April 6, 2023 Nathan Crist

Event: Leveraging Twin Transition Technology for Regional Cohesion in Europe

This year has seen renewed debate on the future of Cohesion Policy in the European Union. At the same time, Europe is undergoing a digital and green transition for which European regions are not equally prepared. A new study by Bertelsmann Stiftung, titled Technological capabilities and the twin transition in Europe: Opportunities for regional collaboration and economic cohesion, identifies new opportunities to spur innovation that are relevant for the twin transition while fostering cohesion at the same time.

On April 24^th, the Bertelsmann Stiftung brought together representatives from European regions, EU institutions, economists, and regional development experts at CEPS in Brussels to present and discuss the results of the study.

After a short welcome by Bertelsmann Stiftung Senior Project Manager Katharina Gnath, study co-author Pierre-Alexandre Balland (Assistant Professor of Economic Geography and Complex Systems, Utrecht University & Artificial Intelligence and Natural Intelligence Toulouse Institute) presented the main results, and was followed by a panel discussion moderated by Cinzia Alcidi, Research Director at CEPS, with:

Ron Boschma, Professor in Regional Economics, Utrecht University & Stavanger University
Peter Berkowitz, Director – Policy, Directorate-General for Regional and Urban Policy, European Commission
Thomas Wobben, Director – Directorate C – Legislative Work, European Committee of the Regions

Watch the event in its entirety here:

Pierre-Alexandre Balland started the event by presenting the key findings of the study. The study begins by looking at the strengths of different European regions when it comes to creating green and digital technologies, including which new technologies they have the potential to develop in the future. Europe’s wealthiest regions develop the vast majority of new green and digital technologies. This threatens to increase inequalities between EU regions.

Balland then explained how the study evaluates the complementarity in twin transition technological profiles between these regions and gives a clear view of the untapped potential for linkages between them both across economic development levels and across national borders.

Regions already collaborate with each other to create new technologies, but there is a strong national bias. There is great potential for regions to collaborate with other regions across national borders.

Balland concluded that targeting this untapped potential can help advance the twin transition and reduce disparities between EU regions.

In the panel discussion Peter Berkowitz echoed the warning that the twin transition, like any technological shock, could lead to more inequality between regions. Fortunately, he found, the study does offer a glimpse of possible opportunities. However, identifying this potential is only the first step. Tools are needed than can capitalize on these opportunities, and current tools are insufficient. He recommends determining out how to scale up the existing EU tools to utilize this potential.

Thomas Wobben highlighted the innovation paradox. Regions most in need of innovation to boost their economies are the least able to generate it. To strengthen regions, he argued, regional and local administrations must be improved to find local solutions based on cooperation.

Wobben also urged making inter-regional linkages the norm rather than the exception to overcome the lock-in nature of regional economic trajectories, also called “development traps”.

Ron Boschma pointed out that there are a lot of misalignments on collaboration not just when it comes to less developed or transition regions, but for more developed regions as well. There is therefore incentive for more developed regions to seek new collaboration to boost their own innovation capabilities.

While there was agreement on the challenges faced in the innovation divide and the twin transition, there were different views on the panel on how best to address these.

Berkowitz urged a better use of the wide array of existing EU instruments. Besides Cohesion Policy, there are climate policies, Single Market policies, Horizon Europe, industrial policies, and a coming sovereignty fund. There are many instruments beyond Cohesion Policy that can assist in harnessing the potential identified in the study.

On the other hand, Wobben expressed concern about the number of different instruments, which are difficult for regions to use effectively. If regions are meant to be at the center of this process, then they should be kept in mind when solutions are developed.

Finally, Boschma expressed hope that policy solutions would focus on the opportunities of lagging regions to help improve cohesion in Europe. These especially have potential in green technologies, so they can contribute to larger EU policies like the European Green Deal.

For more information and to download the study, please click here.