Demand-driven Policy Research Articles

The effects of Demand-side policy on firm innovation: The Mediating role of R&D activities

Today, innovation is seen as the engine of economic growth. As a result, governments foster innovation activities in both the public and private sectors by using policy tools such as measures, regulations, and incentives. There are two main approaches in government innovation policy: supply-side policy and demand-side policy. Supply-side policy instruments primarily stimulate technological development and diffuse innovation capabilities. On the other hand, demand-side policy supports specific demand and minimizes technological and trade uncertainty at all stages of production. Moreover, a demand-driven procurement policy is one of the main drivers of high-tech industries. At the same time, in line with the growing importance of the knowledge economy and societal concepts, knowledge or technology has become the major determinant of innovation. In this way, companies are encouraged to undertake research and development activities in order to create innovation and advance their technologies. Moreover, the government’s support for investing in research and development (R&D) activities has become an effective solution for the firm’s innovation outputs. These R&D activities are of particular importance in transition and catch-up economies such as the Czech Republic. Therefore, this article aims to analyze the impact of demand-driven policy on business innovation through R&D activities in the Czech Republic. Data from the Community Innovation Survey and partial least squares structural equation modelling are used to achieve the purpose of this article. Our findings show that demand-driven policy (procurement for innovation) significantly and positively affects firm product and process innovation through R&D activities. The findings of our research also have practical implications for firms and policymakers in the Czech Republic. These results could also apply to Central and Eastern Europe, where we can observe similar characteristics of firms, for instance, because of their innovation performance.

The augmented and integrative model of economic growth: Theoretical and empirical evidence from USA

The current nexus between education and economic growth leads us to propose a hybrid and integrated theoretical model. The variables chosen for this research were human capital and labour, and their impact on unemployment and economic growth was considered. In the validation of the theoretical model, different equations were contemplated, and the ARDL co-integration technique for its estimation was chosen. This study emphasizes the importance of technological progress, physical capital and human capital; the latter is measured by educational training and its interactive effect on employment and unemployment in explaining the behaviour of economic growth in the US from 1981 to 2019. The results show different statistical significance in the short and long term. These results corroborate the premise that there are partial adjustments in the short term, particularly after an economic crisis. In the long term, economic growth is affected by the positive or negative magnitudes of the product elasticity for each of the drivers considered. In terms of policy implications, a combination of structural and demand-driven policies must be implemented to reduce unemployment, in particular, to halt protracted economic recessions.

Who is left behind? Exploring the characteristics of China's broadband non-adopting families

China has made significant progress in broadband development. As of September 2018, 95% of China's population was covered by 4G networks. However, our estimates show that nearly 30% of China's families did not use broadband that year. This study attempts to investigate the characteristics of China's broadband left-behind families. Overall, consistent with the findings for other countries, families with a lower socioeconomic status are more likely to be broadband non-adopters. In the information society, older, poorer, rural and less educated families are left behind. It is recommended that the Chinese government shift from a top-down investment-driven policy to a user-centered demand-driven policy to address the digital divide.

Exploring the consumption-based carbon emissions of industrial cities in China: a case study of Tianjin.

Cities are usually the final destination for consumable goods and services produced along supply chains and the most appropriate scale to implement policy. Consumption-based policies could complement current carbon emissions mitigation actions, but such studies at the city level are relatively rare. We used a demand-driven input-output model to explore a historical time series (1987-2012) of consumption-based emissions in Tianjin for the first time, a typical industrial city which has the largest carbon footprint in China. The results reveal the differences between consumption- and production-based emissions, and Tianjin has transformed from a producer city into a typical consumer city since 2000s, mainly due to infrastructure construction. There is more capital investment in industrial infrastructures than in real estate in Tianjin, causing the largest carbon footprint. The trade deficit and different carbon intensity have substantial influences on consumption-based emissions. Finally, population, income, and urbanization could enable a more accurate interpretation of urban carbon footprint growth. Demand-driven policy implications for addressing these emissions in booming industrial cities are discussed and provide a new perspective on carbon emissions mitigation. Our results offer valuable lessons on industrial cities' strategies and initiatives for climate change mitigation worldwide, particularly in developing countries.

