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October 10, 2011 at 8:22 am

Ex-ante conditionalities for Regional Innovation Policies

As I reported last week, the European Commission has presented the proposals for the new 2014-2020 EU Regional Policy regulations, and the EU regions are currently discussing the future of the policy at the Open Days 2011. Although these drafts need to be definitively adopted by the end of 2012 by the Council and the European Parliament, this step is going to represent a milestone in a long process. On the one hand, it is the final product of a two-years-long discussion started in the high-level group reflecting on future Cohesion Policy, a support working group composed by representatives of the Commission and the Member States. On the other hand, it represents the beginning of the 2014-2020 programming phase.

A new principle is introduced. Regional Policy will not finance a Member State Programme until a set of ex-ante conditionalities, that is specific conditions and pre-requisites at the national level, are fulfilled. Ex-ante conditionalities were first envisioned by the European Commission in the framework of the debate on the reinforcement of economic governance [pdf]. Then they were reaffirmed in the Fifth Cohesion Report and further developed in a high level group document [pdf] proposed by the Commission in December 2010.

A list of the conditionalities proposed can be found in the general regulation. As for research and innovation (R&I), the conditionality is as follows: “the existence of a national and/or regional innovation strategy for smart specialisation in line with the National Reform Program, to leverage private R&I expenditure, which complies with the features of well-performing national or regional research and innovation systems”.

The focus of the conditionality is in fact only on the strategic level, that is on the existence of policy documents that, based on tools such as the technological forecasting, select a limited number of policy priorities and industry sectors to support. In particular, the proposal of the EU Commission states that Member States must:

  • define an innovation strategy for smart specialisation that is based on a SWOT analysis to concentrate resources on a limited set of R&I priorities, outlines measures to stimulate private RTD investment and contains a monitoring and review system.
  • adopt a framework outlining available budgetary resources for R&D;
  • adopt a multi-annual plan for budgeting and prioritization of investments linked to EU priorities (ESFRI).

The need for a strategic view of regional policies in general and of innovation policies in particular (see for example the much-needed smart specialization approach) is evident. But is such a strategy-focused approach enough to ensure a better policy and a better use of public money?

First, given the essential nature of R&I policy, the answer should be “no”. As stated in one the underlying papers of the Barca Report on the future of Cohesion Policy, “Putting money into a strategic R&D plan may not always lead to a new technology, or even less to the adoption of that technology”. In other words, identifying regional strengths and comparative advantages is correct, but will may not lead to the desired results.

Secondly, a strategic document that is compliant with the Commission’s requests is easy to be obtained for a regional government. For example, the regional strategy could be written by a consultancy and adopted without an active involvement of regional and local agencies, and, even worse, of stakeholders. I don’t mean that this is the usual way to define a regional strategy, but it happens.
Thirdly, a strategy defines policy objectives, priorities, targets, indicators, but does not describe exhaustively how these objectives are going to be reached. And we know that devil is in the details.
So this is why other kinds of ex-ante conditionalities should be taken into account, specifically those related to policy implementation. For example, one conditionality could focus on the specific content and characteristics of the criteria for projects selection included in the Operational Programmes. Since Operational Programmes are generally set up after the definition of the “contract” between the Member State and the European Union, this solution may be more difficult to implement – because Member States should first approve the Operational Programmes and the selection criteria and than wait for the EU money – but will ensure a tremendous improvement in the quality of selected interventions.

For example, a conditionality could be applied to the selection criteria by making sure they incorporate the results of ex-post evaluation of past interventions and learning from policy failures. The conditionality could also be leveraged to systematically introduce a multi-stage approach in funding projects. In this case, a project-level conditionality is applied both on final and intermediate results through in itinere and ex-post evaluations.

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