<p>This study examines the effects of the largest innovation policy funded by the EU Cohesion policy on the socio-economic development of Calabria implemented in the framework of the Smart Specialisation Strategy (S3). Employing a sharp regression discontinuity design (RDD), we assess the impact of European Structural and Investment Funds, particularly focusing on the Regional Operational Programme (ROP) allocated for research and innovation. The results indicate a positive and statistically significant impact of the policy intervention on investment, employment, and wage growth, while the effect on turnover is positive but not significant. The study contributes to the literature on the microeconomic impacts of cohesion policies and offers insights into the effectiveness of EU funding in fostering innovation and sustainable growth in less developed regions. Robustness checks validate the RDD approach, indicating that the policy has effectively strengthened firms' innovative capacities and economic performance, potentially helping Calabria escape an underdevelopment trap.</p>