The smart specialization concept was implemented in the EU in 2014, stating that regions have to specify specialization areas for development of innovations. Economic specialization reveals a comparative advantage in that field. However, there are different arguments linking specialization to economic development. This study analyzes these arguments and aims to investigate the impact of economic specialization on regional economic development and to give insights into identifying prospective areas in regional economies. A panel fixed effect estimation of industry-level regional data suggests that economic specialization in broader regional employment, called relative specialization, is ambiguously associated with economic development. Our findings suggest that neither economic specialization nor economic diversity are a clear-cut solution for ensuring economic growth. Economic structure in EU regions differs, and there is no one answer for which approach is better for economic development. Specialization measures, particularly the location quotient, cannot fully capture the dynamics in the industry structure that could be essential for formation of regional development strategy.

This study investigates the efficiency growth of advanced technology-generating sectors within the European Union (EU). Using a stochastic frontier analysis of annual sector-level panel data from 2000 to 2019, we examine sectoral (NACE two-digit level) and territorial implications. Our findings indicate that technological change was more intense in advanced technology-generating sectors than in other economic sectors, primarily driven by fixed capital investments. However, the impact of in-house research and development varied. Economic sectors such as pharmaceuticals and motor vehicles struggled to improve their production efficiency due to high competition and market specificity. A comparative analysis of EU economies showed a lower level of production efficiency in catching-up economies. Nevertheless, these economies contributed to the shift of the production possibility frontier in certain sectors on the EU level. Therefore, this study contributes to the ongoing scientific discussion on technological innovations in diverse territories, suggesting that less-developed economies could generate technological advancements in specific areas. We also discuss the implications for innovation and industrial policy actions. First published online 09 January 2024 Keyword : production efficiency, economic sectors, advanced technologies, technological progress, technical efficiency, stochastic frontier analysis, R&D, smart specialization