Regions represent parts of countries or the world that we view as functional units due to certain characteristics and have the potential as such to create a system suitable for further development. Regions lagging behind will need to undertake additional analysis and research to remove the factors that are slowing them down (lagging factors). Analyzing the six most important economic sectors, it is concluded that there is room for improvement in almost every sector. It is precisely the different sectors of specialization of the regions that offer different potentials for further advancement. Therefore, the regions are seen as the main investment policy of Europe. Strengthening competitiveness, increasing stable economic growth, creating new jobs and improving the business climate and quality of life can be seen through the regions. The focus will not be exclusively on developed or developing regions, but also on those lagging behind, because the goal is to enrich and strengthen the growth of the overall economic performance of the regions as a whole or the state. The primary task in implementing a smart specialization strategy is to focus on effective skills and continuously upgrade knowledge. Precisely the division into four statistical regions of the second level (NUTS 2) will enable the maximum degree of benefit for as many inhabitants of the Republic of Croatia as possible in terms of granting regional aid. It will ensure an increase in co-financing rates for all regions and will provide better conditions for the use of cohesion policy funds for almost the entire territory of the Republic of Croatia, which will directly affect the development and upgrading of institutions.