Interview with Mikel Landabaso, Director at the European Commission’s Joint Research Centre, on S3 in the Western Balkans

Smart Specialisation Strategies (S3) have taken on a growing role in shaping innovation and industrial policy across Europe, including in the Western Balkans, where countries are looking to modernise their economies and move closer to the European Union. By encouraging place-based, evidence-driven investment and stronger links between research, business and public authorities, S3 offers a practical framework for fostering competitiveness and long-term growth. In this interview, Mikel Landabaso, Director for Fair and Sustainable Economy at the European Commission’s Joint Research Centre (JRC), discusses why S3 matters for the Western Balkans, what has worked so far, where key bottlenecks remain, and how the region should prepare for the next EU budget cycle.

POLICY ANSWERS: Why are Smart Specialisation Strategies (S3) important for the Western Balkans, and how does the JRC support putting S3 into practice?

Mikel Landabaso: Smart Specialisation Strategies are important for the Western Balkans because they provide a structured, evidence-based way to modernise and diversify economies, strengthen competitiveness, and better align national development priorities with European policy frameworks. S3 helps countries move away from fragmented, ad-hoc investment decisions and instead focus resources on areas where they have realistic innovation and growth potential, based on their assets, skills, and entrepreneurial dynamics within an innovation ecosystem framework.

For the Western Balkans, S3 also plays a strategic role in EU integration. It helps align innovation, industrial, and research policies with EU cohesion policy principles and prepares administrations and ecosystems for future participation in EU funding instruments including by creating a pipeline of investment ready R&I projects.

The JRC supports S3 in the region by acting as a neutral, science-based partner, drawing lessons from previous S3 experiences throughout the EU. We provide analytical tools, methodological guidance, capacity building, and peer-learning opportunities. This includes support for data analysis, entrepreneurial discovery processes, governance design, and monitoring frameworks. Importantly, our role is not to prescribe priorities, but to help countries build robust processes that allow priorities to emerge transparently and credibly.

POLICY ANSWERS: How can S3 really change the growth model of Western Balkan economies? Can S3 help close the gap between stronger and weaker regions in the Western Balkans?

Mikel Landabaso: S3 can contribute to changing the growth model by shifting the focus from cost-based competitiveness to knowledge- and innovation-driven development. It encourages stronger links and interactions between businesses, research organisations, and public authorities, which is necessary for an efficient regional and national ecosystem. It also promotes investment in higher-value activities rather than relying solely on traditional sectors or low-cost labour.

In this sense, S3 is not about picking winners, but about building efficient ecosystems that enable learning, upgrading, and diversification over time, building on national and regional diversity as a source of innovation in the EU. If implemented consistently, it can help Western Balkan economies promote innovation in their industrial fabric and better integrate into European and global value chains.

Regarding territorial disparities, S3 has the potential to reduce gaps between stronger and weaker regions, but this is not automatic. The strength of S3 lies in its place-based approach: it recognises that different regions have different development paths. By combining adequate capacity building, strong institutions, fruitful interactions amongst the different innovation actors, and targeted investments, S3 can help less-developed regions identify niche opportunities and avoid artificially imitating stronger regions without sufficient critical mass or innovation assets.

POLICY ANSWERS: What’s working well so far with S3 in the WB region?

Mikel Landabaso: One positive development is the strong political and institutional commitment we see across the region. All Western Balkan economies have engaged seriously in developing S3, often under challenging conditions, and have invested in building inter-ministerial coordination and stakeholder involvement.

Another major achievement is the embedding of S3 into national programming activities. This has strengthened inter-ministerial coordination and improved coherence between innovation policy and other policy frameworks, ensuring that S3 is not isolated but integrated into broader development strategies. This means more effective innovation related public investments capable of catalyzing private funds

POLICY ANSWERS: Are there any highlights in the S3 development or implementation that you find particularly remarkable?

Mikel Landabaso: What stands out is the potential and the willingness to learn and cooperate regionally. The Western Balkans have used S3 not only as a national policy tool, but also as a platform for regional dialogue and alignment. This is particularly important for smaller economies, where cross-border cooperation and regional value chains can be a major source of scale and resilience. In fact, one of the S3 mottos is “cooperate locally and regionally in order to promote innovation that allows you to compete globally”.

It is also remarkable that Smart Specialisation has directly contributed to the development of country-specific legal frameworks and governance settings, including when necessary, sandboxes. This, going well beyond the preparation of strategy documents, fully supports the alignment with EU standards and broader EU integration processes.

POLICY ANSWERS: Where do you see the main bottlenecks, and what would you advise governments to focus on?

Mikel Landabaso: The main bottlenecks are less about strategy design and more about implementation capacity. The final test for an S3 strategy is the quality and effect of the new innovation project that it funds.

In particular, limited private sector engagement, lack of engagement between universities and science with private firms such as SMEs, and skills mismatches continue to constrain innovation and economic upgrading.

Despite progress in stakeholder dialogue, many firms – especially SMEs – still face barriers to sustained participation, and incentives to engage remain weak.

At the same time, education, university research, and training systems are often not sufficiently aligned with emerging S3 priority areas, limiting the availability of relevant technical and innovation-related skills.

Governments should therefore focus on:

• creating better conditions for meaningful and sustained private sector participation, including clearer links between S3 priorities and funding instruments, so that public funds actually catalyze private R&I investments.
• aligning skills development with S3 priorities and labour market needs, particularly at regional and local level, with special emphasis on AI upskilling.
• strengthening the capacity to implement, monitor, and adjust policy mixes in a coherent and coordinated manner.

Smart Specialisation is a long-term learning process, and its credibility depends on continuity, evidence, and the ability to turn strategic priorities into tangible results, rather than on quick wins.

POLICY ANSWERS: Do you expect S3 to stay important in the next EU budget period, and what should the region prepare for?

Mikel Landabaso: The next Multiannual Financial Framework is still under discussion, and I cannot prejudge the outcome of ongoing negotiations.

That said, stakeholder participation and evidence will remain critical ingredients for effective policymaking in the field of R&I.

To face future challenges, countries need not only to exploit existing strengths, but also to unlock untapped potential, and there is no better way to do that than relying on participation and evidence.

The region should therefore continue to strengthen its analytical base, stakeholder engagement, and ability to adapt strategies to evolving priorities, while continued commitment to R&I with deep pockets by the public sector remain a priority.

Additionally, the JRC has been working since long time in ways to bring forward the ideas of Smart Specialization, developing further the concept of “place-based transformative innovation”. In parallel to the work we do around S3, we have launched a project called “Transforming Territories” where we accompany around 200 territories in their journey to use innovation as a way to address societal challenges. I would also encourage the Western Balkans economies to explore this path, which is absolutely complementary to S3 and can reinforce their Smart Specialization strategies.

POLICY ANSWERS: If you had one message for S3 teams in the region, what would it be?

Mikel Landabaso: Also following up on the main results of the S3 High Level event in Brussels last December, my key message would be: treat S3 as a living process, not a document. Its real value lies in sustained commitment, openness to evidence, and meaningful engagement with stakeholders. The JRC will continue to support you in this journey, but long-term impact ultimately depends on national ownership and continued strategic focus.

Furthermore, do not hesitate to experiment beyond S3, by exploring transformative innovation and in particular, the JRC’s “Transforming Territories” project.