EStIF 3 | 2018 241 BalticSeaRegion-wideResearch-BusinessCooperation BalticSeaRegion-wideResearch-Business Cooperation:WhatBenefitsForSparsely PopulatedAreasandSmartSpecialisation? Ninetta Chaniotou & Zane Šime* The article elaborates on the findings of smart specialisation in view of how on-going thinking on this Europe-wide innovation experiment should be advanced on a qualitatively new level, especially taking into consideration the role of rural areas and their specific economic growth needs. The example of Kainuu offers an insight into how a sparsely populated area in north eastFinlandcanbenefitfromEU-fundedtransnationalcooperationprogrammes,complement- ed with tailored support from the European Structural and Investment Funds, in its aspira- tions to tap into the unexplored innovation potential of the regional economy and enhance its links to other parts of Europe. Kainuu testifies to the readiness of regional authorities to adopt state of the art development approaches and tools, often requiring diversification from tradi- tional solutions. Meanwhile, Kainuu’s experience and continued engagement in EU-funded transnational and interregional projects suggests that project concepts and actions need to be sufficiently strategic and well-defined in view of making the argument for the introduction of innovative tools in all regions. Among the suggestions for enhanced quality of transnational collaboration, the article argues for joint performance indicators and continuous oversight of the potential geographical compartmentalisation of smart specialisation theoretical thinking. I. Introduction The Baltic Sea Region is characterised by its close ties between different stakeholders. The establishment of these relationships across the Baltic Sea Region gained prominence in the early 1990s, for example, with the launch of the Baltic Sea Parliamentary Con- ference in 1991 and the Council of the Baltic Sea States (CBSS) in 1992, 1 as well as – more recently – the first European macro-regional strategy, the European Union Strategy for the Baltic Sea Region (EUSBSR) in 2009. Highly urbanised areas dominate the multi- lateral initiatives in the Baltic Sea Region. For exam- ple, the widely-read ‘Baltic Rim Economies’, pub- lished by the Pan-European Institute of the Univer- sity of Turku, regularly features headlines with such well-known and extensively networked cities as Helsinki, Tallinn, Turku and St. Petersburg. 2 Further- more, the Union of Baltic Cities, also founded in 1992, 3 and Turku Process 4 – a joint initiative among * NinettaChaniotouisDirectoroftheInternationalCooperation ProjectsatKainuunEtuOy. ZaneŠimeisCommunication&ResearchCoordinatoratthe CounciloftheBalticSeaStatesSecretariat.Thecontentofthis articledoesnotreflecttheofficialopinionoftheCouncilofthe BalticSeaStates.Responsibilityfortheinformationandviews expressedthereinliesentirelywiththeauthor,includingany possiblemistakes. Theauthorswouldliketoextendspecialthankstotheinitial reviewerofthisarticle–DrUweSassenberg,BalticTRAMProject Manager. 1 LassiHeininen,'TheArctic,Baltic,andNorth-Atlantic‘coopera- tiveregions’in‘WiderNorthernEurope’:similaritiesanddiffer- ences'[2017]48(4)JournalofBalticStudies438 <10.1080/01629778.2017.1305180>accessed17June2018 2 Thelatestissuesserveastellingexamplesoftheseobservations: [2018](1)BalticRimEconomies<https://www.utu.fi/en/units/tse/ units/PEI/BRE/Documents/BRE_1_2018.pdf>accessed17June 2018; [2018](2)BalticRimEconomies<https://www.utu.fi/en/units/tse/ units/PEI/BRE/Documents/BRE_2_2018.pdf>accessed17June 2018 3 MargitBussmanandSebastianNickel,'Transnationalcoopera- tion:anetworkanalysisoftowntwinningintheBalticSeare- gion'[2018]JournalofBalticStudies5 <10.1080/01629778.2018.1447977>accessed17June2018; AndreyMakarychevandAlexanderSergunin,'Russia’srolein regionalcooperationandtheEUStrategyfortheBalticSeaRe- gion'[2017]48(4)JournalofBalticStudies466 <10.1080/01629778.2017.1305186>accessed17June2018; AlexanderSerguninandPerttiJoenniemi,'DoestheEUStrategy