The document discusses innovation and territorial development opportunities for rural areas. By 2050, 30% of the global population will still live in rural areas, representing billions of people with culture, resources, and potential for innovation. Smart specialization and specialization have emerged as driving forces for rural area development, posing new challenges for policymakers in EU peripheral regions. The document advocates designing smart specialization strategies as a big opportunity for EU rural communities to promote local idea and knowledge generation, exploitation, and sharing within and across regions through balanced knowledge spillovers. Governments have a dual role in fostering industrial growth and transformation.

1. Innovation & Territorial Development:
What is Left for Rural Areas?
Francesco Molinari,
mail@francescomolinari.it

2. In brief
• 70% of global population will (by 2050) congregate in
Cities, but another 30% will forever stay out of the
urbanisation process – that makes billion of people,
not necessarily passive receptors of socially oriented
services, but an immense reservoir of culture,
resources – and innovation
• What patterns of evolution shall we foresee for these
people / areas? Recently, smartness and specialisation
have appeared (jointly or independently) as driving
forces, which will be the topic of my speech today
• This poses new challenges to policy makers in EU
peripheral regions
28-06-2013 2Francesco Molinari
http://www.who.int/gho/urban_health/situation_trends/urban_population_growth_text/en/

3. 28-06-2013 3Francesco Molinari
http://smartness.it/?page_id=38
Smartness =
An Ecosystemic concept

4. Could these functions be
part of rural world too?
28-06-2013 4Francesco Molinari
http://www.nus.edu.sg/globalasiainstitute/events/speakerseries/downloads/ProfViswanadham
_Design_of_Smart_Villages.pdf

5. Could these functions be
part of rural world too?
28-06-2013 5Francesco Molinari
 A positive answer in http://www.peripheria.eu/places/palmela

6. Could these functions be
part of rural world too?
28-06-2013 6Francesco Molinari
The best, quickest and most efficient way is to
build up from the bottom. Every village has to
become a self sufficient republic. This does
not require brave resolutions. It requires
brave, corporate, intelligent work.
(Gandhiji, Harijan, 18-1-1922)
Quotedfrom
http://www.nus.edu.sg/globalasiainstitute/events/speakerseries/downloads/ProfViswanadham
_Design_of_Smart_Villages.pdf

7. Specialisation
David Ricardo, 1817:
In Portugal it is possible to produce both wine and cloth with less
labour than it would take to produce the same quantities in
England. However the relative costs of producing those two goods
are different in the two countries. In England it is very hard to
produce wine, and only moderately difficult to produce cloth. In
Portugal both are easy to produce. Therefore, while it is cheaper to
produce cloth in Portugal than England, it is cheaper still for
Portugal to produce excess wine, and trade that for English cloth.
Conversely England benefits from this trade because its cost for
producing cloth has not changed but it can now get wine at a lower
price, closer to the cost of cloth. The conclusion drawn is that each
country can gain by specializing in the good where it has
comparative advantage, and trading that good for the other.
28-06-2013 7Francesco Molinari
http://en.wikipedia.org/wiki/Comparative_advantage

8. But the world has
changed meanwhile
28-06-2013 8Francesco Molinari

9. Smart Specialisation
• Shift from a mainly sectorial to a territorial
discourse (“place matters”)
• Key concepts (after Philip Mc Cann):
– Embeddedness: what belongs to the place, to the
community (of affairs, of citizens, etc.)
– Related variety: specialised technological
diversification (comparative, rather than
competitive advantage)
– Connectivity: i.e. access to markets, global value
chains, etc.
28-06-2013 9Francesco Molinari
http://ec.europa.eu/regional_policy/cooperate/regions_for_economic_change/index_en.cfm

10. Innovation
28-06-2013 10Francesco Molinari
International
cooperation is
conducive to
all kinds of
innovation…
…BUT
regional / national
cooperation has
little or no effect,
esp. on DUL
ALL
types of
interaction
matter…
CONCLUSIONS:
1) Excessive territorial proximity may be
detrimental to innovation
2) Heterogeneity of industrial agents is
important
…BUT cooperation with
competitors can significantly
harm entrepreneurial capacity
to innovate

11. Morale
• Smart Specialisation Strategy design is a big
opportunity for EU rural communities (regions)
• Its most immediate implications are towards
promoting the generation, exploitation, and
dissemination of local ideas and knowledge
• Maximising both intra- and inter-regional knowledge
spillovers in the relevant scale domains
• In this context, “Laissez-faire” leads to underprovision
of innovation and governments need to play a dual role
in fostering industrial growth and transformation (R.
Hausmann& D. Rodrik, Economic Development as Self-
Discovery, 2003)
28-06-2013 11Francesco Molinari

12. Thanks!
• See you in person next time!
• mail@francescomolinari.it
28-06-2013 12Francesco Molinari