Hungary, Lower Silesia (Poland), Midlands (UK), Hessen (Germany), 
Emilia Romagna (Italy) and Valencia (Spain).  

RIC has access to a range of funding sources, including the Structural Fund and national or regional 
R&D  financing,  and  is  able  to  coordinate  these  sources  at  city  and  regional  levels.  The  resources 
concerned  will  be  available  for  the  Climate-KIC  from  the  start  of  the  programme.  The  RIC  will 
initially  focus  on  carbon  emission  reduction  by  participating  in  implementation  programmes, 
demonstration  projects  and  strategic  support  programmes.  It  will  exchange  and  disseminate  the 
knowledge obtained. 

More information: http://eit.europa.eu/kics1/climate-kic.html  

The OECD has stressed the role of public support for involving higher education institutions 
in  regional  development  by  promoting  clusters  and  mobility  of  people  between  universities 
and  businesses  at  local  level  to  improve  human  capital,  the  pool  of  knowledge  and  the 
attractiveness of the area for business.84  

Cohesion  policy  provided  support  for  knowledge  partnership  between  universities  and 
industry, under many forms, as well as for territorial cooperation, particularly between regions 
in  different  countries,  focussing  on  innovation  and  including  the  establishment  of  networks 
between universities, research institutions and SMEs. 

84 

Higher Education and regions, OECD Policy brief (September 2007) 

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2.3.3.  Developing  regional  and  attractive  research  infrastructures  and  centres  of 

competence 

Regional 
Partner 
Research 
Infrastructure

   Pan European 
   Research  
   Infrastructure

Global 
Research 
Infrastructure  

Regional 
Partner 
Research 
Infrastructure

Regional 
Partner 
Research 
Infrastructure

Research infrastructure needs to provide world-class facilities and services to researchers. It is 
at  the  centre  of  a  knowledge-based  innovation  system  linking  research  organisations, 
universities, industry, investors and public authorities. There are three ways of helping the EU 
and regions utilise their potential fully: (i) develop world-class research infrastructure on the 
basis of existing scientific excellence in regions, use the potential of the Structural Funds, (ii) 
involve less research intensive countries in networks of distributed research facilities, and (iii) 
develop Regional Partner Facilities (RPF). 

Typically  these  RPF  would  be  associated  through  various  schemes  with  large  facilities,  and 
by means of such links could share many of the benefits, including in particular dissemination 
to  the  local  economy  or  collaboration  with  local  industry.  The  specific  ‘partnership’  role  of 
RPF would  include  participation in preparing experiments, training young scientists and  the 
broad promotion of the science undertaken at the large facility. The three ways listed above 
would  also  have  an  important,  more  general,  role  contributing  to  the  circulation  of  ‘brains’ 
and reducing the risk of brain drain while at the same time providing much needed balance to 
the distribution of European research infrastructure. 

The PALS Research Centre  

The  Pals  research  centre  is  the  only  laser  laboratory  in  the  Czech  Republic  and,  indeed,  in  all  the 
"new" EU Member States, which operates a kJ-class terawatt high-power laser. As an open civilian 
infrastructure,  it  serves  not  only  the  Prague  region  and  the  Czech  Republic  as  a  whole,  but  also 
neighbouring  countries  such  as  Poland  and  Hungary.  Close  links  exist  with  other  European  high-
power  lasers  through  the  LASERLAB-EUROPE  network  and  it  is  at  present  closely  involved  in  the 
preparation phase of ELI (ESFRI project) which will be part financed by the ERDF 

2.4. 

Creativity and cultural industries 

Opportunities  for  regional  development  go  beyond  technological  innovation.  Indeed, 
creativity  can  lead  to  new  products  and  services  in  all  kinds  of  businesses,  ranging  from 
traditional  sectors  closely  linked  to  local  development,  such  as  food,  textiles,  crafts  and 
tourism,  to  more  cutting  edge  sectors  such  as  ICT  and  product  and  industrial  design. 
Innovation can be based not only on technological knowledge but also on market and societal 
knowledge  and  can  lead  to  new  development  strategies,  business  organisations  and 
management and training models as well as new societal solutions.  

The regional level is the one best suited to promoting creativity and innovation. Regions are 
large  enough  to  matter  and  small  enough  to  care  for  the  people  working  and  living  there. 
Metropolitan  centres  are  naturally  in  an  advantageous  position  to  attract  creative  industries. 
But  creative  industries  are  also  a  catalyst  for  structural  change  in  many  industrial  and  rural 

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areas  with  the  potential  not  only  to  rejuvenate  their  economies  but  also  to  changing  their 
public image.  

Creativity and innovation require networking both within the region and with other regions in 
the  same  country  as  well  as  outside.  Grouping  different  regions  and  exploring  different 
approaches can increase the effectiveness of a network. One factor of success in networking 
to increase creativity and innovation is to connect a wide variety of public and private partners 
from different sectors, regions and communities.  

2.4.1.  Cultural and creative industries (CCIs) 

During  the  recent  “Towards  a  Pan-European  initiative  in  support  of  innovative  creative 
industries in Europe” event, organised by the European Commission, experts adopted the so-
called Amsterdam declaration urging regions, Member States and the Commission to follow a 
more strategic approach to innovative creative industries85 “Cultural and creative industries 
are at the crossroad between culture, creativity and innovation. They offer a huge potential to 
contribute  to  the  transformation  of  European  society,  responding  to  major  social, 
demographical and environmental challenges and leading to a more sustainable and smarter 
economy within the EU 2020 strategy. Yet, the combined cultural and economic potential of 
these dynamic industries still remains largely underestimated and untapped”. 

Recent studies show that CCIs tend to be highly innovative companies with much economic 
potential86  and  are  one  of  the  most  dynamic  emerging  sectors  in  world  trade87.  Moreover, 
examples suggest that they play an important role in many regions, offering scope for cluster 
policies to further “strengthen the strengths”88. The CCIs therefore appear to be increasingly 
important  for  the  development  of  the  knowledge  economy;  they  are  both  knowledge  and 
labour  intensive  and  they  have  a  large  potential  for  generating  employment  and  export 
growth. 

CCIs are an essential part of the move from societies with a strong focus on specific hardware 
production  to  those  producing  less  tangible  output.  They  provide  content  for  the  further 
development of ICT, spur impulses for innovation and are instrumental in shaping social and 
cultural  trends  and  consumer  demand  in  the  emerging  'experience  economy'.  Creative 
innovation  services  are  often  inputs  to  innovative  activities  by  enterprises  in  the  wider 
economy.  

CCIs can also help to combat a wide range of social problems, from crime prevention to the 
fight against social exclusion, from expanding social capital to regenerating communities and 
improving public services.  

As  highlighted  in  the  recent  Commission  Green  Paper  “Unlocking  the  potential  of  cultural 
and  creative  industries”  these  industries  “often  contribute  to  boosting  local  economies  in 
decline,  contributing  to  the  emergence  of  new  economic  activities,  creating  new  and 
sustainable jobs and enhancing the attractiveness of European regions and cities”.89 

85 

86 

87 

88 

89 

The Amsterdam declaration, adopted on 5 February 2010. 
http://www.europe-innova.eu/creative-industries 
See  in  particular  Commission  Staff  Working  Document  “Challenges  for  EU  support  to  innovation  in 
services – fostering new markets and jobs through innovation”, SEC (2009)1195 final, September 2009 
See  in  particular  UNCTAD  (2008)  “Creative  Economy  –  the  Challenge  of  Assessing  the  Creative 
Economy – towards informed policy-making” 
Staff Working Document “Challenges for EU support to innovation in services – fostering new markets 
and jobs through innovation”, SEC(2009)1195 final, September 2009 
COM(2010) 183, of 27 April 2010. 

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Also  recently,  the  Council  has  invited  the  Member  States  and  the  Commission  to  adopt  a 
strategic  approach  to  culture  in  local  and  regional  development  policies,  including  through 
stimulating  a  favourable  environment  for  the  development  of  CCIs,  especially  SMEs90. 
Specific  lines  of  action  were  highlighted  such  as  encouraging  a  favourable  regulatory 
environment  for  cultural  and  creative  SMEs,  strengthening  entrepreneurship  through 
favouring the creation of CCI incubators, exploring ways of promoting new business models 
and  consolidating  creative  clusters  and  business  research  centres,  improving  the  access  of 
cultural and creative SMEs to (digital and physical) channels of distribution, and promoting 
better links between CCIs and financial services. 

"ImMediaTe" and "BCreative" projects in the European Knowledge Intensive Services Innovation 
Platform91  
ImMediaTe92  is  aimed  at  providing  tools  and  services  to  assist  the  growth  of  digital  media  SMEs 
operating  in  creative  industries.  The  project  mobilises  sector-specific  financial  resources  and  has 
developed innovation vouchers. It also organises a series of thematic events, market and investment 
forums focusing on presenting key trends and market opportunities for businesses in the digital media 
sector as well as pitch sessions for selected companies allowing them to meet international financial 
investors. Ad hoc coaching on media literacy, including management, marketing and IPRs, as well as 
financial and business support services are provided to SMEs across Europe.  

BCreative93 brings together various innovation support measures for SMEs to link knowledge 
creation,  incubation,  finance  and  clusters.  BCreative  provides  support  to  SMEs  across 
Europe to better exploit their research results and helps them look for investors and potential 
business partners. The project has developed innovation vouchers and has set up a European 
online platform for creative businesses, bringing together relevant stakeholders and providing 
a toolkit to European companies to help them to venture capital and entrepreneurial skills as 
well as enabling them to exchange information on intellectual property and legal issues. 

Culturally-based  investment  has  led  to  the  diversification  of  local  economies  in  decline, 
spurred local growth and regeneration and enhanced social cohesion across cities and regions. 

Berlin: regional revitalisation through creative industries  

The ERDF-supported Kreativ Coaching Centre (KCC) in Berlin, established in 2008, helps emerging 
entrepreneurs in creative industries by providing individual assistance through experienced coaches, 
qualified in business administration and creative industries, who offer advice and expertise to young 
and growing companies to solve their particular problems in a non bureaucratic, hands-on way. 

Moreover, the presence of CCIs and vibrant cultural communities are also seen by more and 
more  cities  and  regions  as  ‘soft’  location  factors  that  can  help  them  boost  their 
competitiveness  by  establishing  a  favourable  environment  for  innovation  and  attracting 
highly-skilled people as well as companies. 

90 
91 
92 
93 

Council conclusions of 10 May 2010 on the contribution of culture to local and regional development. 
http://www.europe-innova.eu/kis-innovation-platform  
http://www.europe-innova.eu/ImMediaTe 
http://www.europe-innova.eu/BCreative  

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Interactive Institute Sonic Studio (Piteå, Sweden)  

A  significant  success  of  the  Studio  is  DigiWall,  an  interactive  system  combining  a  climbing  wall, 
computer  games  and  music  applications  in  healthcare  for  therapeutic  healing,  adapting  the 
application to the physical state of the patient. The studio collaborates with both traditional and more 
modern firms. 

This project has contributed to regional development by boosting research in a novel interdisciplinary 
research area, which has attracted senior researchers to the peripheral region concerned. The studio 
has also created new employment opportunities, both in newly established enterprises and in existing 
ones. 

Attaining  ERDF  funding  has  been  a  significant  quality  label  for  attracting  other  kinds  of  financial 
support 

To  reinforce  the  contribution  of  CCIs  to  regional  innovation  systems,  it  is  necessary  to 
develop  synergies  at  different  levels  of  governance.  Success  requires  partnership  between 
public authorities in different policy areas (higher education and research, culture, economy, 
industries and employment) and relevant representatives from civil society (businesses, social 
partners, citizens associations and NGOs). 

