The document summarizes the long-term regional strategy of the Basque Country from 1980 to 2020. Key aspects of the strategy included building on existing industrial and scientific strengths, focusing on strategic priorities like advanced manufacturing, and taking a collaborative approach involving businesses, universities, and government. The strategy evolved over time to emphasize inclusive competitiveness through innovation and adapted to challenges like economic transitions. It generated improved economic and social outcomes for the Basque Country like increased GDP per capita and lower poverty rates.

1. Long-term regional strategy
for inclusive competitiveness
The Basque Country case
James Wilson
2021 Cluster Conference
Ruhr University, Bochum
September 23rd 2021

2. 2
The rise in regional strategy
Industrial Policy
From ‘old’ industrial policy to
‘new’ industrial policy
(e.g. Rodrik, 2004; Bailey et al. 2015, 2018)
Innovation Policy
From ‘linear’ to ‘systemic’ to
‘transformative’ (and S3)
(e.g. Cooke & Morgan, 1998; Foray, 2018;
Schot & Steinmueller, 2018)
CONTEXT:
Importance of ‘place’ in understanding economic development
(e.g. Barca et al, 2012; Gertler, 2018)
CONVERGENCE
AROUND MORE
STRATEGIC
APPROACH
EMERGING CONTEXT:
Need to respond to societal challenges (missions and SDGs)
(e.g. Breznitz et al, 2018; Kuhlman and Rip, 2018; Mazzucato, 2019)

3. 3
Why is the Basque Country of interest?
• One of few regions to proactively and
consistently build an industry-focused
territorial strategy over several decades
• Strong trajectory of growth and
transformation since the mid-1980s
• Identified as a success case in several
international studies (Including studies
authored by OECD, Michael Porter and
Kevin Morgan)
• Today among the top regions in Europe in
both GDP per capita and in having a low
percentage of population at risk of poverty
or social exclusion
GDP per capita in the Basque Country 1980-2019
Source: Based on Alcaide (2003), De la Fuente (2017), Eustat and Ameco.

4. 4
About the Basque Country
Geo-demographic features
• Population: 2.2 million people
• Surface area: 7.235 km2
• Population density: 301 people/km2
• Municipalities: 251
Key competitiveness fundamentals
• Employment in high- & med-high- tech
manufacturing: 8.7% (rank 31)
• Employment in knowledge-intensive
services: 38.4% (rank 113)
• Employment in R&D: 2.06% (rank 21)
• R&D spending: 1.85% GDP (rank 57)
• Publications per million inhabitants:
2714 (rank 72)
• Population 15-19 in vocational
education: 64.5% (rank 23)
• Population 25-64 in continuing
education: 13% (rank 72)
• Broadband access: 91% (rank 76)
Visit the Basque Country Competitiveness
Observatory to see more indicators
Socioeconomic performance
• GDP per capita: €39.591 (PAA)
(ranked 29 / 218 EU regions)
• Poverty Risk Rate: 14.4%
(ranked 29 / 218 EU regions)
• Exports: 33% GDP
• Industry and energy: 24% GDP
* Based on 2019 data (or latest year possible), sourced from Orkestra’s Regional Competitiveness Observatory

5. 5
Key features of the Basque Territorial Strategy 1980-2008
The foundations
The 1980s
• Creation of a new regional
Administration
• Need to promote substantial industrial
restructuring in response to deep
economic crisis
The 1990s
• Strategy built around clusters
• Improve the efficiency of industry
• Foster non-R&D-based diversification
• Promote internationalization
The 2000s
• Sustained focus on innovation
• Science-driven industrial
diversification
Three distinctive sub-periods of the Basque Country’s strategy from the start of the autonomous regional
government in 1980 through to the advent of the 2008 financial crisis
• Aranguren et al. (2012), Porter et al. (2016), Valdaliso (2013, 2015)

6. 6
+1,7%
2008: 34.3%
1990: 22.8%
+8.7%
+9.1%
50%
+11.5%
2008: 46.5%
1990: 37.4%
2008: 9.1%
1990: 0.4%
2008: 1.8%
1990: 0.1%
Exports as a % of GDP
% of high
and medium-high
technology exports
% of researchers in
total employment
R&D intensity
of GDP
+1.7%
Key features of the Basque Territorial Strategy 1980-2008
The foundations

