Smart specialisation: beyond patents

Local capabilities are regarded a key pillar of Smart Specialization policy in the EU. Regions should build on existing capabilities to develop new activities. This makes it crucial to understand how to capture and measure regional capabilities. Studies often rely on one type of capabilities, like technological capabilities based on patent data, and use that information to identify diversification potentials of regions. This implies other types of capabilities in regions are not taken up, resulting in a possible underestimation of the diversification potentials of regions. This report analyzes different capabilities to assess the diversification potentials of 292 NUTS2 European regions by using data on occupations and sectors from the EU Labour Force Survey Database. We find that regions in Europe differ in terms of capabilities. For instance, a region may score high with respect to diversification potentials in new occupations, but low on new sectors, or new technologies. This report shows how crucial it is to account for different types of diversification opportunities of regions in S3 strategies, instead of relying on one type only. Finally, we show the diversification potentials of European regions in 7 key technologies, like batteries and hydrogen.