The  Commission  encourages  Member  States  and  regions  to  reap  the  benefits  of  CCIs  by 
including  them  explicitly  in  their  strategies  for  innovation  and  entrepreneurship,  in 
cooperation  with  relevant  stakeholders  from  civil  society.  Moreover,  EU  Cultural  policy 
needs to steer the implementation of Culture and Media programmes in a way which increases 
the capacity of the cultural sector to act as a catalyst for creativity and innovation at regional 
level through mobility, peer learning, peer coaching and cooperation.  

Creative Clusters in low density urban area (Obidos, Portugal, as lead partner, together with other 
partners from Spain, Italy, Hungary, Romania, Finland and UK)  

The starting assumption of this ERDF URBACT network is that creativity can act as a driving force 
for the economic development of small urban centres as well as big cities. 

Its  objective  is  to  promote  exchange  of  experience  and  best  practice  and  to  make  policy 
recommendations and suggest action plans relating to creative clusters in low density urban areas. 

The European capitals of culture offer an opportunity for the cities bearing the title and their 
surrounding areas to formulate a longer term strategy of urban and cultural development.  

EN 

26 

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Liverpool,  European  Capital  of  Culture  2008,  and  the  HerO  network  “Heritage  as  Opportunity” 
(ERDF URBACT project with a Fast Track Network label: Regensburg, Germany, as lead partner 
and other partners from Austria, Italy, Lithuania, Romania, UK, Poland, France and Malta) 

A deprived area 25 years ago, Liverpool became European Capital of Culture in 2008. The key words 
of  its  success  were  participation,  repositioning,  regeneration  and  sustainability.  The  city  organised 
national and international events, strongly focussed and engaging local people. Intercultural dialogue 
required  much  creativity.  Starting  from  cultural  assets  such  as  its  maritime  heritage,  music  and 
football, Liverpool became a brand for UK tourism itself. It is now one of the most popular cities in 
the UK for international visitors, after London and Edinburgh. 

The research team “Impacts 08” has developed a model for evaluating the multiple impact of culture-
led regeneration programmes that can be applied to events across the UK and internationally. 

The city is keen to share its experience with other cities. It is member of the HerO network "Heritage 
as  Opportunity",  funded  by  the  URBACT  programme,  a  network  of  10  cities  with  the  aim  of 
developing innovative management strategies balancing in a sustainable way the different needs of the 
local  population,  tourists,  conservationists  and  local  business.  Heritage  management  is  more  than 
preserving  the  past,  it  is  about  being  creative  and  capitalising  on  the  potential  of  cultural  heritage 
assets for economic, social and cultural activities. 

At  project  level,  the  main  expected  outputs  of  the  HerO  network  are  the  compilation  of  interesting 
cases, the development of integrated management plans and as policy recommendations and practical 
guidance. At local level, support groups and action plans will be established. 

The Fast Track label given to the HerO network under the initiative "Regions for Economic Change" 
provides opportunities and benefits. The Commission not only provides grants but participates in the 
discussions  with  the  Managing  Authorities  to  define  strategies  leading  to  concrete  action  in 
operational programmes 

The Commission will launch initiatives in 2011 to bring together the main actors at regional, 
national  and  European  levels  with  the  aim  of  making  more  strategic  use  of  current  and 
planned measures in support of cultural and creative industries.94 

2.4.2.  Design for user-centred innovation 

Although often associated with aesthetics and the ‘looks’ of products only, the application of 
design is in reality much broader. User needs, aspirations and abilities are the starting point 
and  focus  of  design  activities,  integrating,  for  example,  environmental,  safety  and 
accessibility  considerations  into  products,  services  and  systems.  Design  is  increasingly 
recognised  as  a  means  for  user-centred  innovation,  which  however,  is  not  sufficiently 
reflected in most national and regional innovation policies95. Integrating a design aspect at an 
early stage in innovation projects can stimulate market take-up and the commercial success of 
innovations. 

South East England: stimulating eco-design in SMEs 

Design & Innovation for Business Sustainability (DIBS), led by WSX Enterprise and supported by the 
ERDF:  is  a programme  stimulating  SMEs  to  incorporate  sustainable design into  their  products  and 
services, cutting resource costs and attracting environmentally-aware customers.  

. 

94 

95 

EN 

As part of the "Innovation Union" flagship initiative, specific actions will be undertaken to strengthen 
the role of cultural and creative industries as a catalyst for innovation and structural change.  
“Design as a driver of user-centred innovation” (SEC(2009)501 final). 

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Design support for SMEs, De Montfort University, East Midlands, UK96 

Through intensive design support, the De Montfort S programmes have generated over 40 commercial 
products and created over 50 new jobs for regional SMEs over the past 5 years.  

The programmes facilitated the translation of research outcomes and knowledge into new commercial 
products  and  services.  Partnerships  with  regional  design  consultancies  and  other  universities 
provided the in-depth specialist support required to meet the innovation needs of SMEs.  

The project received € 800 000 of ERDF co-funding and provided a 7.5 x return on investment with 
respect to GVA increase, which will increase as more products are brought to market. 

. 

The SEE project (‘Sharing Experience Europe – Policy, Innovation, Design’ (ERDF INTERREG 
IV C)  

This Network of 11 organisations shares knowledge and experience in order to develop new thinking, 
disseminate  good  practice  and  influence  local,  regional  and  national  policies  for  design  and 
innovation.  The  partners  come  from  the  UK,  Belgium,  Denmark,  Estonia,  Finland,  France,  Ireland, 
Italy, Poland, Slovenia and Spain. All are currently involved in their own regional innovation policy 
and  their  regional  governments  have  committed  to  exploring  improvements  in  the  provision  and 
delivery of innovation, entrepreneurship and design through individual or joint policies 

2.5. 

Digital Agenda 

2.5.1.  Why does the EU need a Digital Agenda? 

The availability of fast internet access and sophisticated on-line services on the World Wide 
Web is changing the very nature of innovation. 

Some  250  million  internet  users  in  the  EU  and  almost  2  billion  worldwide  are  engendering 
new  business  models,  stimulating  innovation  in  product  development  and  service  delivery, 
forcing the formulation of new marketing strategies, increasing social inclusion and political 
participation,  enabling a better  realisation of cultural production, changing  social habits and 
reshaping  social  and  economic  models.  The  Internet  is  fuelling  innovation  and  change  on  a 
massive and historically unprecedented scale. 

From  now  on,  the  rate  of  innovation  will  also  depend  on  the  quantity  and  quality  of  the 
connections in this huge communication network. Reducing gaps in access and the use of high 
speed  communication  networks  and  internet-based  services  may  help  to  feed  a  new  type  of 
innovation  beyond  the  restrictive  environment  of  research  laboratories  and  university 
campuses. 

The  Digital  Agenda  calls  for  leveraging  more  private  investment,  better  coordination  and 
pooling of resources, joint research infrastructure and innovation clusters, the development of 
open platforms for new applications and services, and ‘lighter and faster’ access to research 
funds. The Commission will notably: 

•  Leverage  more  private 

the  strategic  use  of  pre-commercial 
through 
procurement and public-private partnerships by maintaining a 20% yearly increase in the 
ICT R&D budgetin FP7.  

investment 

96 

http://www.dmu.ac.uk/ 

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28 

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•  Reinforce the coordination and pooling of resources with Member States and industry, and 
put greater focus on demand- and user-driven partnerships in EU support for ICT research 
and innovation. 

•  Ensure  sufficient  financial  support  for  joint  ICT  research  infrastructure  and  innovation 

clusters,- and further develop e-infrastructures  

•  Together with key national, regional and local partners, engage, through CIP financing, in 
large scale pilot projectsto test and develop innovative and inter-operable solutions in areas 
of public interest.  

2.5.2.  Research and Innovation in ICT: a key action 

The Communication "A Strategy for ICT R&D and Innovation in Europe: Raising the Game" 
highlighted the need to:  

•  Support European leadership in ICT as a key enabling technology of the future.  

•  Support  knowledge  hubs  with  universities,  research 

institutes  and 

infrastructure 

maintaining strong links with industry.  

•  Support the importance of combining 'demand pull' from innovative markets with 'supply 
push'  from  new  ICT  and  infrastructure  to  achieve  both  public  service  goals  and  business 
growth.  

ICT  research  is  the  single  largest  budget  item  under  the  current  EU  Research  Framework 
Programme (FP7). ICT in FP7 focuses on key areas where the EU has competitive advantages 
and  established  strengths,  like  communication  and  service  infrastructure,  electronics  and 
photonics,  digital  content,  and  cognitive  systems  and  robotics,  as  well  as  in  challenging 
application areas such as healthcare, social inclusion, transport, energy and the environment. 

In  the  ICT  Policy  Support  Programme  (PSP),  one  of  the  three  areas  of  the  EU's 
Competitiveness & Innovation Programme (CIP) supports the piloting of inter-operable pan-
European  digital  services,  notably  for  public  services.  The  ICT  PSP  is  aimed  at  stimulating 
innovation  and  competitiveness  and  accelerating  the  development  of  a  sustainable, 
competitive, innovative and inclusive information society.  

There is a need to reinforce combined efforts and exploit synergies with related Community 
R&D and Innovation policies to provide increased support for the strategic content of the ICT 
R&D policies and programmes. Here the public sector should take a more proactive role as a 
technologically-demanding  buyer  which,  through  pre-commercial  procurement  and/or 
procurement of innovation, stimulates the development of innovative solutions for the socio-
economic  challenges  which  the  EU  faces.  In  addition  to  improving  the  quality  and 
effectiveness  of  public  services,  this  can  help  create  opportunities  for  companies  to  assume 
international leadership in new markets. 

2.5.3.  Findings of the 2009 Strategic Report in relation to the digital priorities 
The  Strategic  Report,97  adopted  in  March  2010,  concluded  that  investment  in  the  digital 
economy - rolling out broadband and exploiting ICT use in the public and business sectors - is 
proceeding relatively slowly and unevenly, even if it is possible to identify examples of good 
practice.  

97 

COM(2010)110 of 31.03.2010 http://ec.europa.eu/regional_policy/policy/reporting/cs_reports_en.htm  

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29 

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The  following  graph  illustrates  the  rate  of  progress  across  Member  States  in  implementing 
ICT projects linked to the Digital Agenda: 

Digital Agenda 
Allocation to selected projects 2007-2013

4,00

3,50

3,00

2,50

2,00

1,50

1,00

0,50

0,00

)
n
(€b
3
1
0
2
-
7
0
0
2
t
n
e
m
t
s
e
v
n

i

U
E
d
e
d
i
c
e
D

80%

70%

60%

50%

40%

30%

20%

10%

0%

)

%

(

s
s
e
r
g
o
r
p
f
o
e
t
a
R

PL

IT GR SK ES CZ PT HU FR RO UK DE LT LV SI

FI SE EU27

€ bn

% project selected

It  is  crucial  that  Member  States  improve  the  implementation  of  programmes  with  increased 
transparency, networking and the exchange of good practice and policy learning on cohesion 
policy  priorities  to  make  an  early  contribution  to  pursuing  the  Europe  2020  strategy,  its 
flagship initiatives and its quantified targets.  

Capitalising on good ideas 

Beyond  the  significant  financial  investment  foreseen  for  the  2007-2013  period,  Cohesion 
policy also contributes to the promotion of ICT via supporting the exchange of good practice 
and  innovative  ideas  between  regions.  Currently,  three  ICT  related  fast-track  networks, 
included in the Regions for Economic Change initiative, are in operation across the EU, with 
the aim of promoting innovation and the knowledge economy at regional and local level by 
transferring innovative ICT-related ideas into mainstream Cohesion policy programmes: 

B3 Regions: Regions for Better Broadband connection98  

B3  Regions  s  aimed  at  improving  the  effectiveness  of  regional  development  policies  as  regards  the 
Information  Society,  by  spreading  the  examples  of  good  practice  of  the  expert  partners  relating  to 
broadband implementation in disadvantaged areas. The aims are: 

1. To share experience of implementing broadband and related issues (such as demand aggregation 
and state aid regulation).  