7. 7
Building sustained resilience
Basque Strategy 2008-2020
• The Basque Country was able to navigate the 2008 financial crisis
relatively successfully
• The strategy implemented in the period 2008-2020 has generated
continued improvements in economic and social outcomes
What for?
Ultimate goals of
the strategy
Who / how?
Organisations
and individuals
leading the
strategy
What?
Specialisation,
assets, targeted
actors and
instruments
3 basic questions to understand the
evolution of the territorial strategy
during this period
Research Approach: Documentary evidence, interviews
with key players and ongoing interaction with regional
stakeholders through action research projects

8. 8
What for?
Basque Strategy 2008-2020
What
for?
• GDP per capita initially fell from
€32,497 in 2008 to €30,607 in
2014 in the context of the 2008
financial crisis
• It recovered its growth and
reached €34,942 in 2019, an 8%
increase on the 2008 level
• Long-term decline in the
contribution of industry to
the economy was
stabilised at around 24%
• The proportion of the
population at risk from
poverty or social exclusion
fell to 14.4% by 2019
• The Basque country is
among the top regions in
Europe in this indicator
The focus of the strategy evolved to fit a more mature economy with a well-developed
infrastructure: inclusive competitiveness through innovation, leveraging public-private
collaboration spaces to facilitate a systemic and participative strategy
Industry
Social
Outcomes
Economic
Outcomes

9. 9
What?
Basque Strategy 2008-2020
• Companies involved in strategy through Basque Council on
Science, Technology and Innovation and S3 steering groups
• Intermediary organisations: Cluster organisations, business
associations, vocational training system, …
• Science, Technology and Innovation Network actors:
Alignment of university research with industry needs and
targeting weaknesses in non-technological innovation
through VET and KIBS
Targeted actors
• Ageing, Energy, Transport and mobility, Digital world and
Science industry identified as key markets in the 2015 Science,
Technology and Innovation Plan
• Smart Specialisation Strategy (S3) set out in 2020 Science,
Technology and Innovation Plan identified Advanced
manufacturing, Energy and Biosciences-health as strategic
priorities
Specialisation
• Investment in ICT infrastructures and high
technological-readiness levels (TRLs)
• Skills upgrading and alignment with
priorities of the Smart Specialisation
Strategy (S3)
• Address weaknesses in non-technological
innovation
• Reorganisation of Science, Technology and
Innovation Network
• Maturing of the public sector alongside
local institutionalization
Assets
What?
The specialisation, assets and
targeted actors that underly the
strategy

10. 10
What?
Basque Strategy 2008-2020
Key instruments for leveraging assets, promoting smart specialisation and targeting key actors have included:
Instruments
An action plan to align public
and private policies with the
achievement of the United
Nations’ Sustainable
Development Goals
Adoption of the Euskadi
Basque Country 2030 Agenda
Implemented through the 2015
and 2020 Science, Technology
and Innovation Plans and
supported by a range of new
governance mechanisms
A dynamic Smart
Specialisation Strategy
By supporting
cluster organisations,
local economic
development agencies,
vocational training centres
and a range of other such
intermediary institutions
Policy instruments to
strengthen public-private
cooperation

11. 11
Who / How?
Basque Strategy 2008-2020
Who / How?
Organisations and
individuals leading the
strategy
Efforts to position the
Basque Country in the
European context and to
consolidate the relationship
with neighboring regions
1. Strengthen
external governance
3. More distributed
leadership
Active participation from the
tripe helix: Business,
University and Government
4. From static to
living strategy
Continuous evaluation as a
mechanism for decision
making and learning
2. Strengthen
internal governance
New mechanisms to facilitate
inter-departmental and
inter-institutional
coordination

