Priority 1: SMARTER AND MORE COMPETITIVE REGIONS The vision set out in Ireland’s Smart Specialisation Strategy (2022) [‘S3’] is to “embrace a regional approach to addressing Ireland’s Research, Development and Innovation (RD&I) challenges and to “provide a ‘bridge’ between regional and national innovation strategy building and decision making, bringing coherence to RD&I planning for the benefit of enterprise and advancing the RD&I agenda regionally and nationally”. The vision for the Southern Region – to become one of Europe’s most creative, innovative, greenest and liveable regions – and the vision for the Eastern and Midland Region – the creation of a sustainable and competitive region that supports the health and wellbeing of people and places – are set out in the RSES for the Southern Region (2020) and the RSES for the Eastern and Midland Region (2019) respectively. Each RSES includes high level strategic objectives and Regional Policy Objectives (RPOs) consistent with the five specific objectives for the ERDF under policy objective 1 [‘PO1’] “a more competitive and smarter Europe by promoting innovative and smart economic transformation and regional ICT connectivity”. The RSES for the Southern Region sets out an economic vision for the region based on “five economic principles of smart specialisation, clustering, placemaking for enterprise development, knowledge diffusion, and capacity building”. The RSES for the Eastern and Midland Region’s preferred economic strategy promotes “smart specialisation strategies based on identified strengths and competitive advantages, combined with cluster policies that promote economies of scale and network effects in certain locations. The strategy should also support diversification of local economies and development of innovation and entrepreneurial ecosystems for sustained national growth that can withstand external shocks”. A key factor to ensuring sustainable economic development is the degree to which a region’s enterprise base can remain competitive and productive, with CR2019 and CR2020 noting that differences in regional competitiveness in Ireland are sizeable and that significant productivity gaps remain between lagging domestic firms and highly productive multinational companies. While both regions in the programme area are assigned to the second strongest innovation group in the Regional Innovation Scoreboard 2021 - the Strong Innovators, this can hide underperformance and regional imbalances both within and between the two regions. The Eastern and Midland Region continues to perform above both the State and EU average, with index scores of 102.2 and 110.5 respectively. Despite this, the region’s RIS index score has decreased in both absolute and relative terms since 2011. The Southern Region has the lowest real growth rate of regional Gross Value Added (GVA) and total business expenditure on R&I amounted to €489 per head of population in 2019, below the State average of €662 (Central Statistics Office). From a labour market perspective, a total of 6,242 people were engaged as R&I staff – in the private sector – in the Southern Region in 2019, accounting for 0.79% of the region’s labour force (Q4, 2019), which was the lowest ratio out of the three NUTS 2 regions of Ireland and below the State average of 1.12%. According to the Regional Competitiveness Index (RCI) 2019, the Southern Region was ranked the 129th most competitive region out of 268 regions in the EU, with the region underperforming with respect to infrastructure and market size, and – to a lesser extent – labour market efficiency and innovation. Interlinked to the region’s competitiveness performance is the underlying challenge of lagging productivity levels in domestic SMEs in Ireland – as documented in the Country Reports, with the enterprise base of the region very reliant on these types of enterprises. As of 2018, 83,596 or 99.7 % of enterprises based in the Southern Region were classified as SMEs, and of the three NUTS 2 Regions, the Southern Region was the most reliant on these types of enterprises. Meanwhile, the Eastern and Midland Region was ranked the 89th most competitive region in the EU, as per the findings of the RCI 2019. In this regard, the region underperforms relative to its peer regions with respect to labour market efficiency and market size. Like the other NUTS 2 Regions, the Eastern and Midland Region enterprise base is also notably reliant on SMEs, with 137,049 or 99.5 % of the region’s enterprises classified as SMEs.
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