2.  To  spread  the  benefits  achieved  in  the  consortium  to  external  stakeholders  and,  in  particular,  to 
Managing  Authorities  and  ICT  agencies  willing  to  implement  successful  broadband  strategies  with 
Structural Fund support. 

. 

PIKE: Promoting Innovation and the Knowledge Economy99  

The  aim  of  the  project  is  to  improve  regional  and  local  Innovation  &  Knowledge  Economy  policies 
through  the  exchange  and  transfer  of  examples  of  e-Government  and  Wireless  Broadband  good 
practice, and through the integration of these into the development policies of participating regions 

98 
99 

http://www.b3regions.eu/  
http://www.pike-project.eu/  

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30 

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IMMODI: 

This project is aimed at making the most of the results and examples of good practice developed by the 
partners as regards of e-Government and e-health, which contribute to the development of mountain 
and rural areas. Selected examples will be presented at technical and regional workshops, detailed in 
a  published  guide  and  discussed  with  Managing  Authorities  in  order  to  transfer  them  into  the 
development programmes of participating regions 

Regio Stars Awards: original and innovative projects which can inspire other regions 

High Speed Broadband roll out in Auvergne 

High-speed  broadband  access  is  a  decisive  factor  of  competitiveness  for  region,  in  terms  of  both 
attracting  new  residents  and  firms  and  persuading  existing  ones  not  to  leave.  Auvergne,  one  of  the 
most  sparsely  populated  regions  in  France,  launched  the  first  telecommunications  public/private 
partnership  in  the  country,  with  the  help  of  a  EUR  10  million  ERDF  grant,  to  extend  high-speed 
broadband coverage to all households. 

. 

Computer Literacy Basics for a Lithuanian e-Citizen  

(Funding: :EUR 2,694,534 of which EUR 1,996,650 from the (ESF) 

Promoting  computer  literacy  is  key  to  reducing  the  digital  divide  which  exists  in  Lithuania.  The 
objective  of  the  project  was  to  increase  the  accessibility  of  the  Internet  and  e-services  by  providing 
information  and  computer  literacy  training  to  adults,  establishing  Public  Internet  Access  Points 
(PIAPs) and stimulating the growth of e-services countrywide. Key target groups included those living 
in  remote  areas  with  little  access  to  digital  services,  in  particular  in  rural  regions,  the  elderly  and 
those  with  disabilities.  The  aim  was  to  equip  300,000  Lithuanian  residents  with  computer  literacy 
skills, in line with the objectives established by the national Knowledge Society Council. The project 
was conducted countrywide between 2006 and 2008. Over 50,400 adults (with an average age of 43, 
61% of whom came from small towns and rural areas) have since completed the LIA courses - helping 
to  boost  the  overall  competitiveness  of  Lithuania’s  economy  by  upgrading  skills.  LIA  is  a  good 
example of private and public partnership, especially with local municipalities, which make it possible 
to reach directly people persons living in district centres and rural areas. 

. 

.A  new  business  model  for  ambulatory  monitoring  of  patients  suffering  from  congestive  heart 
failure, Brandenburg 

Total cost: EUR 242,402 of which EUR 86,172 from the (ERDF)  

The project combined the expertise of various regional partners to provide an innovative ICT based 
business  model  for  long  term,  ambulatory  management  of  patients  suffering  from  congestive  heart 
failure  in  underdeveloped  areas.  One  of  the  priorities  was  to  encourage  regional  SMEs  to  develop 
business models using ICT applications that create new services or optimise the workflow of existing 
services  in  the  health  care  industry.  A  further  aims  was  to  investigate  a  new  tele-monitoring  device 
capable of measuring and transmitting multiple vital-indicators to a tele-medical centre to analyse the 
data.  The  concern  aim  was  to  reduce  the  number  of  hospital  admissions  per  patient,  the  number  of 
days  spent  in  hospital  when  admitted  and  the  associated  health  care  costs,  while  at  the  same  time 
increasing the standard of health care and the quality of life for patients. 

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31 

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2.6. 

Demand-pull for innovation: Public Procurement 

Public procurement is recognised as a key driver of innovation particularly in areas where the 
public  sector  is  a  major  purchaser.  The  Innovation  Union  proposes  that  Member  States  and 
regions set aside specific budgets for procurement of innovative solutions.  

An  important  approach  is  through  pre-commercial  procurement  where  public  authorities 
provide contracts to develop new solutions for specific challenges where existing products or 
services available on the market are inadequate100. Another approach is for public tenders to 
set performance criteria or evaluation criteria which stimulate innovation in the market.  

A  number  of  trans-national  networks  have  been  supported  by  the  European  Commission 
under  the  Lead  Market  Initiative101  and  other  policies,  such  as  territorial  cooperation,  to 
develop this approach.  

The  Innovation  Union  flagship  initiative  proposes  further  EU  support  for  procurement  of 
innovation,  including  through the use of the Structural Funds.  A particular focus will  be  on 
European Innovation Partnerships that are intended to provide a framework for major supply-
side  and  demand-side  measures  –  including  procurement  –  to  address  specific  societal 
challenges. 

East of England pre-commercial procurement for health care innovations.  

In May 2009 the East of England Development Agency together with the UK National Health Services 
East of England and UK Technology Strategy Board launched a pre-commercial procurement of an 
innovative  process,  material,  device,  product  or  service  which  will  help  to  meet  current  health 
priorities  in  the  region.  This  initiative  was  by  theERDF.  Up  to  £100,000  was  awarded  for  winning 
tenders  in  a  first  phase  with  the  potential  of  further  financial  assistance  to  develop  and  evaluate 
projects in a second phase.102 The aim is to provide procurement opportunities for innovative health 
care businesses and bring the benefits of new innovations and technologies to patients. 

RAPIDE  is  a  Fast  Track  Network  of  the  Regions  for  Economic  Change  Initiative  funded  by 
INTERREG IVC.  

The project is focused on supporting the implementation of good practice relating to the role of the 
public  sector  in  stimulating  innovation  in  partner  regions,  for  example  through:  procurement, 
investment decisions (gap funding, regeneration etc.), initiatives that assist and advise businesses and 
academia-business partnerships and policy development and adoption103.  

3. 

INCREASING SYNERGIES BETWEEN POLICY INSTRUMENTS 

This chapter outlines possible ways of increasing synergy between EU funding programmes, 
in  particular  between  those  which  are  managed  by  the  Commission  and  those  which  are 
implemented by national and regional authorities under the shared management approach of 
Cohesion Policy.  

3.1.  Main EU funding instruments 

The main EU funding instruments considered in this section are: 

100 

101 

102 
103 

The  legal  framework  and  good  practice  on  pre-commercial  procurement  are  provided  in  the 
Commission  Communication  "Pre-commercial  Procurement:  Driving  innovation  to  ensure  sustainable 
high quality public services in Europe", COM(2007)799. 
See  Lead  Market  Initiative  website  at  http://ec.europa.eu/enterprise/policies/innovation/policy/lead-
market-initiative/index_en.htm  
More info on: http://www.eeda.org.uk/4091.asp  
www.rapidenetwork.eu 

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•  the  EU  7th  Research  Framework  Programme  (FP7),  in  particular  the  "Capacities" 
programme  that  includes  “Regions  of  Knowledge  (RoK)”,  “Research  Potential  in 
Convergence  and  Outermost  regions  (RegPot)”,  "Research  Infrastructures  (RIs)",  in 
connection with the European Strategic Forum for Research Infrastructures (ESFRI), and 
"Research for the benefit of SMEs"; 

•  the  Competitiveness  and  Innovation  Framework  Programme  (CIP),  in  particular  its 
"Enterprise  and  Innovation  Programme"  with  financial  instruments,  innovation  and 
business  support  services,  networking  projects  between  innovation  policy-makers  and 
support providers and eco-innovation projects; 

•  the  Structural  Funds  (SF),  namely  the  European  Regional  Development  Fund  (ERDF), 
including INTERREG IVC and URBACT II, and the European Social Fund (ESF), which 
support Cohesion Policy. 

The  importance  of  research  and  innovation  is  reflected  in  the  budget  allocations  to  these 
funding  instruments:  the  7th  Research  Framework  Programme  (FP7)  has  a  budget  of  some 
€ 50 billion; the Competitiveness and Innovation Framework Programme (CIP), has a budget 
of € 3.6 billion, part of which supports innovati on, and the Structural Funds have a budget of 
€ 85  billion  dedicated  to  innovation,  of  which  n early  € 50  billion  are  allocated  for  core 
research and innovation. 

3.2. 

Policy framework (synergies of design) 

According to the General Regulation on Cohesion Policy104 the Commission and the Member 
States  shall  ensure  that  the  assistance  from  the  funds  is  complementary  to  other  financial 

104 

See Article 9 of Council Regulation (EC) No 1083/2006, of 11.7.2006, OJ L210 of 31.7.2006 

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33 

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instruments  and  the  Commission  decisions  adopting  FP7  and  the  CIP  contain  similar 
provisions105. 

Achieving the necessary "synergies" between the instruments is a major challenge, given that 
they generally have different intervention logics, thematic priorities, timing and funding rules. 
Moreover,  their  implementation  usually  involves  different  administrative  levels  and 
authorities.  

With a view to encouraging synergies, the Commission, in 2007, adopted the Communication 
"Competitive European Regions through Research and Innovation"106, which built on earlier 
work  of  the  European  Parliament,  the  European  Research  Advisory  Board107  and  the 
Scientific and Technical Research Committee of the EU (CREST)108. The key message of the 
Communication was the need for the Member States and regions to improve the arrangements 
for  co-ordinated  preparation  and  use  of  the  EU  funding  instruments  for  research  and 
innovation. 

The Communication also acknowledged in its conclusions the important role of the European 
Commission in promoting synergies. Since its adoption, therefore, a number of practical steps 
have been taken by the Commission in that direction. 
A  "Practical  Guide  to  EU  funding  opportunities  for  research  &  innovation"109  has  been 
produced that provides potential beneficiaries with straightforward and simple information on 
EU  research  and  innovation  funding.  The  guide  includes  a  short  description  of  the  possible 
support  offered  by  the  three  instruments,  a  checklist  of  questions  and  a  scorecard  to  be 
completed in order to highlight the most appropriate funding source. 

In addition, the guide explains the rules for combining  the funding  instruments  and stresses 
the  role  of  national  and  regional  authorities  in  exploiting  the  potential  for  synergies  and 
fostering a co-ordinated access to the EU funds. This involves fostering greater cooperation at 
regional  level  between  the  organisations  involved  in  the  management  or  implementation  of 
the different EU funding instruments, such as: the Managing Authorities for the programmes 
of  the  Structural  Funds;  the  National  Contact  Points  (NCPs)  for  each  area  of  FP7  and  the 
Enterprise Europe Network (EEN) for the CIP.  

In  complement  to  the  Practical  Guide,  a  Commission  Staff  Working  Document  containing 
actual examples of synergies in the use of the different sources of EU research and innovation 
funding in the Member States is being finalised. 

Also,  steps  are  being  taken  to  better  inform  national  and  regional  authorities  on  the 
beneficiaries of EU research and innovation funding located in their regions. This information 
is already provided to the national authorities and the aim is to distribute it more widely at the 
regional level. 

105 

106 
107 
108 
109 

Decision  No  1639/2006/EC  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL  of  24 
October 2006 establishing  a Competitiveness  and  Innovation Framework  Programme  (2007  to 2013); 
Decision  No  1982/2006/EC  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL  of  18 
December  2006  concerning  the  Seventh  Framework  Programme  of  the  European  Community  for 
research, technological development and demonstration activities (2007-2013) 
COM(2007) 474, 16.8.2007 
Now the European Research Area Board (ERAB) 
Now the European Research Area Committee (ERAC) 
Practical  guide 
funding  opportunities 
http://cordis.europa.eu/eu-funding-guide/home_en.html 

innovation 

to  EU 

research 

(2009): 

and 

for 

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Although much progress has been made, there is still room to further strengthen and deepen 
synergies between the funding sources. Following a recommendation from the Council110 an 
ERAC (former CREST) working group has examined synergies not just between the FP7, the 
CIP  and  the  Structural  Funds  but  more  widely  in  the  "knowledge  triangle"  including 
education and life-long learning. The conclusions of this work will feed into the deliberations 
an  expert  group  on  synergies,  established  under  the  2010  work  programme  of  the  FP7 
regional actions, which will closely examine the development of synergies during the current 
programming period and the prospects for the next period, post 2013. 

