When cohesion meets excellence: Analysing the drivers of synergies between EU R&I funding instruments in EU regions

This paper introduces a novel approach to measuring synergies between Horizon 2020 and cohesion policy funding in the field of R&I during the 2014-2020 programming period. Leveraging project-level data, we calculate regional cosine similarity indices based on societal grand challenges (SGCs) addressed to assess alignment between the two EU funding instruments in EU NUTS-3 regions. Results indicate that synergies are less likely in rural areas, emerging innovators, and - though not statistically significant - less developed regions, highlighting the role of business environments and innovation ecosystems. Regression analysis reveals that funding alignment is positively linked to the presence of universities and specialization in knowledge-intensive services, though the latter exhibits a nonlinear effect under certain circumstances. However, a higher number of SGCs addressed in smart specialization (S3) policy objectives is negatively associated with thematic funding similarity, likely due to fragmentation and dilution of focus. Regions that prioritize too many SGCs may reduce their ability to develop strong specialization and align different funding sources effectively.