Regional development in a rapidly changing world – new studies from Nordregio

Innovation and smart growth are at the forefront of current development and planning challenges in an increasingly globalized world. Issues like resilience, digitalisation and smart specialisation are the order of the day, also within Nordic co-operation on regional development. How to cope with crises, ride the waves of change and find your own niche in the new digital economy is explored in a series of new research projects undertaken by Nordregio.

Innovation and growth from a regional perspective

Overall economic growth is created regionally and locally through innovation and entrepreneurship. A big part of the Nordic co-operation on regional development is therefore to support Nordic regions in developing a systematic approach to smart, sustainable development – which is also a key focus for the Nordic thematic group on innovative and resilient regions 2017-2020, one of three working groups set up to realize the ambitions of the current Nordic Co-operation Programme for Regional Development and Modernisation. The three overall themes of the working group are: the green transition, smart specialisation and digitalisation.

“Promoting innovation requires a systematic analysis of the region’s demography and labour force, opportunities for research, education and skills development, and the availability of natural resources, just to name a few,” says Birgitte Sem. She is Senior Analyst at the Norwegian Ministry of Local Government and Regional Development and chair of the group. “As an example, the circular bioeconomy is often highlighted as an opportunity to create new businesses and employment opportunities, thereby making the regions more attractive and liveable. Our aim is to provide the regions with tools and analyses to help make this happen.”

Coping with crisis and carrying on

The group is also occupied with regional resilience, which concerns the ability to react when faced with different types of crises, whether caused by political development, sudden socio-economic change, financial crisis, or major natural and environmental disasters.

“It’s important to keep in mind that crises appear in different ways in different areas, so there is no ready-made recipe for how to prepare and react,” says Sem. “Often, these crises have a negative effect on the economy and labour market, which can be addressed through e.g. education and training, whereas natural and environmental disasters might require a more technical approach. It’s important for the regions to establish systems to identify potential vulnerabilities and their main positions of strength. Building trust and dialogue between the actors at the regional level will enable them to react swiftly and effectively to any crises that might occur.”

According to Jukka Teräs, Senior Research Fellow at Nordregio, resilience is not only about reacting to crises but also about planning ahead for potential risks in order to deal with the crises that will inevitably occur in all regions at some point of time. Teräs is one of the authors of a new report, Regional economic and social resilience: An in-depth study in the Nordic countries. The report seeks to identify the main components of regional resilience, potential risks and threats facing Nordic regions, and ways in which to anticipate and react to shocks and disturbances.

“We’ve studied the ability to anticipate and react to crises of different kinds, such as big socio-economic shocks, i.e. when large companies like Nokia or Ericsson shut down their activities in an area. We also look into the so-called slow-burn, where the population declines over a longer period of time, resulting in long-term deterioration of the conditions and services in the region.”

Smart specialisation and digitalisation for the future

One of the group’s key strengths, Teräs says, is that it includes all types of regions in its research, ranging from rural and remote areas in the Nordic countries to the bigger, more populated regions and urban centres.

“It’s often said that most of the innovation capacity is found in the bigger cities, as the smaller regions lack education opportunities and people with the right skills. But the picture is not that simple. Smaller regions are often capable of achieving a more focused approach to promoting innovation, which enables change that might be more difficult to attain in the larger cities.”

Smart specialisation, another of the group’s priorities, is about just that. Originally introduced by the EU, smart specialisation is a method to identify opportunities for regional development and innovation through an analysis of demographic development, strengths and weaknesses of the labour force and local business environment. The group recently published a report on the status, characteristics and potential of smart specialisation in the Nordic region.

“Smart specialisation is first and foremost a method to define priorities and common areas of action, which is crucial if you want to establish new industries, either to complement or replace previous economic activity,” says Birgitte Sem. “Ensuring involvement from all relevant local and regional stakeholders is key to this process. If they know and trust each other, they can react faster and more effectively to the challenges they’re facing.”

In addition, the group recently published a report that investigates the potential and main challenges of digitalisation in Nordic regions. Digitalisation will play a key role in the delivery of municipal and regional services in the future, and also represents a wealth of opportunities when it comes to skills development, education, and the creation of new businesses and industries with promising growth potential. Furthermore, an initiative on skills policy is currently being prepared.

“Skills policies are important components of smart specialisation, innovation, digitalisation and regional resilience,” Sem explains. “They address issues such as unemployment, successful integration of immigrants in the labour market, as well as education and training to meet the demand for highly specialised, skilled and productive labour. The mismatch between demand and supply of skills in the labour market is an issue in many regions, albeit in different ways. Therefore, a regional approach to skills challenges and policies is necessary.”

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