Finally, the importance of synergies between funding sources for research and innovation was 
examined in the Week of Innovating Regions in Europe (WIRE) conference organised under 
the  Spanish  Presidency  of  the  EU  in  March  2010  and  will  also  be  considered  in  a  further 
WIRE conference under the Hungarian Presidency in the first semester of 2011. 

Ireland:  Resourcing  Information  and  Technology  Transfer  in  the  Border,  Midland  and  Western 
Region - a Regional Programme of Innovative Actions (2006-2008) 

The  programme  was  aimed  at  strengthening  small  business  interaction  with  the  higher  education 
sector  and  helping  owner  managers  develop  their  businesses  through  tailored  mentoring  and 
management assistance. 

Through  the  provision  of  research  vouchers,  23  small  firms  across  the  region  were  able  to  access 
specialist research and knowledge services from colleges which allowed them to progress to the next 
stage of their business growth plans. 

The  business  mentoring  initiative  for  winners  targeted  small  firms  which  had  emerged  from  the 
Campus/Incubation  environment  as  well  as  SMEs  with  high  value  added  export  potential.  Small 
specialist firms received strategic business planning, management and marketing supports under the 
scheme. 

These initiatives are being mainstreamed by the Irish Government and the EU FP7 has been identified 
as a possible vehicle to further stimulate the positive results obtained 

ERDF funding: EUR 1,108,233 

More information: www.bmwassembly.ie 

. 
Spain, a thematic network on R&D&I funded by SF, better coordination with FP7 

The Spanish National Strategic Reference Framework has established a coordination committee and 
thematic networks for ensuring complementarity between the Structural Funds and other national and 
community financial instruments; as well as fostering exchange of good practice and lessons learned 
among managing authorities and main stakeholders.  

The research, development and innovation (R&D&I) network is being supported under the "Technical 
Assistance" priority of the Operational Programme "Technological Fund". CDTI (the Spanish Centre 
for the Development of Industrial Technology) is currently managing an operation called: "Support to 
the  Spanish  leadership  of  European  and  International  projects"  (ERDF  support:  around  EUR  150 
million) which consists of three main parts: 

•  Demonstration Projects derived from previous FP projects led by Spanish partners. 

•  Support  for  the  participation  of  Spanish  companies  in  the  Joint  Technologies  Initiatives  (JTI) 

fostered by FP7.  

•  Support to international projects, mainly those in the EUREKA programme. 

110 

Competitiveness Council Conclusions of 3 December 2009 on guidance for future priorities. 

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3.3. 

Practical examples of synergies (synergies in action) 

3.3.1.  Research infrastructures and Research Potential 

The Commission has started encouraging the Managing Authorities to consider the possibility 
of  using  the  Structural  Funds  to  provide  complementary  funding  for  two  actions  under  FP7 
which are of particular importance for the regions but which suffer major funding constraints. 
These  are  the  Research  Infrastructures  identified  by  the  European  Strategy  Forum  on 
Research Infrastructures (ESFRI) 111 and the Research Potential action112. 

The  Research  Potential  action  is  included  in  the  Capacities  Programme  of  FP7  and  focuses 
explicitly  on  Convergence  and  Outermost  regions.  It  aims  at  strengthening  the  capacities  of 
researchers  in  these  regions  to  successfully  participate  in  research  activities  at  EU  level. 
Projects  are  assessed  in  terms  of  scientific  quality,  management  and  impact,  including 
regional  development,  by  panels  of  experts.  Due  to  a  lack  of  resources,  many  projects 
assessed as good under this initiative cannot be supported by FP7. 

ESFRI gives national authorities the opportunity to jointly explore the needs for new research 
infrastructures  and  to  identify  projects  of  pan-European  relevance.  The  ESFRI  projects  are 
selected  by  a  Committee  (delegates  of  the  Member  States)  on  the  basis  of  a  first  analysis 
undertaken  by  a  technical working  group (scientific experts).  Therefore, the ESFRI projects 
are,  therefore,  clearly  relevant  for  EU  research.  FP7  can  fund  the  preparatory  phase  of  the 
projects  (e.g.  feasibility  studies)  but  cannot  support  their  construction.  This  can  be  done 
through the existing national and EU funding instruments, including the Risk Sharing Finance 
Facility (RSFF),113 a joint initiative of the Commission and of the European Investment Bank. 

Possibilities  for  funding  Research  Potential  and  ESFRI  projects  are  being  explored  by  a 
number  of  national  authorities  responsible  for  scientific  research  and  some  Managing 
Authorities  of  ERDF  programmes.  The  projects  need  to  meet  requirements  of  scientific 
excellence and impact on the regional economy. For some ESFRI projects, industrial partners 
have  already  been  identified  and  letters  of  interest  from  companies  received,  demonstrating 
the potential impact on the economy (partnership with innovative industries, large companies, 
SMEs and start-ups; links with innovative incubators for the creation of spin-offs). 

ELI project (Extreme Light Research Infrastructure) 

The  ELI  project  has  been  selected  by  the  ESFRI  Committee  as  being  of  pan-European  interest.  The 
preparatory  phase  of  this  laser  facility,  involving  40  research  and  academic  institutions  from  13 
Member  States  and  supported  by  FP7  Capacities,  has  led  to  the  selection  of  three  sites  providing 
complementary  technologies,  situated  in  the  Czech  Republic  (near  Prague),  Hungary  (Szeged)  and 
Romania (near Bucharest).  

Possibilities for funding under Cohesion policy the construction of new research infrastructure on the 
three  sites  (total  costs  exceeding  EUR  700  million)  are  being  explored  by  the  national  authorities 
responsible for scientific research and management of the Structural Funds programmes with a view 
to  meeting  requirements  relating  to  scientific  excellence  and  the  impact  on  the  regional  economy. 
Industrial partners have been identified and letters of interest from companies have been received. 

More information: http://www.extreme-light-infrastructure.eu/index.php 

111 
112 
113 

http://ec.europa.eu/research/infrastructures/index_en.cfm?pg=esfri 
http://cordis.europa.eu/fp7/capacities/convergence-regions_en.html  
http://www.eib.org/products/loans/special/rsff/index.htm?lang=en  

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In the future, the Commission could envisage exploring funding opportunities for other good 
projects  identified  under  EU  Research  policy.  For  instance,  in  the  context  of  the  sub-
programme  "Cooperation"  of  FP7,  European  Technology  Platforms  (ETP)114  can  act  as  a 
catalyst  for  research  projects  on  some  specific  themes,  involving  businesses  and  promoting 
knowledge partnership for innovation. 

3.3.2. 

Synchronised support for innovation projects and take-up of research results  

The  CIP  co-financing  of  pilot  and  market  replication  projects,  in  particular  in  the  fields  of 
eco-innovation and ICT, as well as the technology transfer and business partnering services of 
the  Enterprise  Europe  Network,  can  help  rolling  out  innovations  that  were  developed  with 
Structural  Fund  support  in  the  Internal  Market.  The  CIP  financial  instruments  can  facilitate 
the  economic  success  of  firms  that  developed  business  innovation  ideas  emanating  from 
Structural Fund supported research projects.  

Research results obtained by SMEs through the "Research for the benefit of SMEs" projects 
of FP7, can lead to commercial innovation ideas that may benefit from SF support for their 
development, demonstration and implementation. 

3.3.3. 

Science and technology parks 

The  most  commonly  used  definition  of  a  science  park  in  Europe  is  that  of  the  International 
Association of Science Parks (IASP)115 ‘A Science Park is a business support and technology 
transfer initiative that: 

•  encourages  and  supports  the  start  up  and  incubation  of  innovation  led,  high  growth, 

knowledge based businesses; 

•  provides  an  environment  where  larger  and  international  businesses  can  develop  specific 
and  close  interactions  with  a  particular  centre  of  knowledge  creation  for  their  mutual 
benefit; 

•  has formal and operational links with centres of knowledge creation such as universities, 

higher education institutes and research organisations’. 

Science  and  industrial  parks  facilitate  the  establishment  of  links  between  higher  education, 
research and businesses. They are catalysts for technology transfer activities. 
In the report,116 the European Economic and Social Committee (EESC) refers to "Technology, 
Industrial, Innovation and Science Parks (TIIS)" as fulfilling the requirement to bring together 
universities,  other  research  institutions  and  enterprises  in  all  Member  States  and  so  help  to 
bridge the technology gap between regions. The EESC stresses that TIIS are contributing to 
European  industrial  change,  enhancing  innovation-,  clustering-  and  Business-to-Business 
activities, and supporting SMEs and regional job creation. EESC also highlights the fact that 
TIIS  play  a  prominent  role  in  efforts  to  facilitate  and  stimulate  innovation  and  regional 
reduce 
development,  given 
unemployment and the gap between divergent levels of regional development. 

they  enhance  competitiveness,  while  helping 

that 

to 

114 
115 
116 

More information: http://cordis.europa.eu/technology-platforms/home_en.html 
"Regional Research Intensive Clusters and Science Parks", EU Commission, DG RTD, September 2007 
EESC document CCMI/025 (14/12/2005) and CCMI/072 14/07/2010. 

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Science Park Potsdam Golm, Germany (Finalist RegioStars Award 2009)117 

Since  the  mid-1990s,  the  Science  Park  at  Golm  on  the  outskirts  of  Potsdam  has  developed  into  the 
largest  and  most  important  science  and  research  centre  in  Brandenburg.  Originally  the  site  of 
Potsdam  University,  Golm  now  hosts  three  Max  Planck  Institutes,  two  Fraunhofer  Gesellschaft 
Institutes, a business incubation centre(GO:IN) and many innovative enterprises. 

GO:IN, which opened in 200,7, provides ideal start-up conditions for new entrepreneurs with services 
such as conference rooms, joint marketing and coaching. In 2008, it housed 28 enterprises. 

ERDF contribution: EUR 74.3 million 

More than 1.300 scientists are working at the science park and the various university institutes have a 
total of 7.000 students. Many joint research projects have been funded under FP5, 6 and 7. 

More information: http://www.wisspark.de/ 

In addition to fostering innovation for enterprises, the ERDF and ESF also support action to 
promote  innovation  in  public  authorities  including,  for  instance,  experimentation  with  new 
forms of innovation, integration of innovation into social systems and urban planning and so 
on. Examples of good practice and measures that were developed and tested under CIP, FP7 
and INTERREG projects could be taken-up and implemented by managing authorities in their 
Operational Programmes. 

3.3.4. 

Innovation, research systems and cluster initiatives 

There is a need to develop synergies between pilot projects funded under the different policy 
instruments  (RoK,  RegPot,  Europe  INNOVA  and  PRO  INNO  Europe®118,  FTN  and  other 
INTERREG and URBACT projects). To pursue this objective, it is crucial to foster a greater 
cooperation  at  regional  level  between  the  above  mentioned  organisations  involved  in  the 
implementation of the different EU funding instruments. 

117 
118 

Investing in our regions, 150 examples of projects co-funded by European Regional Policy, EC, 2010. 
See www.europe-innova.eu and www.proinno-europe.eu  

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CLOE (Fast Track Network INTERREG IVC) to Clusterpast (FP7-Regions of Knowledge project, 
lead  partner  Lyon,  France),  to  the  European  Cluster  Observatory  (CIP  project)  and  to  the 
mainstream programmes of the Structural Funds 

The CLOE network "Clusters Linked Over Europe" was one the first Fast Track Networks under the 
“Regions  for  Economic  Change”  initiative,  created  to  speed  up  the  transfer  of  good  practice  from 
pilot projects to large scale Structural Fund Operational Programmes. CLOE has become the hub for 
over  25  local  networks  across  Europe.  CLOE  and  has  produced  a  Cluster  Management  Guide  for 
regional  authorities  and  cluster  managers,  identifying  good  practice,  and  methods,  tools  and 
processes for setting up and managing clusters in regions. 

