Economic impact of smart specialization policy in the context of multilevel governance: the Hungarian case

This paper simulates various economic impact estimates to examine how one or more policy instruments at the regional level can drive economic impacts at the national level. Using a multilevel governance (MLG) approach, we explore how the results of measuring economic impacts at different levels of government can be taken into account in the implementation of EU regional policies, such as smart specialization, and encourage the application of MLG principles at different levels of government. The research simulated seven NUTS 2 regions in Hungary, most of which are dominated by less developed regions. Eight policy simulations were run using the GMR-Europe economic impact model using three policy instruments, namely investment policy, research and development policy, and human resource policy. The economic impact of the policy interventions was estimated on three important economic variables, namely gross value added, employment, and total factor productivity. Simulation results and policy lessons are presented and discussed in detail.