The Smart Specialisation Strategy (S3) in Albania: A New Strategic Approach to Innovation
The Smart Specialisation Approach
In recent years, countries and regions in the European Union (EU) have developed Smart Specialisation Strategies (S3) as a new tool to promote innovation and regional development. The S3 approach, which is gaining increasing interest worldwide, is based on the specific context of each region or country and aims to identify several priority areas for regional/national economies where the impact of public investments in research, development, and innovation can be highly significant. It emphasizes the potential for cross-sectoral linkages beyond traditional industries and promotes diversification based on these linkages. Since S3 is a highly participatory process, priority areas should not be determined top-down solely by policymakers but rather through an inclusive dialogue among stakeholders in all sectors and regions, known as the Entrepreneurial Discovery Process (EDP). This includes ministries and government agencies, the private sector, academia, research institutes, and civil society.
Today, a strong focus on innovation policies is even more urgent due to the growing need to address societal challenges in the past decade.
The implementation of S3 in the Western Balkan countries should be seen in the context of the EU enlargement strategy, which offers a perspective for accession and foresees support for various policy areas, including socio-economic development.
The Process of Designing S3 in Albania
Albania initiated its S3 design process in 2016 under the responsibility of the Ministry of Education, Sports, and Youth. The decision was also linked to higher education reform, as there was a need for better cooperation between institutions of higher education (IHE) and businesses to align more closely with regional development objectives and labor market demands. A national event organized in December 2016 with the support of TAIEX brought together a large number of actors and institutions, and from roundtable discussions, an informal working group with various experts was formed. It worked towards the development of S3, which was officially adopted in 2018. In 2017, Albania registered in the Joint Research Centre (JRC) platform of the European Commission for S3, and in 2018, the informal working group with representatives from various institutions, including business and academia, was formalized by order of the Minister of Education, Sports, and Youth. More key actors joined, creating a broader group, including the Ministry of Education, Sports, and Youth, the Ministry of Finance and Economy, the National Agency for Scientific Research and Innovation, the Union of Manufacturers, the Regional Development Agency, IHEs, the Municipality of Tirana, etc. The S3 team also established the National Analytical Team, with representatives from various institutions and experts such as INSTAT, the Department of Statistics at the University of Tirana, AIDA, the General Directorate of Industrial Property, etc. Several activities were organized for the preparation of S3 and training seminars for capacity building.
Meanwhile, S3 became part of the regional agenda of the Western Balkans 6 (WB6), as part of the Smart Growth pillar in the MAP REA (led by the Ministry of Finance and Economy), as well as part of two chapters within Albania's European integration. To assist the Western Balkan economies in their respective S3 design processes, the JRC of the EU has developed an S3 Framework that includes all the steps to be followed until the final drafting of the strategic document and can be used as a guide.
The Albanian S3 team developed an S3 Guide based on the JRC Framework, and so far, steps have been taken to develop a Strategy at the national level while keeping a regional perspective, focusing on the potential of Albania's 12 regions.
Identification of Priority Areas for S3 in Albania
Albania completed the initial steps of context analysis, following the S3 Framework, through quantitative and qualitative mapping of the country's economic, innovative, scientific, and technological potential. The respective reports have carried out the initial identification of those economic and productive areas that could be considered potentially in the selection of priority areas for S3.
Two studies have identified preliminary S3 priorities:
➢ (NACE A) – Agriculture, Forestry and Fishing
- A01.6 - Support for activities related to agriculture and post-harvest crop activities
- A03.21 - Sea aquaculture
- A03.1 - Fishing
➢ (NACE C) – Manifacturing
- C10.8 – Production of other food products
- C24.5 - Casting of metals
➢ (NACE D) – Energy
- D35.1 - Production, transmission, and distribution of electrical energy
➢ (NACE I) – Accommodation and supporting service activities
- I55.9 - Other accommodations
➢ (NACE J) – Information and Communication
- J61.3 - Satellite telecommunications activities
- J62.09 - Other information technology activities
➢ (NACE N) – Administrative and support service activities
- N82.2 - Call center activities
- N82.9 - Other business support service activities
From a qualitative analysis, the following cross-sectoral areas can be considered for further assessment. For this purpose, the discussion within the EDP will be able to confirm, integrate, and specify the new pathways - dynamics of creation and targeted interventions and investments:
➢ Blue Economy
➢ Healthy Food
➢ Renewable resources energy
➢ Extended BPO
This report mentions that regarding opportunities coming from abroad, the functioning of AIDA, the regulatory and programmatic system, as well as specific programs (such as those for the diaspora), may represent a starting point with great potential, to be accompanied by swift and effective implementation.
