Policy priorities 

With extensive devolved powers since 1979 the Basque Country has its own parliament and government with a high level of autonomy regarding education, industry, culture, health, law enforcement and social services, and its own tax system.

This autonomy provides the region with key levers to address the social and economic challenges it encounters. During the end of the 20th century the region experienced industrial decline and high unemployment, and more recently GDP fell in the wake of the global financial crash in 2008.

Policy responses are centred on an industry-focused territorial strategy. In terms of inclusive productivity, policy priorities were building sustained resilience and combatting social exclusion, addressing health inequalities, and developing specialisation through science and technology. This was in the context of decarbonisation and addressing climate change.

Policy interventions and aims

Following several decades of industry-focused territorial strategy the focus of the Basque regional strategy between 2008 and 2018 “…had evolved to competitiveness in solidarity through innovation, leveraging public-private collaboration spaces to facilitate a systemic and participative strategy”^[1].

The strategy aimed to further develop specialisation which was informed by two science, technology, and innovation plans. The 2015 Science, Technology and Innovation Plan (2011) focused on key markets and transversal capabilities to develop existing strengths and complementary capacities. The 2020 Science, Technology and Innovation Plan (2014) outlined a framework for a smart specialisation strategy with three strategic priorities complemented by four niche opportunities, and four transversal areas: internationalisation, skills, new business models, entrepreneurship.

Key aspects of the Basque region's approach:

Investment in digital and HLT infrastructure. Compared to the rest of Spain, the Basque region invested less in physical infrastructure and focused its efforts on digital and industry 4.0 such as two cyber security centres, a digital innovation hub, and several sector specific research centres.

Improvement of skills and a better alignment between the skills system and the smart specialisation strategy. There has been an increased recognition by Basque universities of their role within local economic development, for example the 4GuneCluster. The vocational training system has continued to develop with a focus on addressing small business needs and challenge-based learning through collaborations between educators and business.

Rising consciousness of weaknesses in non-technological innovation alongside a reorganisation of the Basque Science, Technology, and Innovation Network. The Basque government recognised a need to develop non-technological innovations to increase productivity and piloted programmes such as one to increase advanced management skills.

Maturing the public sector alongside local institutionalisation. The public sector in the Basque region was consolidated during this time and a series of public/private collaborations processes were successfully developedxi.

Creative and cultural sectoral development. Following the European Commission’s 2010 Green Paper: Unlocking the potential of cultural and creative industries the Basque Government set about doing that. In the coming years, a concerted effort was made to understand the size of the sector and how institutions could help it develop, with the Basque Culture Observatory leading the analysis. In 2014 the Basque Country began leading the Regional Initiative for Culture and Creativity (an informal network of 25 countries) and was one of 6 EU regions to be part of the EU Smart Specialisation Creative Districts/CREADIS3 project. In 2016 San Sebastian, in the Basque Country, was European Capital of Culture, 19 years after the Guggenheim Museum opened in Bilbao.

Tackling health ineqaulites. Health reforms in the Basque Country health “are credited with development of one of the most successful integrated care strategies in Europe”. A key driver of this success is the focus of the Health Policy in the Basque Country 2013–2020 (HPBC) on health, social determinants, and implementation. This places tackling health inequalities at its core, with accompanying quantitative outcome targets.  

What has changed since 2008 

The focus of the Basque Country’s regional policy has been on developing clusters of higher-tech and higher-GVA sectors. Between 2008 and 2018, the proportion of people in employment who worked in knowledge intensive service in the Basque Country rose by 5.6 percentage points, from 31.6% to 37.2%. By comparison, the proportion of people in employment who worked in knowledge intensive services in North East England rose by 0.9 percentage points over the same period (from 45.7% to 46.6%).

Knowledge intensive services include research and development, information and communication services, human resource management, tax services and other services related to legal compliance, accounting and marketing.

Caveats and Conclusions

The Basque Country has some key differences with the North East. It is also known as the Basque autonomous community, reflecting the breadth of devolved powers and resources available. In particular, the Basque has extensive fiscal autonomy and the regional government is responsible for collecting taxes.

Overall, following a period of economic decline the Basque Country witnessed a period of remarkable economic growth post millennium which led to it becoming an internationally competitive, innovation-oriented, and economically successful region^[1]. The strategy implemented in the period of 2008 to 2020 has generated continued socioeconomic development and has allowed for progressively resilient competitiveness. GDP bounced back by 2019, while inequality reduced and R&D investment increased.

Success in the Basque Country shows that clear innovation policy which speaks to all actors (public sector, business, universities/R&D, and those who work in between) is key to a successful regional. The Basque Country’s innovation strategies built on existing strengths whilst looking forward in complementary areas to diversify the region’s economy and create resilience. The 2004 Basque Competitiveness Forum, combining public and private actors and organisations to help inform policy, is regarded as an important milestone.^[2]

The long-term strategy that has been in place has generated five main lessons:

1. Orientation and inclusive competitiveness – ensuring that economic development aims have not been pursued at the expense of social aims, thus maintaining social cohesion.
2. Proactiveness – investing in assets that would build from existing strengths.
3. Focus – focus on industry to further strengthen activities; both in terms of technological innovation and non-technological innovation to boost productivity in unproductive firms.
4. Policy capabilities – the construction of broad-based policy capabilities for strategic thinking and implementation has various dimensions.
5. Openness – through inside openness by involving the population with development, and outside openness, through building internationalism.
   1. ^{^} Orkestra (2021) Long-Term Regional Strategy For Inclusive Competitiveness: The Basque Country Case, 2008–2020. Available here.
   2. ^{^} Caroline Gray (2023) What can the Basque Country Teach the UK About Levelling up? Available here