The Role of Demand on Innovation: Evidence from a Resource Rich Economy

Abstract

As the demand-pull theories of innovation are making their come back, there is also increasing interest in the role of government demand in stimulating innovation. Governments, especially in OECD countries, have announced initiatives and reforms aimed at mobilising the use of procurement to support competitiveness and innovation (OECD, 2013). In the past 10 years, the oil and gas rich countries of the Gulf Cooperation Council have earmarked substantial financial resources to support the development of domestic innovation systems. This paper draws on the Abu Dhabi Innovation Survey to discern the impact of demand on innovation, particularly that of government demand. With a few exceptions (Aschhoff and Sofka 2009; Slavtchev and Wiederhold 2012; Guerzoni and Raiteri 2015), most of the empirical evidence on the effect of government demand on innovation is based on case studies (Edler 2013, Edquist and Zabala-Iturriagagoitia 2012, 2014; Edquist 2015; Georghiou et al. 2014;). This paper therefore provides two unique insights, firstly, insights into an innovation survey from the Middle East and, secondly, insights into the influence of substantial domestic albeit “un-articulated” demand.

Keywords: Government Demand, Innovation Policy, Resource-rich Countries