Abstract: With the rise of the Smart Specialisation (RIS3) concept, concentrating knowledge resources and linking them to a limited number of priority economic activities has become an important concept in the R&D, innovation, and cohesion policies in the European Union. We conclude from the analysis of economic performance and effectiveness of the prior higher education, R&D and innovation policies in selected European small economies and theory that several crucial issues should be considered in translating the RIS3 into effective strategies.

RIS3 was born to inform R&D policy making, and it emphasises predominantly R&D based technological innovation. Yet, it is not sufficient to focus solely on the contribution of R&D to the upgrading of existing industry, when economic cohesion and structural change in industry is sought. Development of an effective RIS3 calls for, especially in the EU cohesion economies, substantial efforts to strengthen higher education, R&D job creation, and capability building in future paradigm leading high-­‐tech areas in particular. The role of foreign direct investments and relocation of industry in structural change should also be considered carefully. Finally, proper loop-­‐back mechanisms have to be put in place in order to foster policy learning, and introduction if necessary policy adjustments as RIS3 gets implemented.

An updated version of this paper has appeared as “Smart Specialisation in Cohesion Economies” in the Springer Journal of the Knowledge Economy.