The S3 strategy in the Western Balkan countries

The development of the Smart Specialization Strategy (S3) promoted by the European Commission in the Western Balkans aims to foster innovation, sustainable growth and active involvement of local communities. An update on the progress achieved so far

The Smart Specialisation Strategy  (S3) is an economic policy aimed at promoting “knowledge-based growth in EU regions and countries”. According to the European Commission, this strategy is “fundamental to achieving a smarter, more sustainable and inclusive Europe”. The focus of the S3 strategy is on research and innovation, a key sector for economic transformation. Already integrated into the 2014-2020 cohesion policy programming period, and renewed for 2021-2027, the S3 encourages each European region to “discover its competitive advantage” and invest in it to make it excellent.

The S3, in fact, is based on three pillars: localisation, prioritisation and participation. It is “a place-based approach”, which is based on the assets and resources available in a given place. Specialisation strategies must identify and concentrate resources on a limited set of thematic areas, the so-called S3 investment priorities. Furthermore, the S3 requires the involvement of stakeholders from different sectors (public sector, research, private sector and civil society), throughout the entire strategy cycle; local actors must support the definition, review, monitoring and implementation of the S3 investment priorities. This economic policy is therefore exquisitely “place-based” and that is aimed at enhancing the specific characteristics of each territory through active participation of stakeholders, in contrast to universal recipes and guidelines, which can hardly be applied to all territories with the same results.

In addition to the application of the S3 in the member states, the EU has also involved non-EU partners in this economic strategy, and in particular those aiming to join the European Union. Serbia since 2015 and, since 2017, Albania, North Macedonia and Montenegro are part of the S3. In the Smart Specialisation process carried out by these candidate countries, crucial support is provided by the Joint Research Centre (JRC) - the research centre of the European Commission, which provides “scientific evidence and technical support” to all Union policies.

In particular, the JRC has developed a Framework for the adoption of the Smart Specialisation Strategy ad hoc for the countries involved in the enlargement. This Framework is divided into a series of practical steps: the first two are for strengthening the institutional capacity (institutional capacity building), then there are two phases of “mapping” (qualitative and quantitative) of the economic, scientific and innovative potential; then the “dialogue with stakeholders”, the development of the institutional capacity for the implementation of the Strategy and the drafting of the Strategy itself.

Below is a summary of the progress of four Western Balkan countries in their approach to S3: Montenegro, Serbia, North Macedonia and Albania.

Montenegro  is the country that stands out most for a good path of preparation and adoption of S3. In 2017, the Ministry of Science of Montenegro established the Working Group for the development of the Strategy with the assistance of the JRC and in 2019 adopted the Strategy with the positive opinion of the European Commission. Since then, Montenegro has established the Council for Innovation and Smart Specialization, which is entrusted with the implementation of the S3. Following the mapping and stakeholder dialogue, the economic priority areas identified were: 1) renewable energy sources and energy efficiency, 2) sustainable agriculture and food value chain, 3) advanced materials and sustainable technologies, 4) sustainable tourism and health tourism and 5) Information and Communication Technologies (ICT) (as a horizontal dimension providing business and technological support to other priority areas).

Serbia  was the first country in the Western Balkans to register on the S3 Platform , in November 2015. The Ministry of Education, Science and Technological Development created the Inter-ministerial Working Group for the Development of S3. In April 2021, the country adopted the S3 Strategy. The mapping of Serbia's economic and innovation potential was carried out on a regional basis, with the following specialisations: 1) Belgrade: computer programming and ICT, R&D and technical consultancy, creative economy and monetary intermediation; 2) Vojvodina: automotive industry, agricultural economy (including processing industries), petrochemical industry, plastic industry; 3) Šumadija and Western Serbia: agro/garden/forestry-pastoral economy (including processing industries), automotive industry, textile industry, plastic industry, metallurgical industry; 4) Southern and Eastern Serbia: agro-horticultural economy (including processing industries), textile industry, rubber industry, electrical engineering.

North Macedonia  is in the final phase of the accession process to the S3 Strategy, and 2024 should be the year in which, having received approval from the JRC and the European Commission, it will be able to move to the implementation phase. In the mapping phase, the priority areas identified were the industries related to "Smart agriculture and higher value-added foods; Information and communication technologies (ICT); Electromechanical industry - Industry 4.0; Sustainable materials and smart buildings". Two "horizontal" themes were also identified as priorities: Energy for the future and Tourism.

Finally, Albania , despite having started the process of designing its S3 in 2017, has not yet been able to move to the implementation phase. Currently, according to the JRC, Albania is in the penultimate phase, that of designing the monitoring, implementation and financing system. The priority areas identified by the Albanian S3 development team are: Agriculture, fisheries and forestry; Manufacturing; Energy; Tourism; Information and communication technologies (ICT); Business process outsourcing (digital services).

In conclusion, Montenegro and Serbia are the two countries that have joined and completed the accession process to S3 first, with the final goal of improving their economic performance and integrating into the priorities and market of the European Union. The two countries are therefore considered two models in the region. North Macedonia is in the process of finalising the design of the Strategy and 2024 should be the year for the country to move to implementation. Albania, on the other hand, is the most delayed of the four countries and has to complete the penultimate phase of institutional capacity development for the implementation of the Strategy.

According to the JRC 2024 report, Smart Specialisation in the Western Balkans and Türkiye – Lessons learned , the slow adoption of the S3 strategy, which is already underway or about to be implemented in the four countries analysed, is due to several causes: first of all the Covid-19 pandemic, which has significantly slowed down all processes. In addition, however, there are structural causes such as the lack of adequate resources, both economic and temporal, made available by governments (with the exception of Montenegro, which according to the European Commission's assessments has instead invested significantly), uncertain internal political situations and the lack, at least in the initial phases, of knowledge and experience.

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This publication has been produced within the project "EU Cohesion Policy Programming: Chapter 22 Exchange Programme in Albania and North Macedonia", financed by the CEI Fund  of the European Bank for Reconstruction and Development (EBRD) with the contribution of Italy. The CEI Fund is in no way responsible for the information or views expressed within the framework of the project. The sole responsibility for the contents lies with OBC Transeuropa