REGIONAL COMPETITIVENESS IN THE CONTEXT OF “NEW INDUSTRIAL POLICY” – THE CASE OF CROATIA

Abstract

The purpose of this paper is to do research on regional conditions that are most conducive to maximising the positive effects of the implementation of “New industrial policy” (policy based on Smart specialisation strategy) to regional competitiveness in Croatia. Rather than using the standard but fragmented system of counties, this small post-transition economy is first mapped into five regions following the concept of regional innovation systems (RISs). Essentially, RIS concept rests on an idea that interactions among regional agents lead to the creation of optimal innovation output, while policy based on Smart specialisation strategy in Croatia is a national policy that promotes creation of innovative products and services in five promising domains and 13 sub- thematic areas. Analysis is carried out in two steps, firstly using a data-driven approach employed in a multidimensional framework for assessing regional accessibility, absorptive capacity and diffusion of knowledge in the context of Smart specialisation strategy (S3) implementation. In the second step, the assumption of post-transition reliance on the external knowledge and technology in producing innovation output is examined via regional presence of high-technology firms, GDP per capita and international trade and investment variables and patents per 100.000 inhabitants using cluster analysis (Ward method). The results show that highly internationalised regions with higher density of hightechnology firms already produce relatively more innovation output per capita. With already favourable conditions in place, these progressive regions are most likely to reinforce their competitive advantages through the transformation of their economic structures enabled by implementation of S3.