State Engagement with Farmer-led Irrigation Development: Symbolic Irrigation Modernisation and Disturbed Development Trajectories in Tanzania

Farmer-led irrigation development, a process in which farmers initiate the establishment of irrigation, is increasingly recognised as the driving force behind irrigation expansion, agricultural intensification, and commercialisation in sub-Saharan Africa. Governments and development agencies aim to build upon these practices to further stimulate agricultural production and expand the irrigated area. In what seems the recognition of farmers’ ability to take the lead, various African states have developed policies for ‘demand-driven irrigation development’. This article scrutinises the actual practices of such a policy through a case analysis of an intervention in Northern Tanzania. The analysis demonstrates how even demand-driven policies can disturb the development trajectory of farmer-led irrigation development by reinforcing modernisation ideals adhered to by both farmers and government employees. An emphasis on the aesthetics of modernity leads to symbolic modernisation, cementing the dominant role of the state and formal expertise and paralysing farmers’ irrigation development initiatives. This does not necessarily lead to agricultural intensification and commercialisation, which the formal policies seem to aim for and which is central to processes of farmer-led irrigation development.

Long-term growth perspectives in Japan and the Euro area

Euro area countries and Japan are confronted with similar challenges. Potential output is on a declining trend in the Euro area, and the decrease started well before the financial crisis. In Japan, low-output growth is a striking feature since many years, despite the unconventional monetary policy stance and numerous fiscal stimulus programs provided by the government. According to a growth accounting exercise based on a Cobb-Douglas production function, the development in both economies can be traced to a weak evolution of TFP. Weak capital deepening is detected especially in the Euro area. Driven by high uncertainty, the willingness of firms to undertake investment is only modest and constitutes the Achilles’ heel for a smooth recovery. Both economies are not well prepared to manage the demographic challenges caused by an elderly population. Given that debt-to-GDP ratios are already at record heights, the scope for further demand-driven policies is limited, especially in Japan. Instead, structural reforms are on the agenda to promote the framework conditions for higher investment and long-run growth in both regions.

Growth and the Smart State

As countries develop, the main driver of economic growth shifts from imitation to innovation. These two sources of growth require different policies and institutions. In particular, in this article we argue that the transition from an imitation-based to an innovation-based economy calls the old welfare state model into question. It is not so much the size of the state that is at stake but rather its governance. What we need to foster economic growth in developed economies is not a reduced state but a strategic state, which acts as a catalyst using selective and properly governed support to the market-driven innovation process. This idea of a strategic state that targets its investments to maximize growth in the face of hard budget constraints departs both from the Keynesian view of a state sustaining growth through demand-driven policies and from the neoliberal view of a minimal state confined to its regalian functions.

Combined Innovation Policy: Linking Scientific and Practical Knowledge in Innovation Systems

New research indicates that firms combining the science-based STI (Science, Technology, Innovation) and the experience-based DUI (Doing, Using, Interacting) modes of innovation are more efficient when it comes to improving innovation capacity and competitiveness. With regard to innovation policy, the STI mode calls for a supply-driven policy, typically aimed to commercialize research results. The DUI mode suggests a demand-driven policy approach, such as supporting the development of new products or services to specific markets. This article analyses how the two types of innovation policies and the two innovation modes can be combined in regional innovation systems (RISs). The analysis builds on studies of the food industry and related knowledge organizations in two counties, Rogaland County (Norway) and Skåne County (Sweden), and two policy initiatives (NCE Culinology and Skåne Food Innovation Network) aimed at strengthening the innovative capability of the RISs. The analysis indicates that policies aimed to link science- and user-driven innovation activity should focus on building absorptive capacity of DUI firms (e.g. through increased scientific competence) and implementation capacity of STI firms (e.g. through increased market and process competence).

