Projecting Opportunities for INdustrial Transitions (POINT): Concepts, rationales and methodological guidelines for territorial reviews of industrial transition

This report provides guidelines with respect to concepts, rationales and methodological considerations aimed at experts conducting territorial reviews of industrial transition and at policy makers and analysts with an interest in the operationalisation of transformative industrial innovation. It explains the concepts necessary to adopt a wider framing of the production and consumption system, the rationales for (and objectives of) reviews useful for transformative industrial innovation, and the POINT (Projecting Opportunities for INdustrial Transitions) methodology presented as a series of steps. The concepts section outlines a framework that allows Smart Specialisation Strategies (S3) to be mobilised in ways that are in keeping with vanguard thinking and international practice on system innovation and new industrial policies. Doing so requires reframing the domain of policy action, broadening it to cover the entire production and consumption system. When a wider view of the production and consumption system is taken, previously unidentified interconnections between its constituent parts can become obvious. Importantly, these interconnections represent points of powerful policy leverage, if their identification enables coordinated and timely action. Successful transition management requires strategic directions that draw upon territorial values (in addition to economic strengths); a concern with multiple-value creation (economic, social, environmental); the management of demand (public procurement, households); understanding and managing resistance to change; and ways of satisfying the very different needs and ambitions of a great number of actors with unequal power over the system. The rationales section argues that transitions require clarity of purpose and a new paradigm of thinking and acting in the face of transformative change. A confluence of maturing trends, including the availability of funding and an increasing readiness to deploy the full panoply of industrial policy instruments, can allow territories to benefit from new opportunities and manage the threats. As deep structural change is often accompanied by social transformation, these transitions represent a chance not just to cater for the economic growth imperative but also to respond to growing social demands to maintain dignified, fulfilling, and well-remunerated employment, empower traditionally disadvantaged groups and achieve sustainability. However, this is not a likely outcome in the absence of preparation and a preparedness to act. Obtaining legitimacy and resources for pursuing transformative change requires alternative framings as to why and how policy can yield desirable outcomes. The section also explains how the perspective taken has been motivated by the needs of lagging and other regions that suffer from long-term lock-in to economic activities with limited opportunities for branching within predictable timeframes. For these, as well as many other regions, new pathways for industrial development supported by multi-level coordination, planning and interventions are necessary. The territorial reviews can produce relevant evidence that is difficult to obtain otherwise. The section on the POINT methodology presents suggestions on the framing, procedure and conduct of the reviews. The reviews focus on an industrial theme of growing global importance suggested by the relevant territorial authorities (for instance, but not confined to: climate change/renewable energy; electrification of transport; circular economy; digitalisation; artificial intelligence). The purpose of the reviews is to collect evidence and examine the scope for developing adequate territorial responses that harness cross-portfolio complementarities (e.g. between ministries and between levels of governance) and cross-stakeholder coordination (e.g. between businesses and broad constituencies of consumers/users). In each territory under review and for an industrial theme suggested by the authorities the review findings are documented in a report that serves to: (a) Map the affected orientation, resource mobilisation, production and consumption systems in the territory; (b) Document existing planning arrangements and directions of deliberate change (e.g. as described in thematic policy and business strategies, or evident in momentum-gathering social concerns and movements, consumer trends, common territorial values etc.) of various stakeholders in the affected systems that could later form the basis for a broadly-supported transition vision; (c) Make concrete suggestions for the advancement of the transition and for managing its downsides. Given the nature and magnitude of the transition challenge, adequate territorial responses will include not just research and innovation policies that are already part of S3, but also industrial and employment policies more generally, including provisions for education and skills, for complementary large public infrastructures (e.g. in energy, transport, waste), urban planning, fiscal policy and social security reform, among others. The recommendations of the review therefore place a particular emphasis on fostering alignment and coordination within government. The reviews aim to build the evidence base for appropriate "Actions to Manage Industrial Transitions", as stipulated in fulfilment criterion No.6 of the enabling condition of good governance foreseen in the next multi-annual financing period of the EU Structural Funds (without prejudice to the final decision of the European Commission). The reviews can further inform the design and implementation of S3 [e.g. refining or extending priorities, broadening the Entrepreneurial Discovery Process (EDP), fostering synergies with other funding streams] as well as informing, and been informed by, industrial policies and other territorial strategies for economic, social and sustainable development. More broadly, the reviews can be an input to a participatory process of stakeholder engagement leading to the development of credible positive visions for the future that can be the source of pride and inspiration for the region (or country) and a rallying point for the mobilisation of actors and resources from all levels.