On the Basque Model

of Regional
Specialisation
1. REGIONAL, NATIONAL AND
INTERNATIONAL POLICIES THAT
HAVE BEEN DECISIVE FOR
PRIORITISATION OF DOMAINS

INNOVATING PUBLIC POLICY

 1.1. An Advanced Industrial Area
.. High density of population and urban profile
-2.162.944 inhabitants
-7,234 km2 (299 inhabitants/km2)
-67% of inhabitants in the three main cities

.. High aging rate with low immigration flows

.. Above the Spanish and EU27 media in GDP (136%)

.. Comparative good behavior of the labor market (10,7%)

but with occupancy rate (68,5%) slightly below the
European media

INNOVATING PUBLIC POLICY

 1.1. An Advanced Industrial Area
.. Strong weight of the industrial sector as a distinctive
element

.. Very focused in industries in low-medium technological

intensity

.. High degree of external openness: 50% of sales out of the

country.

.. Business fabric mainly composed by small businesses with

some enterprises being leaders in their niche market.

.. High percentage of population with college education but

with a relatively small number of third degree graduates.
INNOVATING PUBLIC POLICY
 1.1. An Advanced Industrial Area

.. Much to be done about English language

.. Low levels of poverty and good position in terms of

human development index

.. Basque society has a high level of satisfaction with

life

.. Higher level of CO2 emissions and minor role of

renewable energy

INNOVATING PUBLIC POLICY

 1.2. Priority setting in the
governance system
.. During the 30 years of Basque political autonomy,
sectoral prioritization criteria have kept evolving
over time.

.. During the first two decades, the main goal was

keeping alive the regional industrial fabric. This led
to the amortization of heavy industry (steel,
shipbuilding) as well as to the defense of the
whole fabric of SMEs in other sectors.

INNOVATING PUBLIC POLICY

 1.2. Priority setting in the
governance system
.. During the last decade, the basic approach has
been to raise the technological capacity and
innovation of Basque industry. With this
approach, sectoral policies have been defined
based on the need to promote new areas of high
added value.

INNOVATING PUBLIC POLICY

 1.3. Key Policy Instruments
and Investments
.. The basic tools of sectoral policies in the Basque
Country have been mainly determined by internal
strategic analysis of the region, rather than S3
strategies.

.. The amortization of traditional heavy industry was

mainly managed by the Central Government.

.. On the other hand, both the defense during the 80s and
90s of the industrial sectors in the country -other than
heavy industry- and the creation and promotion of the
network of technological centers were developed under
the leadership of the Basque Government.
INNOVATING PUBLIC POLICY
 1.3. Key Policy Instruments
and Investments

.. Both the network of technological centers and the

coordinated action of Basque and Provincial
governments have been essential for the promotion of
applied research.

.. The university scientific equipment is high but somewhat

uncoordinated with the Basque business reality. This is
one of the key factors that led to the changing of focus
towards new industry sectors of high added value.

INNOVATING PUBLIC POLICY

 1.3. Key Policy Instruments
and Investments

.. Entrepreneurship: Very efficient fabric of small

businesses. In a socially and politically difficult
context, and with a low technological
equipment, these businessmen have been
quite efficient in the management of SMEs

INNOVATING PUBLIC POLICY

 1.4. Coordination activities to
support S3
.. In the future, we are going to need a new socio-political
"consensus" in the Basque Country.

.. In particular, we must ensure that the provincial industrial

policies are consistent with the policies of the Basque
government.

.. In particular, alignment of tax policy –in the hands of the 3

provinces- with sectoral policy objectives is essential.

.. New focus on social and environmental requirements,

necessary for this new “consensus”.
INNOVATING PUBLIC POLICY
 1.5. Measuring the effects and
impacts
.. Industrial and I+D+I plans (PCTI 2015, clusters
strategies) set clear and measurable sectoral goals,
tools and resources.

.. But the general objectives are mainly established

and measured on results, regardless of the
necessary assessment of costs from a comparative
perspective. This makes impossible a true
evaluation of the efficiency of the policies
developed, except on an intuitive or approximate
level.

INNOVATING PUBLIC POLICY

2. FUTURE DEVELOPMENT GRAS-
PING THE OPPORTUNITIES FOR
SMART SPECIALISATION

INNOVATING PUBLIC POLICY

 2.1. Current status of the specialisation
and prioritisation in the region

.. The most important factor for the renewal of the

precedent sectoral "diversification" strategies will
probably be the widespread awareness of the
dubious results of these strategies.

.. So, new government plans (2010 and 2011) has not

opted ​for aggressive goals in favor of “new” sectors.
Instead, the established new goals are mainly
linked to the development of activities that are
complementary to the existing ones.