Status and Prospects of Autonomous Vehicle Positioning Method for Cooperative Vehicle Infrastructure System

With application of the vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communication and many advanced information processing technologies, the cooperative vehicle infrastructure system promises to an effective optimization in safety and efficiency of road traffic systems, which has been an inevitable development trend of Intelligent Transportation System. In the cooperative systems, vehicle autonomous positioning plays an important fundamental role to realize the system demand-driven policies and functional implementations. In this paper, based on the introduction of cooperative vehicle infrastructure system and characteristics of vehicle positioning, requirements of vehicle autonomous positioning from the cooperative vehicle infrastructure system are summarized in different levels of performance, functionality and systematic architecture. With the presented technology status of vehicle autonomous positioning, research progress and main achievements of the vehicle autonomous positioning method for cooperative vehicle infrastructure system are reviewed with regard to the filter-based sensor information fusion, integrity enhancement and road map integration. On this basis, aiming to promote development of cooperative vehicle infrastructure systems, prospects on future development of research and exploration in the field of vehicle autonomous positioning are presented based on the constraints and limitations of existing methods and solutions, which indicate great importance to the developing strategies of intelligent transportation.

고령화 사회에서의 소방인력 활용 및 서비스 개선방안

본 연구는 고령화 사회에서 소방인력 활용 및 서비스 증대에 목적이 있다. 지속적인 생활수준 향상과 의료기술의 발달로 노인인구 비율이 높아져 고령화가 빠르게 진행됨에 따라 각종 재난으로부터 안전을 책임지고 있는 소방이 재해약자의 입장에서 종합적이고 체계적으로 관계부서와 연계하여 재해약자의 정확한 현황을 파악함과 동시에 신속한 출동은 물론 적절한 응급조치가 실시될 수 있도록 하여야 할 것이다. 그러기 위해서는 특정대상물위주의 정책에서 수요중심의 정책으로 전환하여 노인들의 생활 안전 교육과 주택안전의 종합적인 대책들이 강구되어야 한다. 또한 근대적 홍보방법에서 벗어서 IT강국의 위용을 활용한 홍보를 하는 등 119서비스 확대로 노인들의 편안하고 안락한 노후생활을 위한 소방서비스를 제공하여야 한다. 고령화 사회에서 노인인구에 대한 고찰이야말로 선진소방으로 가는 최선의 방법이다. This study is aimed to increase the fire-fighting manpower utilization and the increasing of its services in aging society. Due to continuous improvement of living standards and development of medical technology, the elderly population rate is being increased and it brings rapid progresses of aging society. Therefore, as a fire-fighting organization which is responsible for safety from various disasters, they should grasp comprehensively and systematically exact status of weak person from disaster in perspective of it with conjunction of all concerned department and at the same time proceed to speedy move as well as determine the appropriate emergency measures. In order to do this, safe life education for elderly people and the comprehensive measures of home security should be taken by transforming the policy from particular object-oriented policy to demand-driven policy. And through the expansion of one one nine services such as using grandeur of powerful IT nation out of old-fashioned promotion way, they should provide fire-fighting service for convenient and comfortable life of elderly people after retirement. A consideration of the elderly people is the best way to penetrate a advancement fire-fighting in aging society.

Energy- and Environmentally Efficient Road Management: The Case of the Spanish Motorway Network

Transport is responsible for 41% of CO2 emissions in Spain, and around 65% of that figure is due to road traffic. Tolled motorways are currently managed according to economic criteria: minimizing operational costs and maximizing revenues from tolls. Within this framework, this paper develops a new methodology for managing motorways based on a target of maximum energy efficiency. It includes technological and demand-driven policies, which are applied to two case studies. Various conclusions emerge from this study. One is, that the use of intelligent payment systems is recommended; and another, is that the most sustainable policy would involve defining the most efficient strategy for each motorway section, including the maximum use of its capacity, the toll level which attracts the most vehicles, and the optimum speed limit for each type of vehicle.

