DEMAND-ORIENTED PUBLIC POLICIES AND INNOVATION ECOSYSTEMS: A NARRATIVE LITERATURE REVIEW

Abstract

Innovation plays a pivotal role in economic and social development, driving competitiveness, value creation, and the transformation of production systems. In this context, innovation ecosystems stand out as environments formed by the interaction among companies, universities, government, and society, where cooperation among diverse actors enables the creation and dissemination of innovative solutions. The State assumes a strategic role by formulating public policies, reducing uncertainty, and stimulating technological investment. Traditionally, innovation policies have focused on supply-side instruments, such as research funding, tax incentives, and support for technological development. However, demand-oriented policies are gaining prominence by directing innovation efforts toward societal needs through mechanisms such as public procurement, technological commissioning, and regulations. Through a narrative literature review, this study analyzed how these policies contribute to strengthening innovation ecosystems and fostering economic growth. The results demonstrate that such instruments enhance coordination among government, businesses, and scientific institutions, thereby fostering innovative markets and the practical application of knowledge. Nevertheless, challenges—such as bureaucracy, limited integration among actors, and institutional constraints—hinder their implementation, underscoring the need to combine supply- and demand-side policies to promote more dynamic and sustainable ecosystems.