The Clusterplast network, created by some CLOE partners, is an inter-cluster initiative funded under 
the  Regions  of  Knowledge  action  (FP7)  to  target  the  future  challenges  for  the  polymer  converting 
industry.  It  was  set  up  under  a  Joint  Action  Plan  (JAP)  designed  to  promote  synergy  between  local 
and  regional  authorities,  businesses  and  research  organisations  from  the  6  European  regions 
involved.  The  JAP  will  support  technology-led  development  in  the  regions,  encouraging  innovation 
through  collaboration  between  RTD  centres  and  companies,  stimulating  new  enterprises,  attracting 
new investment through various varied initiatives and coordinating activities to ensure consistent use 
of public and private funding. 

One  output  from  the  Clusterplast  project  will  be  the  provision  of  a  large  information  set  for  the 
European  Cluster  Observatory  (CIP  project).  A  majority  of  the  common  activities  defined  in  the 
Clusterplast JAP could be eligible under the mainstream programmes of the Structural Funds. 

More 
http://www.clusterplast.eu/ 

information: 

http://www.clusterforum.org/, 

http://www.clusterobservatory.eu/, 

3.3.5. 

Improvement and internationalisation of innovation support services  

The  500  regional  partners  or  more  involved  in  the  Enterprise  Europe  Network,  have  been 
recently  encouraged  to  extend  their  business  services  to  other  stakeholders  operating  in  EU 
regions. Traditionally, network partners are oriented towards the direct delivery of services to 
SMEs. From 2011 onwards they will also provide support to cluster organisations, IP advisors 
and  public  enterprises  to  encourage  them  to  take  up  new  innovation  support  schemes  that 
have been developed through pilot activities in Europe INNOVA and INTERREG projects. 

The Europe INNOVA valorisation project and a new role for the Enterprise Europe Network 

The Europe INNOVA platform is aimed at developing better innovation support measures and making 
them  available  to  professionals.  In  the  past,  the  use  of  new  measures  has  often  been  limited  to  the 
projects developing them. Since 2009, the TAKE IT UP project has provided support for all Europe 
INNOVA projects in better testing new measures in more regions and in documenting their results in 
an easily accessible manner. The work of TAKE IT UP is supported by an expert group that includes 
representatives from partner organisations of the Enterprise Europe Network. 

The promotion of measures developed through Europe INNOVA, like the training courses on 
IP  management,  the  European  innovation  management  benchmarking  platform  (imp³rove) 
and others, can have a quick and tangible impact and can lead on from joint policy analysis to 
better support for innovation in regions. Innovation support measures need to be adapted to 
the  characteristics  of  the  regions  concerned  and  to  build  on  local  strengths.  Incentives  also 
need to be provided for the development of new or improved innovation support measures in 

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order to accelerate the development and wider use of good practice, so contributing to more 
effective use of public funding.119  

4. 

TOWARDS SMART SPECIALISATION STRATEGIES 

4.1.  Why do we need smart specialisation? 

Regional  innovation  policies  have  often  demonstrated  a  lack  of  efficiency  in  identifying 
priorities  for  individual  regions  and  forms  of  practical  collaboration  between  regions.  It  is 
widely  argued  that  this  is  one  aspect  that  regional  strategies  have  been  unable  to  solve, 
leading to a wasteful use of public resources and hampering, or delaying, the realisation of the 
potential benefits for society. This is an even more critical issue in the present crisis in view 
of the scarcity of public and private financial resources available.  

A  more  promising  strategy  appears  to  be  for  regions  to  construct  a  strategic  vision  of  their 
future  that  identifies  how  they  should  position  themselves  in  the  knowledge  economy. 
Formulating such a strategy means finding out which R&D and innovation activities can best 
be  developed  competitively  in  the  region  concerned  and  then  implementing  the  policies 
necessary  to  pursue  this  vision.  Such  a  discovery  process  is  at  the  heart  of  -  a  smart 
specialisation strategy. 

In  this  context,  regions  need  to  find  their  ‘market  niches’  and  to  increase  efforts  to  absorb 
knowledge targeted at the economic activities that have the potential to produce quick results 
in  global  markets  and  to  address  the  social  challenges  they  face,  as  well  as  that  of 
globalisation. In sum, they have to bet on smart growth.  

Investment  in  R&D,  human  capital  and  innovation  is  crucial  for  all  regions.  But  they  start 
with  different  endowments  of  these  assets.  There  are  potentially  large  gains  from  strategies 
that exploit an original, globally competitive specialisation niche and strengthen it over time. 
In  order  to  have  a  meaningful  impact,  R&D  and  innovation  resources  must  reach  a  critical 
mass  and  need  to  be  supported  as  much  by  targeted  interventions  in  human  resources  and 
knowledge infrastructure as in the provision of suitable framework conditions for businesses. 
By  focusing  on  areas  of  comparative  advantage  and  key  enabling  technologies  or  social 
challenges, smart specialisation strategies120 can ensure a more efficient and effective use of 
funds and human resources and potentially leverage larger amounts of private investment. 

The exploitation of economies of scale has been a major motivation for pooling resources and 
for  EU  approaches  to  RTD  policy,  as  evidenced  by  numerous  infrastructure  initiatives,  the 
increasingly  large-scale  measures  supported  by  the  FP  (Networks  of  Excellence,  Integrated 
Projects)  and  the  European  Technology  Platforms,  the  EIT  and  other  recent  initiatives. 
However, priority-setting is still largely undertaken with national or regional considerations in 
mind,  often  failing  to  reap  the  full  benefits  of  the  opportunities  offered  by  an  enlarged 
European Research Area (ERA). 

In order to have an appreciable economic impact, RTD efforts must reach some 'critical mass' 
threshold. Priority setting is important, since individual regions or countries may be unable to 
reach such a critical mass and so realise a competitive advantage in a specific area (e.g. nano- 

119 

120 

Commission Staff Working Document SEC(2009)1197 on “Making public support for innovation in the 
EU  more  effective  –  Lessons  learned  from  a  public  consultation  for  action  at  Community  level”,  see 
www.proinno-europe.eu/sites/default/files/page/10/07/making_public_support_for_innovation.pdf  
Foray, D., David, P. and Hall, B. (2009), "Smart Specialisation: The Concept", Knowledge Economists 
Policy Brief No. 9, 
http://ec.europa.eu/invest-in-research/pdf/download_en/kfg_policy_brief_no9.pdf?11111  

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or  bio-technology)  or  industrial  sector.  In  addition,  priority  setting  needs  to  be  pursued 
consistently over long periods of time. Several expert groups have observed that many regions 
and countries disperse their efforts across too many areas, and identify this as a key failing of 
the EU vis-à-vis its major global partners and competitors.  

Smart specialisation has been conceived as a regional and national strategy to overcome such 
problems.  Smart  specialisation  strategies  entail  a  process  of  entrepreneurial  discovery, 
identifying globally distinct niches and steering the RTDI and business innovation efforts of 
all stakeholders towards those areas. The concept has been conceived by Prof. D. Foray and 
Prof. B. van Ark in the context of the Knowledge for Growth Expert group established by the 
Commission. The notion was subsequently adopted in the Barca Report121 commissioned by 
DG Regional Policy as well the Expert Group "The role of community research policy in the 
knowledge-based  economy"122.  Both  expert  groups  propose  smart  specialisation  as  a  way 
forward for future Cohesion policy. 

4.2.  What is smart specialisation? 
In  a  nutshell,  smart  specialisation123  is  about  placing  greater  emphasis  on  innovation  and 
focusing  scarce  human and  financial  RTDI resources in a few globally competitive areas in 
order to boost economic growth and prosperity. 

It  should  be  understood  that  smart  specialisation  provides  a  strategy  and  a  global  role  for 
every regional economy – irrespective of whether they are driven more by manufacturing and 
new  technologies,  services  and  services  innovation,  or  both.  While  leader  regions  might 
invest in the invention of a generic technology, less advanced regions are often better advised 
to invest in the development of the applications of a generic technology or service innovation 
in  one  or  several  important  areas  of  the  regional  economy  or  in  developing  cross-sectoral 
approaches.  Some  examples  are  biotechnology  applied  to  the  exploitation  of  maritime 
resources;  nanotechnology  applied  to  various  agricultural  and  food  sectors  such  as  the 
production of wine, cheese and olive oil; services enabled by information technology applied 
to the management and maintenance of the archaeological and historical heritage. 

Effective investment and a policy framework for the knowledge based society need to be fed 
by  strategic  intelligence  that  stimulates  the  competitiveness  of  regions  through  the 
identification of priorities in high-value added activities. Smart specialisation is an alternative 
to  a  policy  that  spreads  investment  thinly  across  several  areas  and  sectors  irrespective  of  a 
region’s industrial structure and knowledge capacity (in terms of human capital, universities, 
research  organisations  and  so  on.).  It  entails  a  fuller  tailoring  of  research  and  innovation 
policy  to  the  regional  context  based  on  a  realistic  assessment  of  what  can  be  achieved  with 
limited resources. Smart specialisation can, moreover, be a key element in developing multi-
level governance for strategic and integrated innovation policies124. In this sense, policies to 
leverage  investment  for  innovation  have  to  be  better  linked  to  other  policy  domains  and  to 
regional  development  and  to  be  built  on  a  better  understanding  of  regional  strengths  in 
relation to those of other regions125. Smart specialisation is expected to create more diversity 
among  regions  than  a  regime  in  which  every  region  imitates  others.  An  absence  of  smart 

121 
122 
123 

124 

125 

http://ec.europa.eu/regional_policy/policy/future/barca_en.htm 
http://www.earto.eu/fileadmin/content/07_News__public_/KBE_Final_ReportRev-3.pdf 
Foray, D., David, P. and Hall, B. (2009), "Smart Specialisation: The Concept", Knowledge Economists 
Policy Brief No. 9, http://ec.europa.eu/invest-in-research/pdf/download_en/kfg_policy_brief_no9.pdf? 
Background  note  on  "Accelerating  the  transformation  of  Europe  through  innovation"  for  the  Joint 
informal meeting of Ministers for research and Industry, Brussels 15th of July 2010 
Belgian Presidency input to informal competitiveness council, July 2010. 

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specialisation would almost certainly result in duplication, increasing uniformity and a lack of 
imagination and vision in setting R&D priorities, which in turn would diminish the potential 
for complementarities within the EU knowledge base. This could only produce poor results in 
terms  of  the  contribution  of  R&D  and  innovation  to  EU  economic  growth:  most  regions 
would remain unattractive to investors and would not be able to compete with others to attract 
knowledge resources.  
Smart  specialisation  is  also  linked  to  the  concept  of  world-class  clusters126,  which  offer  the 
possibility  of  fostering  excellence  at  all  levels  and  of  strengthening  specific  competitive 
advantages.  A  particular  focus  in  this  regard  needs  to  be  placed  on  supporting  the 
development of more world-class clusters in new industries in order to avoid a misallocation 
of scarce resources. 

It is clear that scientific and innovation effort in a few locations and the neglect of the rest of 
the continent is  not what  Europe 2020 is about. Instead it calls for smart specialisation as a 
way of reconciling strong centripetal forces towards the development of strong agglomeration 
effects with a relatively balanced geographical distribution of innovation capacity across the 
EU. It entails regions developing an original strategic vision in terms of science, technology 
and innovation and implementing the policies necessary to bring it about.  

