Demand-side Innovation Policies

image of Demand-side Innovation Policies

Demand-side innovation policies have been receiving increasing interest from a number of OECD countries in recent years in the context of slow growth and lagging productivity performance. Pressures on fiscal budgets in the aftermath of the financial crisis have also motivated governments to seek ways to boost innovation without necessarily engaging in new programme spending, primarily to meet social demands in areas such as health, energy or the environment.

This book examines dynamics between demand and innovation and provides insights into the rationale and scope for public policies to foster demand for innovation. It shows the potential - but also the limits - of using public procurement, regulations or standards to stimulate public and private demand for innovation, including among SMEs. Drawing on country experience and case studies, this report illustrates good practices for designing, implementing and evaluating demand-side innovation policies.

English Also available in: Chinese

Challenges for demand-side innovation policies

Some demand-side innovation policies arguably carry the risk of excessive government intervention in comparison with policies to stimulate the supply of R&D and foster knowledge spillovers. Demand-side innovation policies also face design and implementation challenges. The systemic nature of this type of policy implies that more co-ordination is needed than for traditional supply-oriented innovation policy. In particular, demand-side measures need to be closely articulated with supply-side measures. However, matching supply with demand is not an easy task and requires building bridges along the value chain, which takes time. Moreover, several demand-side innovation policy measures imply a lead role for a public sector that is not always best placed to support the innovation process. Thus, new capacities may need to be developed to implement innovation-friendly regulations, standards or procurement practices.


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