Lessons for Wales from the Basque Innovation Ecosystem
In February 2024, the Learned Society of Wales hosted a roundtable of experts to reflect on the similarities and differences between the Basque and Welsh innovation ecosystems.
Our objective in hosting the roundtable was to hear how things are done elsewhere to inform reflections on how Wales’s activities and structures are organised. This is not with the intention of identifying ‘best practices’ to be copied, but rather to draw some inspiration from others and consider whether there were ideas that might be appropriately adapted and applied as Wales develops its own approach.
The key insights for the further development of innovation activity in Wales that emerged from this roundtable were:
- Policy continuity
- Strong intergovernmental relationships
- Intermediary actors
- A culture of country-building
The Basque Innovation System: An Overview
Intermediary actors connect the dispersed elements of the Basque system, enhancing efficiency and productivity.
Three key pillars of the Basque Country’s innovation system were highlighted:
1. Science, Technology, and Innovation Network
The Science, Technology, and Innovation Network is a coordinated network of scientific and tech infrastructure and organisations. It was established in 1997 and consolidated as a focal point for innovation policy in the Basque country. There are ten main types of agents within this network, and organisations must apply to be accepted as agents, which helps provide structure and stability to the network. This is a network of heterogeneous actors with separate roles but a clear understanding of how these fit together.
2. Cluster Organisations and Policy
There are 16 cluster organisations within the Basque innovation ecosystem. These organisations serve the dual purpose of serving as instruments of public policy (by facilitating regional transformation through relationships with government) and instruments of business competitiveness (by facilitating business competitiveness through cooperation).
3. Smart Specialisation Strategy
The Basque Smart Specialisation Strategy (PCTI 2030) is structured to address the societal issues facing the Basque provinces through three strategic priorities (smart industry, cleaner energy, personalised health), four opportunity areas (healthy food, eco-innovation, sustainable cities, and creative industries), and transformative, trailblazing initiatives (healthy ageing, electric mobility, circular economy).
The Basque ‘culture of country-building’ was presented as a key factor in its success in innovation.
In the context of these three key pillars, those within the Basque system have and anticipate further challenges that will require new directions in stimulating innovation and industry in the policy and research spaces. These challenges include:
- Increasing manufacturing productivity through stronger SME innovation
- Intelligent diversification of the manufacturing industry
- Transition to environmentally sustainable manufacturing.
- Rooting of firms (and decision-making) in the Basque Country
Reflections on the Basque Innovation Ecosystem
The Basque Country has a similarly complex multi-level governance system to Wales and appears to have developed effective ways of integrating and working across these levels.
The Basque innovation ecosystem offers valuable insights for the Welsh and wider UK audience. Notably, the system’s biggest source of success is policy continuity, as it has been focused on stimulating innovation and industry for 40 years. These twin points of long-termism and continuity stand in stark contrast to many policy contexts. Furthermore, to a greater extent than other EU regions, the Basque Country has both fiscal autonomy and wide-ranging policy competencies. This provides ample resources and scope for an independent Science, Technology, and Innovation policy. The three provincial governments act as vital tax-raising institutions (of which there are no equivalents in the UK). Due to its strength in raising resources, the Basque Country is characterised by robust industrial infrastructure.
The Basque multi-level governance system, extending from Europe through Madrid to the Basque Country and then into its provinces and municipalities, ensures a granular approach to shaping the innovation system. The government sets rules before allowing intermediaries to play a crucial role. These institutional intermediaries facilitate the Basque system’s collective entrepreneurship, leading to joint solutions for common problems. Overall, the Basque innovation ecosystem, characterised by institutional density and semi-permanence, contrasts with the UK’s institutional churn.
The Basque Country's decades-long innovation policy continuity has been essential to its strengths in science, technology, and innovation.
Applying Insights from the Basque Innovation Ecosystem to Wales
It is essential to emphasise the importance of context in the success of a region’s innovation policy and the prospect of any lessons that may be considered applicable to other regions. While it is common to hear references to ‘best practices’, the implication that these may be universally applicable and successful is erroneous. It is not possible to transfer a particular place’s context spatially (and the context is often what leads to policy success); thus, adopting aspects of a particular region’s innovation policy elsewhere is limited. That said, exemplars from elsewhere can often provide insight into the principles of effective policy and practice, and the question then becomes: are these principles relevant, and if so, what practices might be informed and adapted to local conditions to deliver similar outcomes?
With this in mind, successful elements from the Basque system which might provide inspiration for Wales can be summarised as:
- The Basque Country’s decades-long innovation policy continuity has been essential to its strengths in science, technology, and innovation, and the government has been successful in clearly telegraphing the directionality of policy change.
- The Basque Country has a similarly complex multi-level governance system to Wales and appears to have developed effective ways of integrating and working across these levels.
- Intermediary actors connect the dispersed elements of the Basque system, enhancing efficiency and productivity. For example, Innobasque is the Basque Innovation Agency, which coordinates and drives innovation, and Euskalit is the Foundation for promoting Advanced Management in Basque organisations. Wales is particularly underpowered in this area.
- The Basque ‘culture of country-building’ was presented as a key factor in its success in innovation. The innovation ecosystem benefits from the cultivation of a Basque identity that recognises the advantages of collaboration, working together, and giving back. In Wales, universities have started collaborating more actively, but more work is needed.
Background: Learned Society of Wales Innovation Roundtables
Over the last two years, the Society has held a series of innovation roundtables, bringing together innovation experts, practitioners, and leaders to help inform and contribute to discussions that may improve innovation policies and practices in and for Wales. This activity programme initially coincided with the Welsh Government’s development of the new Innovation Strategy for Wales, and associated delivery plans. For 2024, the Society has commenced a new series of the innovation roundtable programme.
In this next phase, the Society is further engaging with thought leaders and practitioners in the field, continuing to develop recommendations to help inform and improve innovation strategies and the innovation environment in Wales. The core new theme for this next phase is “Inclusive Innovation” — defined in the broadest sense, but with particular emphasis on Equality, Diversity and Inclusion, and measuring impact beyond the economic. This second phase will also include a deep dive into a theme from the previous series of roundtables: “Innovation in Small Nations,” an opportunity to share lessons that Wales can learn from other small nations.
All roundtable sessions are conducted under Chatham House rules, and this is the anonymized and unattributed report of key points from the first roundtable.
The Learned Society of Wales is Wales’s national academy for arts and sciences. Its Fellowship brings together experts from across all academic fields and beyond. The Society uses this collective knowledge to promote research, inspire learning, and provide independent policy advice.
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