Innovation strategies for SMEs and clusters: the challenges of a globalised Europe

In this paper we discuss the challenges for the European SMEs facing increased global competition, and how it is possible to design innovative strategies through the new Regional Competitiveness and Employment Objective. First, the paper offers an assessment of the importance of SMEs in the EU context and particularly in the regions concerned by the new objective. Second, the paper will discuss how globalisation poses a serious thread to this development pattern. Third, we briefly explain why further labour market and product liberalisation policies probably have a limited potential. Fourth, there is a wide empirical literature, and a lot of practical experience, on innovation strategies for SMEs and clusters in Europe. The paper will offer a critical assessment of these findings and will suggest how to make the best use of the limited, but critical, resources available under the new Regional Competitiveness Objective.