Identifying  an  original  and  economically  profitable  niche  for  each  region  in  terms  of  key 
enabling technologies127 (e.g. ICT bio- or nano-technology), innovation in services or to meet 
social challenges (e.g. energy scarcity or the environment) would make the most of existing 
diversity  across  EU  regions  while  at  the  same  time  facilitating  the  emergence  of  pan-
European areas of specialisation which are competitive at a global level.  

Smart  specialisation  can  help  all  regions  make  the  most  of  EU  resources  (such  as  from  the 
Framework  Programme  and  the  Structural  Funds),  strengthen  research  and  innovation 
capacity and mobilise latent potential. It can lead to a more coherent distribution of resources 
in this area across the EU, by avoiding unnecessary duplication and increasing the potential 
for complementarity between a number of innovation-related measures. Smart specialisation 
can, therefore, be a catalyst for interregional cooperation. 

Specialisation  in  the  production  process,  in  terms  of  the  concentration  of  activity  within  a 
certain area, generates scale economies, including, at least in certain contexts, in the case of 
knowledge production.128  

The  agglomeration  of  innovation  capacity  is  important  for  the  productivity  of 
technological research 

Literature on regional science highlights the importance of spatial dependence in knowledge 
production  –  i.e.  the  fact  that  research  activities  in  any  given  place  are  often  influenced  by 
related  activities  nearby.129  This  is  confirmed  by  an  econometric  study130  of  the  role  of 

126 

127 
128 

129 

130 

http://intercluster.eu/index.php?option=com_flexicontent&view=items&cid=1:frontpage&id= 
159:release-of-the-white-paper-on-the-emerging-of-world-class-clusters&Itemid=1&lang=en  
http://ec.europa.eu/enterprise/sectors/ict/key_technologies/index_en.htm  
Furman, J. L., Porter, M. E. and Stern, S. (2002), “The determinants of national innovative capacity”, 
Research Policy, 31, pp. 899-933 
Audretsch,  D.  and  Feldman,  M.  (1996)  R&D  spillovers  and  the  geography  of  innovation  and 
production. American Economic Review 86, 630-640; Bottazzi, L. and Peri, G. (2003), "Innovation and 
spillovers in the regions: Evidence from European Patent Data", European Economic Review, Vol. 47, 
pp. 687-710 
Varga,  A.  (2000),  “Local  Academic  Knowledge  Transfers  and  the  Concentration  of  Economic 
Activity”, Journal of Regional Science, Volume 40, No. 2, pp. 289-309 

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agglomeration in university R&D productivity in transferring knowledge to innovation, based 
ion US metropolitan statistical area data. The study finds that a “critical mass” of advanced 
technology  firms,  private research  labs  and  business  services  is  a  prerequisite  for  university 
research to have a significant impact on regional innovation.  

The  development  of  regional  innovation  systems  is  a  cumulative  process  characterised 
by positive-feedback: success breeds more success. 

Local  innovation  capacity  is  built  up  slowly  over  time,  an  observation  that  highlights  the 
importance of policy with a long-term horizon. According to endogenous growth models, the 
size  of  the  workforce  generating  idea  as  well  as  knowledge  accumulated  over  the  past  is 
important131  ('standing  on  the  shoulders  of  giants').  Cumulative  processes  also  have  a 
geographical dimension. Localities with high levels of agglomeration of innovation capacity 
can act as poles attracting mobile science and technology resources to initiate a virtuous cycle 
of better performance and more resources.132  

Specialisation is a function of the extent of the market 

Economic  theorists  as  far  back  as  Adam  Smith  have  understood  that  the  move  from  self-
sufficiency  to  specialisation  is  conditional  on  the  means  of  sourcing  o  essential  inputs  not 
produced internally. Following this reasoning, greater specialisation will come naturally as the 
ERA matures and European integration in research and innovation progresses.  

In its proposed form of implementation, the concept of smart specialisation draws inspiration 
from  studies  of  the  implications  of  the  emergence  and  diffusion  of  General  Purpose 
Technologies  (GPTs,  analogous  to  'key  enabling  technologies'  (KETs)).  Historical  and 
theoretical insights suggest that the diffusion of GPTs/KETs akin to the development of the 
steam engine, electricity and computers in stimulating economic growth.133 A GPT/KET often 
emerges  within  strict  sectoral  confines  in  response  to  specific  needs.  The  distinguishing 
characteristic  of  a  GPT'/KET  is  its  ‘generalisation’  capacity,  in  opening  up  numerous 
opportunities for proximate innovation across economic sectors.  

Smart  specialisation  is  built  on  the  pragmatic  realisation  that  some  regions  may  be  better 
adapted  to  advancing  the  frontier  (i.e.  inventing  new  GPTs/KETs),  whereas  others  can  be 
involved in the co-invention of applications. The aim of regions adopting smart specialisation 
strategies is to achieve coherent matching between their science base, technology production 
and  economic  structure.  This  is  a  long-term  process,  with  echoes  of  similar  processes 
advanced in economic geography under the banner 'the learning region'.134 

131 

132 

133 

134 

Romer, P. M. (1990),"Endogenous technological change", Journal of Political Economy, Vol. 5, No. 98, 
pp. S71-S102 
Crescenzi, R., Rodríguez-Pose, A., and Storper, M. (2007), "The territorial dynamics of innovation: a 
Europe-United  States  comparative  analysis",  Journal  of  Economic  Geography,  Vol.  7,  pp  673-709; 
Varga,  A.  (2006),  "The  spatial  dimension  of  innovation  and  growth:  empirical  research  methodology 
and policy analysis", European Planning Studies, Vol. 9, pp. 1171-1186. 
Crescenzi, R., Rodríguez-Pose, A., and Storper, M. (2007), "The territorial dynamics of innovation: a 
Europe-United  States  comparative  analysis",  Journal  of  Economic  Geography,  Vol.  7,  pp  673-709; 
Varga,  A.  (2006),  "The  spatial  dimension  of  innovation  and  growth:  empirical  research  methodology 
and policy analysis", European Planning Studies, Vol. 9, pp. 1171-1186 
Asheim  B.T.  (2001),  "Learning  regions  as  development  coalitions:  Partnership  as  governance  in 
European workfare states?", Concepts and Transformation, Vol. 6, No. 1, pp.73-101. 

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Regional development through smart specialisation: The Bluebionet example135  

Bluebionet  is  focused  on  the  development  and  adoption  of  maritime  biotechnology.  Four  maritime 
regions  (in  France,  Germany  ,the  UK  and  Spain)  are  coordinating  their  efforts  to  strengthen  their 
knowledge base through the development of biotech applications in this area. This is an example of 
regions with a strategic vision identifying what makes their knowledge base unique and distinctive. By 
working  in  a  coordinated  way,  they  have  determined  that  a  new  technology  could  modernise  and 
revitalise what is for them an important economic sector. Such a vision has enabled them to define a 
competitive area with few players world wide and w ere critical mass is easier to reach. By working 
together, a critical cluster has been formed emerged and the knowledge assets - people, ideas, labs – 
are available to all members of the network, encouraging the expertise to remain in the EU. 

4.3. 

How can regions develop a smart specialisation strategy? 

A  smart  specialisation  strategy  should  be  the  end  result  of  an  entrepreneurial  process  of 
discovery. Appropriate means should be mobilised to identify and achieve a consensus on a 
smart  specialisation  strategy  that  translates  global  opportunities  (mainly  in  the  form  of  key 
enabling, or 'general purpose', technologies) into regional strengths. It should be stressed that 
smart  specialisation  does  not  call  for  a  pre-conceived  “grand  plan”,  but  rather  a  flexible 
strategy under which the role of policy is one of monitoring and providing qualified support. 
It should: 

•  Be place-based: driven by a pragmatic assessment of individual strengths and weaknesses 
and  mindful  of  the  region's  history,  territorial  characteristics  and  broader  geographical 
context,  especially  the  activities  of  neighbouring  regions.136  The  involvement  of 
stakeholders in the identification process is crucial in this regard. 

•  Include a pool of strategic resources: proportional in size to the region's ambitions.  

•  Be  sufficiently  broad  to  allow  for  a  diversified  portfolio  of  related  activities:  striking  a 
balance between specialising enough in order to be competitive, but not so much so as to 
hinder diversification and expose the region to the risk of changing market conditions or 
other  external  and  unpredictable  events.  Cross-sectoral  approaches  and  consideration  of 
future  potiential  changes  or  spin-offs  from  existing  sectors  can  contribute  to  such  a 
portfolio. 

•  Seek  complementarities  with  other  regions:  regions  focusing  on  the  same  key  enabling 
technology  yet  with  different  capabilities  and  capacity  can  seek  synergies  by  forming 
partnerships for closer research and innovation cooperation and mutual policy learning. 

•  Assessed and monitored through peer review and anticipate stepwise structural change and 
the  accompanying  revision  of  priorities.  Monitoring  should  be  accompanied  by  fall-back 
strategies to avoid sunk costs being magnified. 

•  Accompanied  by  a  diverse  policy  mix,  including  specific  measures  for  higher  education 
and  vocational  training,  support  to  innovation  and  SMEs,  taking  account  of  necessary 

135 

136 

Example  taken  from  Foray,  D.  and  Van  Ark,  B.  (2007),  Smart  specialisation  in  a  truly  integrated 
research  area  is  the  key  to  attracting  more  R&D  to  Europe,  Knowledge  for  Growth  Expert  Group, 
Policy Brief 1, http://ec.europa.eu/invest-in-research/pdf/download_en/policy_brief1.pdf  
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 
Hübner, Commissioner for Regional Policy. 

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changes  in  framework  conditions.  The  sustainability  of  the  strategy  will  depend  on  the 
timeliness  of  complementary  investment  in  related  areas.  Care  should  be  taken  to  ensure 
that the focusing of resources on areas of smart specialisation does not interfere with the 
development of a broad human capital base. 

Differentiated strategies across space and time  

Strategic objectives will depend on the regional context and may include: 

•  Retooling:  support  to  technological  and  human  resource  upgrading  within  an  already 

existing industry; 

•  Extending:  some  diversification  of  the  knowledge  base  is  developed  based  on  synergies 

between two or more activities (e.g. silicon and solar panels); 

•  Emerging:  the  discovery  of  an  entirely  new  niche  which  is  likely  to  be  viable  and 

economically important. 

•  Cross-sectoral:  a  new  combination  of  sectors  helps  generate  innovative  ideas  for  new 

products and services.  

Depending  on  local  context  and  circumstances,  the  smart  specialisation  process  can  be 
motivated by different rationales and objectives: 

•  Retooling of an existing sector: technological upgrading of an existing industry, involving 
the development of applications of a GPT. What is discovered in this case is the potential 
of a given generic technology to generate structural change in an already existing industry. 
Here  smart  specialisation  means  simply  that  a  new  area  of  R&D  and  innovation 
specialisation (e.g. the application of ICT of some kind) is emerging to match an important 
industrial  area  of  specialisation  in  the  region  concerned.  In  this  case,  the  role  of 
entrepreneurs in stimulating the smart specialisation process is obvious. But the retooling 
process can happen in industries which are at different levels of capability (high, medium, 
low).  Two  examples  are  given  below  of  extreme  cases  of  high  and  low  capability. 
Depending on the local context, the role of policy is likely to be different too. 

Example 1: The Finnish Pulp and Paper (P&P) industry views nanotechnology as 
a  promising  source  of  valuable  applications  innovations  and  its  firms  are  taking 
steps to assess this potential. Some of the P&P companies are responding to these 
opportunities by increasing their overall internal R&D investment, which is aimed 
not  only  at  implementing  available  technologies  but  also  at  exploring  recent 
advances in areas of nanotechnology and biotechnology. 

Example 2: In the Braga region in Portugal, some retooling processes are evident 
involving  the  application  of  nanotechnologies  in  the  agro-food  sector  in  order  to 
improve  quality  control  in  the  production  of  cheese,  wine  and  olive  oil.  The 
emergence  of  biotech  applications  in  the  exploitation  of  maritime  resources 
(Galicia, Spain) is another good example. 