The full report on the mapping can be found at the following link:
The next step: Entrepreneurial Discovery Process (EDP)
The concept of EDP emphasizes the importance of involving key players and potential innovators in determining priority areas. EDP acknowledges that regional or national governments do not possess inherent wisdom or ex-ante knowledge of future priorities. This phase follows the mapping phase and aims to delve into the sectors and subsectors identified earlier and discuss the needs and tools (policies, measures, and financial ones) that should be undertaken to support innovation. It also aims to explore and further define the sectors that, based on consultations, may result in less or more interest from the interested parties compared to the initially identified sectors. EDP will be organized through working groups across the country with the participation of experts. The working groups will include interested parties from the quadruple helix - policymakers, academics, entrepreneurs, and civil society, and will identify challenges and needs, as well as innovative activities and inform the government. This consultative and participatory process is what primarily distinguishes S3 from traditional industrial and innovation policies. The data/findings from the EDP working groups will complement the results obtained from the mapping phase and will be further developed for the final S3 formulation.
During the EDP in Albania, various types of events have been planned: national events, sectoral workshops, roundtable discussions, cross-border bilateral meetings, interviews, etc. National S3 experts will facilitate the discussion and assist in data collection. With the expertise provided by the JRC, the first phase of EDP has been completed: the methodology and schedule of activities (about 30 national activities, 5 bilateral ones with neighboring countries). The JRC identified experts who will be involved in organizing activities during the EDP phase and preparing reports on the events to assist in the preparation of a final report for the EDP phase.
The EDP phase will be followed by the preparation and design phase of the monitoring, implementation, and financing system, after which, based on the findings from various phases, the S3 document will be prepared.
Interinstitutional Coordination and Stakeholders Involved
Through the Prime Minister's decree, an Interministerial Committee has been established, tasked with monitoring, drafting, and implementing the S3 Strategy, led by Deputy Prime Minister, Ms. Belinda Balluku.
Among the main duties of the Committee are ensuring the progress within the framework of drafting and implementing the S3, promoting high-level coordination of institutions to guide and lead the work in line with the S3.
This strategy is expected to be an umbrella strategy that touches upon various sectors and involves a considerable number of central and local institutions.
The following members are part of the Interministerial Committee for S3:
- Minister of Finance and Economy
- Minister of Education and Sports
- Minister of State for Entrepreneurship Protection
- Minister of Agriculture and Rural Development
- Minister of Tourism and Environment
- Minister of Culture
- Minister of Health and Social Protection
- Minister of State for Service Standards
- Director-General of the State Agency for Strategic Planning and Foreign Assistance Coordination (SASPAC)
- Director-General of INSTAT
- Director-General of the Albanian Investment Development Agency (AIDA)
- Director-General of the National Agency for Information Society (AKSHI)
- Director-General of the General Directorate of Industrial Property
The National S3 Team (NST) is a technical-level structure that directly contributes to the strategy development process. It includes representatives from various institutions/organizations as attached to the list.
Among the key tasks of NST are directly contributing to the strategy development process by gathering and analyzing data, defining the vision, strategic objectives, and specific action plan, as well as ensuring the implementation of all components specified in the activity plan (roadmap), including updating this plan in collaboration with JRC and the European Commission.
Expertise, the role of JRC/EC, and coordination
This is a special strategy that has a specific methodology approved by the JRC and the European Commission and is not the same as the typology of other strategies (such as Regional or Sectoral).
Since the process has already entered into other highly important phases, such as the direct engagement of actors in economic sectors, relevant academics and researchers as mentioned above, alignment of findings regarding skill and competence gaps, and human capital within and outside the country in various economic sectors, etc., central-level coordination is crucial to finalize it.
The EC has provided the necessary expertise and organized the planned training in the process, and it is expected to support the process further. Some of the events held have been supported by ZSI (Austria).
The S3 Strategy for Albania is expected to be finalized within the first six months of 2024.