Long-term care in the Netherlands: from ‘supply-driven’ to ‘demand-driven’ assessment and assignment

Introduction: Long-term care assessment and assignment is a process in which individual’s needs are mapped and is examined to what extent for those needs appropriate care is available. Care assignment is successful, when the assigned and provided care fits the needs of the individual and contributes to the individual’s quality of life. Policy: Up to the 1990s long-term care assignment was supply-driven and the care assessment and assignment were mainly carried out by care providers. This policy caused that predominantly already existing supplies were financed in the Netherlands. Policy change: Societal developments in the 1990s (growing population of elderly and chronically ill, increasing influence of patients in health policy issues, recognition of differences between individuals with respect to autonomy and need for care) led to problems. The (quantitative and qualitative) gap between supply and demand became large and resulted in large waiting lists and dissatisfaction concerning the provided care. At the end of the 1990s a change in policy has been made from supply-driven to demand-driven assessment and assignment. This demand-driven approach requires an independent and integrated assessment procedure, so that the decision about the amount and the nature of the care to provide is no longer made by the care providers. Discussion: The impact of this policy change at the macro-level (economic and organizational) and at the micro-level (patient experiences and satisfaction) will be discussed. Also the question of how scarce resources (e.g. in a situation of economic crisis) affect the implementation of this demand-driven policy will be addressed.

Integrating the Promotional and Service Roles of Retail Inventories

In some retail contexts, higher inventories not only improve service levels, but also stimulate demand by serving as a promotional tool (e.g., by increasing product visibility). Motivated by a building-products retailer's practice of stocking large quantities of products to stimulate demand, we study inventory management and pricing policies when demand is uncertain but increases with stocking quantity. We first characterize the profit-maximization policy for a stochastic inventory model with a general inventory-dependent demand distribution and given price, and show that demand stimulation (by inventories) has the effect of increasing the target service level beyond the classical newsvendor model's critical fractile ratio. To underscore the importance of considering both demand stochasticity and inventory influence, we consider two functionally oriented benchmark policies—a demand-driven policy and a critical fractile policy—that might, respectively, represent marketing and inventory managers' viewpoints. Our numerical analysis reveals that the optimal policy can generate considerably higher profits than the two complementary functional perspectives. Moreover, we prove that the optimal stocking quantity always exceeds the critical fractile solution and can even exceed the demand-driven stocking quantity. We also address the problem of jointly optimizing both stocking quantity and price for demand-stimulating products using a multiplicative model to represent the influence of price and stocking quantity on the demand distribution. For this model, we show that the pricing and stocking decisions can be determined sequentially, with the optimal policy setting higher prices and stock levels than both the functional policies.

Integrating the Promotional and Service Roles of Retail Inventories

In some retail contexts, higher inventories not only improve service levels, but also stimulate demand by serving as a promotional tool (e.g., by increasing product visibility). Motivated by a building-products retailer's practice of stocking large quantities of products to stimulate demand, we study inventory management policies when demand is uncertain but increases with stocking quantity. For general inventory-dependent demand distributions, we characterize the profit-maximizing policy for a stochastic inventory model that extends the classical newsvendor setting. We contrast this integrated policy with two functionally-oriented approaches - a demand-driven policy that might represent marketing managers' view of inventories as a means for promoting products, and a critical fractile policy that reflects the traditional inventory management tradeoff between the costs of overage and lost sales. Our analysis provides insights regarding the structure of the optimal policy, and its relationship to the functional viewpoints. We prove that the optimal stocking quantity always exceeds the critical fractile solution, and can even exceed the demand-driven stocking quantity. Our analysis further shows that the functional orientations are complementary, with one policy performing well when the other fares poorly. By synthesizing the two functional approaches, the optimal stocking policy can achieve considerably higher profits than either functional policy. We also address the problem of jointly optimizing price and stocking quantity for demand-stimulating inventories by considering two alternative models for incorporating the dependence of demand on price - a distribution-lifting model and a multiplicative model. We show that the models permit sequential optimization of the price and stocking quantity decisions, and that ignoring demand stimulation results in a less-than-optimal stocking quantity.