. 

•  The  co-emergence  of  R&D/innovation  activities  and  the  related  business  activity, 
which suddenly becomes profitable and attractive because of the innovations applied to it. 
While some assets as well as market opportunities might be present, the fact that there is 
no  industry,  or  a  very  weak  ones,  makes  it  difficult  for  the  specialisation  to  emerge 
spontaneously.  What  is  discovered  here  is  simply  that  research  and  innovation  in  a 
particular  area  will  make  business  activities  attractive  and  profitable  when  they  were  not 

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before.  However  stimulating  entrepreneurs  to  make  the  discovery  concerned  likely  to  be 
even  more  difficult  than  in  the  previous  case  since  a  lot  of  things  are  missing  to  make  a 
business commitment economically attractive and profitable. While the difference between 
this  and  the  previous  case  is  one  of  degree  (of  capability),  they  require  entirely  different 
policy approaches. 

The  development  of  IT  applications  for  the  management  and  maintenance  of  the 
archaeological and historical heritage in Italy (Florence) is a prominent example 
of the co-emergence of an R&D/innovation niche and a business activity 

. 

•  Extension  and  diversification  of  the  knowledge  base,  driven  by  the  potential  for 
economies  of  scope,  intra-regional  spillovers  and  potential  synergies  between  different 
activities (an already existing one and an emerging one). What is discovered here is that an 
area for R&D and innovation focus could be highly productive because of the potential for 
economies  of  scope  and  spillovers.  A  conceptual  distinction  can  be  drawn  between 
spillovers, in the sense that research input in one area may generate knowledge applicable 
to  another  area  (e.g.  silicon  and  solar  panels),  and  economies  of  scope  arising  from  the 
public  aspects  of  core  bodies  of  knowledge  applicable  to  other  areas.  In  practice,  both 
effects are likely to be a function of the diversity of the region’s research and innovation 
activities  and  the  linkages  between  them.  The  role  of  entrepreneurs  here  might  again  be 
less  obvious  for  the  simple  reason  that  exploring  new  areas  (even  close  to  the  main 
knowledge base) involves more risk and uncertainty than in the first case. 

The region of Toulouse exhibits smart specialisation in aeronautics (Airbus valley). 
The  extension  of  entrepreneurial  activities  and  high  education  and  research 
infrastructure to new areas such as satellites and GPS technologies is a good case 
in point. 

•  Cross-sectoral links can provide a region with the degree of originality and specialisation 
in  its  innovation  strategy  that  is  necessary  to  differentiate  it  and  give  it  a  competitive 
advantage  compared  to  other  regions.  The  fostering  of  cross-sectoral  cooperation  has 
proved to be successful in generating ideas for new innovative applications and integrated 
solutions. 

In  sum,  regions  need  to  formulate  a  smart  specialisation  strategy  to  make  explicit  their 
answers to the following questions: a) what is the link between the major economic sectors of 
the region and the potential application of a generic technology? b) which are the businesses, 
universities,  and  other  bodies  active  in  the  region,  which  areas  are  they  active  in  and  how 
should they be supported? c) is there a gap between the emerging areas of specialisation and 
the assets and infrastructure in the region and how should this be filled? 

4.4. 

Assessing smart specialisation strategies: preliminary thoughts 

A  smart  specialisation  strategy  should  be  developed  through  a  process  of  discovery  led  by 
entrepreneurs. Nevertheless, policy makers have a central role in facilitating communication 
and  in  achieving  the  consensus  necessary  between  stakeholders  for  an  initial  (yet  flexible) 
identification of areas and sectors to prioritise; in other words in the definition of a strategy. 
They  also  have  a  crucial  role  in  'opening-up'  the  region  to  cooperation  with  other  regions 
(nationally  and  internationally).  The  design  of  the  strategy  represents  only  the  beginning  of 
the process of discovery and its ultimate success is closely linked to how systematically it is 
assessed and revised.  

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Yet  assessment  of  R&D  and  innovation  processes  in  general,  and  of  those  aspects  most 
relevant  to  policy  making  in  particular,  is  notoriously  difficult.  The  process  by  which  R&D 
and  innovation  translate  into  tangible  economic  outputs  is  characterised  by  complexity, 
context-specificity  and  uncertainty.  Important  elements  of  this  process  leave  no  measurable 
trail,  or  only  do  so  partially  and  with  a  long  delay.  These  are  important  limitations  in  our 
ability  to  measure  differences  and  trends  and  then  act  upon  them,  which  apply  equally  to 
smart  specialisation  strategies.  Nevertheless  if  strategies  are  designed  according  to  common 
principles they can be compared with each other and be subjected to peer review. 

Assessment  of  implementation  can  also  centre  on  two  facets:  the  monitoring  of  the  policy 
effort  needed  to  facilitate  regional  specialisation  and  the  monitoring  of  the  impacts  of  this 
effort in terms of significant economic outcomes.  

Policy efforts 

It is important to assess the consistency of public support for the knowledge economy with a 
region's smart specialisation strategy. Regions can develop and use, inter alia,, the following 
monitoring and evaluation tools: 

•  Indicators of alignment of regional public R&D, skills generation and industrial structure. 
•  Statistical  identification  of  related  variety137  to  direct  public  resources  to  those  areas, 

sectors and skills with the greatest potential for regional growth. 

Impacts 

The  impact  of  the  strategy  can  be  assessed  by  monitoring  structural  change  and  economic 
impact. Taking into account the inter-complementary relationship between structural change 
and  economic  impact,  the  two  dimensions  are  both  means  to  an  end  as  well  as  ends  in 
themselves. 

•  Structural  change:  Monitoring  means  for  changing  industrial  structure,  and  patterns  of 
cooperation as well as the structure of science and technology, including specialisation and 
proximity to the GPT/KET framework identified need to be developed.  

•  Economic impact: These can include a range of indicators, appropriately adjusted to the 
regional context, measuring economic impact in terms of job creation, skill levels and job 
profiles,  the  emergence  of  clusters  and  the  creation  of  new  companies  in  knowledge-
intensive sectors. 

4.5. 

A Smart Specialisation Platform 

Some  Member  States  and  regions  are  well  advanced  with  the  development,  and  even 
implementation, of smart specialisation strategies. Other regions may wish to share the know-
how obtained and some regions may see a need to adjust and up-date their strategies with a 
fresh approach. This is obviously for Member States and regions to determine. However as it 
is the basis for the success of the Europe 2020 strategy, in particular the smart and sustainable 
growth flagships, and as the ever tighter constraint on public finances requires quick action to 
enhance  the  economic  impact  of  public  investment,  the  Commission  puts  its  arsenal  of 
support measures at the disposal of national and regional policy-makers.  

137 

Frenken,  K.,  Van  Oort,  F.  and  Verburg,  T.  (2007),  "Related  variety,  unrelated  variety  and  regional 
economic growth", Regional Studies, Vol. 41, pp. 685-697 

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It  plans  to  launch  a  "Smart  Specialisation  Platform",  for  national  and  regional  innovation 
policy  makers  to  provide  assistance  for  the  development  and  review  of  smart  specialisation 
strategies.  

This will bring together the relevant EU funding programmes and policy support activities in 
research, regional, enterprise, innovation and education policies.  

It will also bring together expertise from research centres, regional authorities, businesses and 
Commission  services, existing platforms and projects so as to help identify needs, strengths 
and opportunities. 

This  platform  will  collaborate  closely  with  the  CIP-funded  open  “European  Cluster 
Cooperation  Forum”  to  be  established  under  the  European  Cluster  Observatory138  in  2011. 
Building  upon  the  policy  cooperation  of  the  European  Cluster  Alliance  and  taking  into 
account the discussions of the informal Competitiveness Council of July 2010, this measure 
will allow policy makers to share the experience on cluster policies and evaluation practices 
from national and regional initiatives. 

. 

REGIO 

RTD 

ENTR 

Data material & analysis  

Expertise  & 
assistance 

technical 

and 

studies 

•  Ex-ante 
analysis 
Ex-post  evaluations  2000-
2006 
Thematic  Evaluations  2007-
2013  
• Other studies 
• ESPON studies 
•  RfEC  good  practice  case 
studies 
•  Regional  key  figures  on 
R&D 
• ERAWATCH  
•  "Socio-economic  Sciences 
and Humanities" projects  
•  Data 
existing 
infrastructure landscape 
• JRC studies 
• 
Innovation 
Regional 
Monitor  (hub  for  data  on 
regional innovation policies ; 
web-portal functions …) 
• 
European 
Observatory  
• Sectoral Innovation Watch 

from  ESFRI  on 
research 

Cluster 

• RFEC conferences 
RegioStars awards 

•  Contacts  with 
regional 
research  policy  makers  via 
existing  FP7-funded  networks 
and platforms 
• Access to R&D expertise via 
NCP network 
• Research Potential projects 
•  Conferences  and  expert 
workshops 

•  Contacts  with 
regional 
innovation  policy  makers  via 
CIP-funded 
existing 
and 
innovation 
platforms139 
•  Access  to  innovation  and 
support  providers' 
business 

networks 

learning 

Platforms  for  trans-national 
policy 
& 
cooperation 
Fast  Track  Networks  of  the 
RFEC initiative 

• Regions of Knowledge  
• ERA-Nets 

European 

• 
Cooperation Forum 
• European Cluster Alliance 

Cluster 

138 
139 

140 

www.clusterobservatory.eu  
www.proinno-europe.eu/policy-cooperation; 
http://ec.europa.eu/enterprise/policies/innovation/policy/public-procurement/index_en.htm#h2-
networks  
www.europe-innova.eu ; www.enterprise-europe-network.ec.europa.eu  

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Study 

Policy 

Innovation 

• 
Regional 
Scoreboard + EIS 
• 
Innovation 
TrendChart 
• studies (available budget in 
2011: some 200.000) 
• 
culture's 
on 
contribution  to  regional  and 
local development, including 
a pedagogical tool 
•  Study  on  the  European 
Capitals  of  Culture  (ECoCs) 
and annual evaluations of the 
ECoCs 
•  Study  on  the  economy  of 
culture 
   Study 
the 
entrepreneurial dimension of 
the  Cultural  and  Creative 
industries 

on 

expertise  via  the  EEN  and 
other CIP-funded networks140 
•  Conferences  and  expert 
workshops  (available  budget 
in 2011: some 200.000) 
• … 

•  Conferences  and  expert 
workshops 

•  Potentially141,  a  working 
group of Member State experts 
to 
working  on  how  best 
integrated 
an 
promote 
approach to culture in regional 
and local development. 

groupings 
analysis 
Policy 
evaluating 
impact  of 
the 
cultural  policies  at  national, 
regional or local levels142 

MAPPING REGIONAL INNOVATION 

EAC 

. 

5. 

A synthetic indicator of regional innovation potential which takes account of several key 
aspects  of  the  innovation  process  is  developed  here,  including  such  aspects  as  R&D 
expenditure, patents, academic publications and the share of human resources in science and 
technology  to  capture  the  innovative  capacity  of  a  region.  The  absorption  capacity  is 
measured  by  the  education  level  of  the  population,  lifelong  learning  and  the  share  of 
employment in knowledge intensive services. The capacity of the region to participate in the 
diffusion  of  innovation  is  based  on  motorway  and  railway  density,  access  to  flights,  the 
distance of the population to universities, the share of high tech employment and the share of 
households with broadband access.  

The  map  shows  six  types  of  region,  ranging  from  strong  generators  of  knowledge  to  weak 
absorbers and diffusers.  

The  first  type  'strong  generators'  is  mostly  made  up  of  the  highly  developed  regions  of  the 
North-Western EU Member States. These regions are close to the world technology frontier 
and  their  growth  process  generally  hinges  on  innovation  and  R&D  as  well  as  on  the 
accumulation of human capital with a view to move the technology frontier outwards. 

