An undesirable result of the rapid implementation of smart specialization into the framework of European Union Cohesion Policy was that it left several practical issues unanswered. An important unanswered issue is the implementation of economic impact assessment in a smart specialization policy context. Integrating entrepreneurship and interregional network policies into an economic modelling framework is considered among the most prominent challenges. This paper introduces how these two policies are implemented in the GMR-Europe (geographic, macro and regional) model. The simulations highlight that smart specialization policy targeting the development of entrepreneurship and knowledge networks is not equally successful in all regions.

The present paper introduces the most common methods of regionalizing national inputoutput tables. First we describe the different groups of methods based on our review of the international literature regarding regionalization. Then we focus on particular methods that can be applied for Hungarian counties highlighting their advantages and disadvantages and synthetize the empirical results of them again based on the literature. On the basis of these experiences we attempt to create a complex method fitted to the available Hungarian regional data. For better understanding in the end we apply our method on an illustrative example consisting of three regions with hypothetical sectors and data.

In this paper we argue that it is necessary to apply economic impact models in smart specialization policy in order to come up with reliable economic impact estimations. Solutions suggested in the smart specialization (S3) literature for economic impact assessments cover the economic effects only partially. To estimate the impacts in the industrial, regional and national dimensions in their entirety the application of specifically designed economic models becomes necessary. We extended the geographic macro and regional (GMR)‐Hungary policy impact model with additional features to make this model applicable for S3 economic impact estimations. In our policy simulations we illustrate how the application of this model helps policy‐makers in the prioritization process.

This chapter introduces the most recent version of the geographic macro and regional (GMR) Europe model. The model estimates the economic impacts of policies that aim at improving the quality of entrepreneurship ecosystems. As such, GMR-Europe is the first available economic impact assessment model that estimates the effects of entrepreneurship policies on several economic variables like productivity, GDP, employment, and wages. To measure the quality of regional entrepreneurial ecosystems, GMR-Europe integrates the Regional Entrepreneurship and Development Index (REDI) into its structure. In addition to introducing the GMR-Europe This study was financed by the Financial and Institutional Reforms for an Entrepreneurial Society (FIRES) that has received funding from the EU's Horizon 2020 research and innovation program under grant agreement No. 649378 and by the European Union and Hungary co-financed by the European Social Fund through the project EFOP-3.6.2-16-2017-00017, titled "Sustainable, intelligent and inclusive regional and city models". The research has been conducted as part of the National Excellence in Higher Education Program in Hungary (reference number of the contract: 20765-3/2018/FEKUTSTRAT). The authors of this chapter are indebted to the following colleagues for their invaluable assistance: Gallusz Abaligeti and Dániel Kehl, for their contribution to the empirical calibration of the TFP model equations, Anna Csajkás and Richárd Farkas for their assistance in data collection, data preparation and contribution to estimations and Péter Járosi, whose previous engagement in model development and continuous assistance through this work is an inevitable part of the present model setup. Laszlo Szerb and Attila Varga also gratefully acknowledge support from the National Scientific Research Fund of Hungary (OTKA/NKFI grant no. 120289 titled Entrepreneurship and Competitiveness investigations in Hungary based on the Global Entrepreneurship Monitor surveys 2017-2019). Thanks to Andrea Herrmann for comments on earlier drafts of this chapter.

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