INNOVATING PUBLIC POLICY

 2.2. Ambitions, strategic plans and
catalysts in the innovation eco-system
.. Basic Objectives of industrial and innovation policy:

- Address the crisis in international demand

- Raise the level of technological equipment / boost

basic-oriented research

Strategic Plans:

- Business Competitiveness Plan 2010-2013

- Science, Technology and Innovation Plan 2015
- Strategies of clusters, universities and technology
centers.
INNOVATING PUBLIC POLICY
 2.2. Ambitions, strategic plans and
catalysts in the innovation eco-system
.. Institutional aspects of sectoral policies can be essential
(relationship among public institutions, university policy,
...)

Some key issues:

.. Loss of strength of the previous policy of "diversification"

into new sectors of high added value.

.. Possible consolidation of the biotechnology sector

.. Nanotechnology: From sectoral to horizontal policy, as a

technology tobe promoted in different industrial sectors.
INNOVATING PUBLIC POLICY
 2.2. Ambitions, strategic plans and
catalysts in the innovation eco-system
Some key issues:

.. New "sectors” policy: Refocusing existing industries

rather than promoting new ones. As a consequence:
Promotion of development projects of such new
activities, like renewable energy or electric vehicle.

.. Continuation of the policy of clustering as a tool both for

strategic analysis and for development and
implementation of strategies.

INNOVATING PUBLIC POLICY

 2.6. Bottlenecks and threats for
the innovation eco-system

.. Political fragmentation will be a threat for leadership and

consensus during the next years.

.. Risk of insufficient coordination between public institutions

.. Difficult situation in Spain may have direct effects in Basque

industry: demand / financial sector.

.. The challenge of increasing basic-oriented research –or its

institutional challenges- has not been addressed. Need for
adequate consensus for this purpose.

.. University policy on need of improving efficiency and focus

INNOVATING PUBLIC POLICY

3. LESSONS LEARNED AND CONCLUSIONS
FOR POLICY

INNOVATING PUBLIC POLICY

 3.1. Decisive drivers
for the eco-system
.. Strong budgetary efforts of the Basque
Government.

.. Creating an efficient network of technology

centers

.. High training level

.. Industrial tradition

.. Endogenous development and singular weight of

active and efficient SMEs
INNOVATING PUBLIC POLICY
 3.2. Processes, tools and
mechanisms
.. Strategy definition in the Basque Government:

- Plans for Industrial Policy (2009)

- Plans for R & D & I (2011)

.. Bottom-up strategy process (clusters)

.. Working directly with experts and universities

.. Prospective analysis

.. Involvement of the public and private actors from

the first steps of the strategy process
INNOVATING PUBLIC POLICY
 3.3. The role of RD&i policy
in multi-level governance
.. Multi-level governance is quite complicated in the
Basque Country:

a) historically difficult relations with the central

government

b) the region is divided in three “provinces” with high

powers in development policy and taxation.

.. In the field of innovation and specialisation policies,

relationships among Basque government and the
three provinces have not been particularly difficult.
INNOVATING PUBLIC POLICY
 3.3. The role of RD&i policy
in multi-level governance
.. But some structural disputes have been periodical
among Basque and Central governments.

.. Of particular relevance have been the difficulties in

relation to the transfer of resources in R & D from the
central government, which finally occurred in 2011

.. In some way, the peculiar political situation of the region

has made easier the necessary leadership and
consensus in industrial and innovation policies. In a
somehow artificial context, leadership and consensus
have been achieved for decades around the
governments led by the Basque Nationalist Party.
INNOVATING PUBLIC POLICY
 3.3. The role of RD&i policy
in multi-level governance
.. But the political context has changed during last years
and the current real plurality requires a new
consensus on industrial policy as a whole. Social and
conceptual bases of this consensus are not
necessarily complex. But an active position of the
different political groups in this regard is needed.

.. In particular, we need a political agreement on the

government funding of RD&i and on the goals to be
established for the financial resources recently
transferred in this field from the Central Government.

INNOVATING PUBLIC POLICY

 3.3. The role of RD&i policy
in multi-level governance
.. At another level, we need a more in-depth review
of sectoral policies, very especially when
assessing the efficiency of the efforts deployed in
biotechnology and nanotechnology.

.. The key aspect: not to take into account only the

results (number of new enterprises, sales, ...) but
also financial investments, expenses and
alternative options.

INNOVATING PUBLIC POLICY

 3.3. The role of RD&i policy
in multi-level governance
.. From the point of view of RD&I policy, a boost is
needed in basic-oriented research, both from the
point of view of the amount of public funds
involved and, above all, from the perspective of
institutional changes needed in the Basque
Innovation System -University- and also in the
efficiency of the management of public resources
applied to RD&i.

INNOVATING PUBLIC POLICY

On the Basque Model
of Regional
Specialisation