The 'intermediate performers' broadly correspond to the moderately developed regions of the 
EU.  These  regions  are  catching  up  on  the  first  group  through  a  process  of  technology 
absorption.  However,  such  a  process  requires  high  levels  of  human  capital  and  the  main 

141 

142 

Depending  on  formal  adoption  of  the  Work  Plan  for  Culture  from  2011  onwards,  due  in  November 
2010. 
http://ec.europa.eu/culture/our-programmes-and-actions/doc2011_en.htm  

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challenge for these regions is to reduce the gap with the first group in terms of the education 
level of the workforce.143  

The  two  groups  'weak  absorbers'  and  'weak  diffusers'  are  mostly  in  Central  and  Eastern 
Europe. Absorption is mainly reflected in the education level of the workforce, the extent of 
life  long  learning  and  the  share  of  employment  in  knowledge-intensive  services.  For  these 
regions  where  the  level  of  education  is  often  relatively  high,  the  main  limiting  factor  is  not 
human capital but rather the low endowment of infrastructure and the quality of the business 
environment,  though  factors  like  the  quality  of  the  education  system  or  the  links  of  the 
universities with businesses also need to be tackled through policy action. 

Diffusion  largely  depends  on  factor  mobility,  access  to  broadband,  employment  in  high-tech 
activities,  international  trade  and  foreign  investment.  When  these  are  at  a  developed  enough 
level, the strengthening of human capital usually needs to be included in the priorities. 

The  regions  in  the  worst  situation  are  those  which  are  both  'weak  absorbers’  and  ‘weak 
diffusers'. This group includes Central and Eastern European regions but also some regions in 
the southern European countries. 

143 

DG  Regio  Study  2010:  R.  Wintjes,  H.  Hollanders,  "The  regional  impact  of  technological  change  in 
2020".  

EN 

50 

   EN 

                                                 
Map 4 Regional Innovation potential – synthetic indicator 

Different potentials require different policy-mixes 

Such diversity implies that there is scope for a regional approach to innovation.  Indeed, the 
innovation  process  has  a  strong  local  dimension.  Knowledge  includes  an  important  tacit 
component  that  cannot  be  easily  codified  and  therefore  requires  direct  interaction  between 
actors in the innovation process.  

The geography of innovation has also changed in the last few years, with a less well defined 
and more complex division of labour across cities, regions and countries. Lack of risk capital 
and  the  limited  production,  transfer  and  use  of  knowledge  constitute  key  barriers  to 

EN 

51 

   EN 

 
innovation  along  with  limited  cross-sectoral  collaboration,  lack  of  entrepreneurship  and  the 
long-term negative effects of the financial crisis on R&D funding.144  

Regional diversity in development pathways and models of innovation calls for differentiated 
policies  adapted  to  specific  regional  circumstances.  Differentiated  policies  can  address  the 
wide  range  of  determinants  of  innovation  performance  across  the  EU.  Integrated  policy 
approaches can target both innovation potential and broader social and economic framework 
conditions, particularly in lagging areas. Addressing the weaker innovation systems is vital to 
enhancing overall economic performance. 

In  order  to  achieve  the  Europe  2020  Strategy  objectives  of  developing  knowledge-based 
economies, there is a need to assess their potential for innovation in order to identify the best 
policy mix to overcome the challenges they face.  

The  ex-post  evaluations  of  the  2000-2006  ERDF  programmes  recommended  that  in 
Convergence regions, the ERDF should focus first  and foremost on  technology transfer and 
building  capacity  rather  than  into  leading  edge  research.  For  example,  building  research 
centres  in  regions  where  the  SMEs  have  limited  absorption  capacity  is  likely  to  be  less 
effective than setting up innovation services for companies or more generally improving the 
business environment.  

144 

Wintjes Hollanders, 2010 

EN 

52 

   EN 

                                                 
6. 

QUANTIFYING COHESION POLICY SUPPORT TO INNOVATION 

The Community strategic guidelines on cohesion policy (2007-2013), adopted by the Council, 
stress that to promote sustainable development and strengthen competitiveness it is essential 
to  concentrate  resources  on  research  and  innovation  (RTDI),  entrepreneurship,  the 
information society and the training of workers. 

In  2007,  the  Commission  published  a  Staff  Working  Document  'Regions  delivering 
innovation through Cohesion Policy'145 which produced an estimate, based on this approach, 
the  Operational  Programmes  and 
of 
communicated  to  the  Commission  by  the  Member  States  on  the  base  of  a  list  of  categories 
included in the Implementing Regulation for the Structural Funds.146 

the  planned 

implemented 

investment 

through 

In 2010, the 'Strategic report 2010 on the implementation of the 2007-2013' programmes has 
made an overall assessment of the rate of advancement of these initial plans. This assessment 
shows that, while there has been investment, there are still large amounts of funding available 
to be used. 

. 

6.1. 

Innovation  

ERDF and ESF support for innovation (total) by Objective 

Objective 

Convergence 

Regional Competitiveness 
and Employment 

European Territorial 
Cooperation 

TOTAL 

. 

Planned EU 
Investment 
million € 

Allocated to 
Selected projects 
million € 

Allocation Rate % 

61.289

21.887

2.075

85.252

16.291

26,6% 

5.446

24,9% 

481

23,2% 

22.217

26,1% 

145 

146 

.SEC(2007) 1547. 
http://ec.europa.eu/regional_policy/sources/docoffic/official/communic/comm_en.htm 
Implementing  regulation  for  the  Structural  and  Cohesion  Funds  2007-2013  (EC)  No  1828/2006. 
http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/newregl0713_en.htm 

EN 

53 

   EN 

                                                 
 
ERDF and ESF support to innovation by category and groups (all objectives) 

Code 

Category 

Planned EU 
investment 
million € 

Allocated to 
selected projects 
million € 

Rate of 
Allocation 
% 

Research Technological Development Innovation 

1 

2 

3 

4 

6 

7 

9 

74 

5 

68 

11 

12 

13 

14 

15 

R&TD activities in research 
centres  

R&TD infrastructure and centres 
of competence in a specific 
technology 

Technology transfer and 
improvement of cooperation 
networks ... 

Assistance to R&TD, particularly 
in SMEs (including access to 
R&TD services in research 
centres) 

Assistance to SMEs for the 
promotion of environmentally-
friendly products and production 
processes (...) 

Investment in firms directly 
linked to research and 
innovation (...) 

Other measures to stimulate 
research and innovation and 
entrepreneurship in SMEs 

Developing human potential in 
the field of research and 
innovation, in particular through 
post-graduate studies ... 

5.809 

9.845 

1.973 

34,0% 

3.157 

32,1% 

5.321 

1.011 

19,0% 

5.853 

1.248 

21,3% 

2.479 

485 

19,6% 

8.927 

2.929 

32,8% 

6.820 

2.536 

37,2% 

4.934 

843 

17,1% 

Advanced support services for 
firms and groups of firms 

Support for self-employment 
and business start-up 

Information and communication 
technologies (...) 

Information and communication 
technologies (TEN-ICT) 

Services and applications for 
citizens (e-health, e-
government, e-learning, e-
inclusion, etc.) 

Services and applications for 
SMEs (e-commerce, education 
and training, networking, etc.) 

Other measures for improving 
access to and efficient use of 
ICT by SMEs  

Entrepreneurship 

5.158 

3.212 

1.728 

33,5% 

491 

15,3% 

Innovation ICT 

3.476 

517 

1.151 

33,1% 

179 

34,5% 

5.216 

1.008 

19,3% 

2.050 

166 

8,1% 

1.477 

352 

23,8% 

EN 

54 

   EN 

62 

63 

64 

Development of life-long 
learning systems and strategies 
in firms; training and services 
for employees ... 

Design and dissemination of 
innovative and more productive 
ways of organising work 

Development of special services 
for employment, training and 
support in connection with 
restructuring of sectors ...  

Human Capital 

9.645 

2.254 

23,4% 

1.751 

158 

9,0% 

2.758 

547 

19,8% 

TOTAL  

85.252 

22.217 

26,1% 

The relative shares allocated differ between Member States depending on the total amount of 
funds available, national needs and priorities set by each Member State. 

6.2. 

SMEs and other businesses 

The support to SMEs and other businesses can also be estimated in a similar form. Categories 
included  here  are  a  subset  of  those  indicated  above  with  one  important  exception.  The 
category 08 'Other investment in firms', which accounts for a significant amount of funding 
has been excluded from the innovation group because it can be argued that it is not directly 
targeted at innovation. 

ERDF (mainly) support directly targeted to SMEs by category 

SME 

Category 

3 

4 

6 

9 

14 

15 

68 

Technology transfer and improvement of 
cooperation networks ... 

Assistance to R&TD, particularly in SMEs 
(including access to R&TD services in research 
centres) 

Assistance to SMEs for the promotion of 
environmentally-friendly products and 
production processes (...) 

Other measures to stimulate research and 
innovation and entrepreneurship in SMEs  

Services and applications for SMEs (e-
commerce, education and training, networking, 
etc.) 

Other measures for improving access to and 
efficient use of ICT by SMEs  

Support for self-employment and business start-
up 

Planned EU 
investment 
million € 

Allocated to 
selected 
projects 
million € 

Rate of 
Allocation 
% 

5.321 

1.011 

19,0% 

5.853 

1.248 

21,3% 

2.479 

485 

19,6% 

6.820 

2.536 

37,2% 

2.050 

166 

8,1% 

1.477 

3.212 

352 

23,8% 

491 

15,3% 

TOTAL 

27.213

6.289 

23,10% 

. 

EN 

55 

   EN 

 
  
  
ERDF  (mainly)  support  to  businesses  not  related  to  size,  of  which  a  proportion  also 
benefits SMEs by category 

Planned EU 
investment 
million € 

Allocated to 
selected 
projects 
million € 

Rate of 
Allocation 
% 

5.158

8.927

14.096

28.181

1.728 

33,5% 

2.929 

32,8% 

5.671 

40,2% 

10.328 

36,50% 

Code 

Category 

5 

7 

8 * 

Advanced support services for firms and 
groups of firms 

Investment in firms directly linked to 
research and innovation (...) 

Other investment in firms  

TOTAL 

* Not included in innovation 

. 

ESF support related to businesses by category 

Category 

Development of life-long learning systems and 
strategies in firms; training and services for 
employees ... 

Design and dissemination of innovative and 
more productive ways of organising work 

Development of special services for 
employment, training and support in 
connection with restructuring of sectors ...  

Planned EU 
investment 
million € 

Allocated to 
selected 
projects 
million € 

Rate of 
Allocation 
% 

9.645 

2.254 

23,4% 

1.751 

158 

9,0% 

2.758 

547 

19,8% 

TOTAL 

14.155 

2.960 

20,90% 

Code 

62 

63 

64 

. 

EN 

56 

   EN 

  
  
6.3. 

ICT 

It is also possible to estimate the total amount of support to ICT, the first category of which 
(10:  'Telephone  infrastructure  (including  broadband  networks)'  was  also  excluded  from  the 
innovation total along with other types of infrastructure. 

ERDF (mainly) support for ICT by category 

Code 

10 * 

11 

12 

13 

14 

15 

Category 

Telephone infrastructures (including broadband 
networks) 

Information and communication technologies 
(...) 

Information and communication technologies 
(TEN-ICT) 

Planned EU 
investment 
million € 

Allocated to 
selected 
projects 
million € 

Rate of 
Allocation 
% 

2.306 

418 

18,1% 

3.476 

1.151 

33,1% 

517 

179 

34,5% 

Services and applications for citizens (e-health, 
e-government, e-learning, e-inclusion, etc.) 

5.216 

1.008 

19,3% 

Services and applications for SMEs (e-
commerce, education and training, networking, 
etc.) 

Other measures for improving access to and 
efficient use of ICT by SMEs  

2.050 

166 

8,1% 

1.477 

352 

23,8% 

TOTAL  

15.042

3.274 

21,8% 

. 

* Not included in innovation 

EN 

57 

   EN