Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy

No 2015/28: Innovation-related Public Procurement as a Demand-oriented Innovation Policy Instrument

Charles Edquist ()
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Charles Edquist: CIRCLE, Lund University

Abstract: The purpose in this paper is to show how public procurement can be a driver of innovation. The purpose and point of departure when using public procurement as an instrument of innovation policy is always to solve societal and environmental problems, to satisfy human needs or to meet global challenges. The paper is aimed at everyone who is involved or interested in public procurement, and especially in how this can promote innovation processes. Historically innovation policy has been strongly dominated by supply-push oriented instruments (measures). This linear view is actually still dominating in practical innovation policy pursued, but no longer so much in policy analysis – and certainly not among innovation researchers. In other words, the linear view is completely rejected in innovation research, but still dominates innovation policy. Innovation policy is all actions by public organizations that influence innovation processes. The choice of innovation policy instruments is a very important part of the formulation of an innovation policy. There are potentially scores, or perhaps hundreds, of innovation policy instruments to choose from. A combination of two or more instruments must often be used to solve each specific problem. They are thus combined into an “instrument mix”. Demand-based innovation policy instruments are those that influence innovation processes from the demand side. In this paper, we will very much concentrate on one kind of demand-side innovation policy instrument: innovation-related public procurement. The reason for choosing innovation-related public procurement in particular, is that it is potentially by far the most powerful kind of demand-side innovation policy instrument available. It might even potentially be the most powerful instrument among all innovation policy instruments. Public procurement of different types may affect both the speed and path of innovation development.

Keywords: Innovation policy; innovation system; demand-side innovation policy; innovation policy instruments

JEL-codes: O25; O30; O31; O32; O33; O38; O49

41 pages, August 16, 2015

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