12. 12
Building an Entrepreneurial Discovery Process
Basque S3 (2014-2020)
Analysis of the Basque S3, based on over 60 interviews with key players at two points in time, identifies
the emergence of two levels of entrepreneurial discovery dynamics (Aranguren, Morgan & Wilson, 2021)
1. Overall governance architecture and ‘rules of the game’
• Initial framework for entrepreneurial discovery
• Led and shaped by government (top-down)
• Overseen by new institutional mechanisms and evaluation frameworks
• Critical role in providing coherence at regional level
2. Micro-processes of particularising and valorising priorities
• Emergent, heterogenous processes of entrepreneurial discovery
• Much more granularity, involving more and different actors (bottom-up)
• Associated with the emergence of distributed leadership & experimentation
• Supported by emerging evaluation processes
• Critical role in keeping the strategy alive

13. 13
STRENGTHEN EXTERNAL
GOVERNANCE
Including the
positioning of the
Basque Country in Europe
Summary
Basque Strategy 2008-2020
INCLUSIVE COMPETITIVENESS
based on innovation and participation
SPECIALISATION ASSETS ACTORS
Productive transformation from
existing industrial, scientific &
technological strengths
3 Strategic
priorities:
▪ Advanced
manufacturing
▪ Energy
▪ Biosciences-
Health
Complementary opportunity
niches and transversal areas
What?
Infrastructures for ICT and high TRLs
Education and skills ecosystem aligned
with industry needs
Reorganised STI network (including
recognition of non-technological
innovation needs)
Mature public sector & local
institutionalisation
Intermediary organisations (clusters,
public-private initiatives)
Engagement of large firms and
increased targeting of needs of SMEs
Alignment of university research with
industry needs and targeting of
weaknesses in non-technological
innovation through VETs and KIBS
What?
Who /
How?
STRENGTHEN INTERNAL
GOVERNANCE
Inter-departmental and
inter-institutional
MORE DISTRIBUTED
LEADERSHIP
Active participation from
across the triple helix
FROM A STATIC TO A
LIVING STRATEGY
Evaluation supporting as
decision-making and
learning
What
for?

14. 14
Integrating today’s big societal challenges into the regional strategy
Challenges going forward
The main challenge going forward is to integrate demographic,
energy-environmental and technological-digital transitions into the
regional strategy, in a way that creates opportunities for sustainable
economic development and wellbeing
Integrate the demand-side into policies for
investment in infrastructures
Boost the ambidexterity of firms, especially
SMEs
Strengthen the development of intermediary
and local actors
Orientate economic, scientific and technological
activities towards sustainable transitions
Enhance the collaborative governance of the
strategy
Promote public sector innovation and
social innovation
1
2
3
4
6
5
Continued exploitation
of existing economic
strengths
Learning and exploration
targeted towards new
opportunities related
to the transitions
+

15. 15
Key learnings from the Basque Case
For strategic thinking and
implementation that span
public and private
institutions
4. Policy
Capabilities
Taking calculated risks by
prioritising specific
activities and investing in
related capacities
2. Proactiveness
Mutually re-enforcing
economic and social
elements
1. Orientation
On activities where there
were already existing
strengths: deepen and
diversify
3. Focus
On the inside, involving a
wide range of stakeholders
On the outside by
progressively building
internationalisation
5. Openness

16. 16
Featured publications and resources
Download full study
• Basque Country Competitiveness Observatory
http://ow.ly/SrUy50EzOHH
• Basque Country Competitiveness Report 2020
http://ow.ly/On7650Cukvr
• Orkestra's 7 keys to the Basque Country's
resilience after the pandemic
http://ow.ly/hmnX50ExAuV
• RIS3 challenges: an analysis of the Nouvelle-
Aquitaine, Euskadi, Navarre cross-border space
http://ow.ly/Pqf050ExAwL
• Digital Economy and Society in the Basque
Country. DESI 2020 http://ow.ly/mIrD50EzOC8
• Basque Business Economic and Financial
Observatory http://ow.ly/zqVp50EzOFG
Learn more about the Basque Country
through our research and observatories:
www.orkestra.deusto.es/en

17. Thank You!
James Wilson
Email: jwilson@orkestra.deusto.es
Twitter: @jamierwilson
www.orkestra.deusto.es/en
© Orkestra - Basque Institute of Competitiveness
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