Technological congruence and Smart Specialisation: evidence from European regions

This paper links the Smart Specialisation Strategy (S3) with technological congruence, which stems from the coherence of directed technological change with the structural conditions of local factor markets. We argue that complementary to regional branching, technological congruence is a crucial dimension of S3, and that it has powerful effects on total factor productivity (TFP). The spatial econometrics evidence for European regions over the period 1980-2011 shows that technological congruence has significant effects on TFP, even if potentially mitigated by some market limits that make policy intervention relevant. Therefore, some S3 policy implications are highlighted.