Mapping capabilities for Smart Specialisation: an LLM-based approach

Abstract Smart Specialisation Strategies have become a cornerstone of EU Cohesion Policy, yet prioritizing investment areas remains a challenge. This paper introduces a methodology for capability mapping to support strategic priority setting, integrating data from patents, scientific publications, and research and development (R&D) projects, classified using Large Language Models. Unlike approaches that focus narrowly on technologies or industries, the method maps the intersection of technological domains and fields of application, as envisaged in the foundational literature on Smart Specialisation. This intersectional perspective aims to support a more precise and policy-relevant identification of areas with transformative potential. An empirical application to the Portuguese case illustrates the potential of the methodology to inform decision-making. The method grounds the analysis in local capabilities and contexts, supporting the exploration of place-based, distinctive pathways for structural transformation.