The strategic use of demand policies in building national technological capabilities.
*By Felipe Massami Maruyama
In recent decades, the debate on innovation policies has focused on two main approaches: supply-side policies (supply-side) and demand-side policies (demand-sideAlthough complementary, these two models are based on distinct logics of public intervention and inducing technological development.
Supply-side innovation policies rely on classic support instruments such as credit lines, economic subsidies, tax incentives for R&D, incubators, and technology parks. Their main focus is... TheTo increase spending on research and development, strengthening domestic productive capacity and national scientific and technological capital. These are "push" policies (supply pushIn these models, the State acts as a direct funder of research activities or as an infrastructure provider, even before there is a clear market demand. This logic was predominant in much of the developing economies, including Brazil, and played a fundamental role in the formation of technical and scientific skills. However, in isolation, it proved insufficient to transform knowledge into economic and social value.
This is where demand-side innovation policies become relevant, their essence being to create or direct markets towards innovative solutions, with the State as their main funder and client. Instead of merely financing the supply of knowledge, the State uses its purchasing and regulatory power to stimulate innovation in response to concrete needs, whether of the government itself or of society. Among the available instruments are public procurement for innovation, local content requirements associated with Research and Development (R&D) requirements, sectoral regulation, standardization, and experimental mechanisms such as technology procurement and regulatory sandboxes. These policies function as a "pull" (demand pull), by specifying real challenges and prompting the market to develop appropriate technological responses.
The case of the Technological Procurement (ETEC) conducted by the Brazilian Space Agency (AEB) for the development of the Inertial Navigation System/GNSS (SNI) is emblematic. It is a legal instrument foreseen in the Legal Framework for Science, Technology and Innovation (Law No. 13.243/2016), aimed at contracting technological solutions that do not yet exist in the market. Unlike conventional purchases, payment is conditional on the development effort and not on the final product, allowing for greater technological risk, something essential in strategic sectors such as space and defense.
The Brazilian Space Agency's (AEB) commission mobilized national companies — Concert Space, Cron, and Horuseye Tech — around a critical challenge: developing a system capable of providing trajectory and course correction information for launch vehicles. The project not only created a groundbreaking technology but also strengthened the national innovation ecosystem, generating effects such as the development of technical capabilities, the retention of knowledge-intensive talent, the establishment of new business partnerships, and the expansion of opportunities to other sectors. More than just a technological product, it was a strategic investment in national autonomy and the creation of public value through innovation.
However, the adoption of demand-side policies still faces structural barriers in Brazil: institutional fragmentation, poor coordination between supply and demand policies, a lack of data and systematic evaluations, and a strong aversion to risk in the public sector. Furthermore, external technological dependence and unstable funding, especially from the National Fund for Scientific and Technological Development (FNDCT), limit the continuity of complex and strategic projects.
To overcome these challenges, it is necessary to articulate supply and demand policies in a systemic way. This implies expanding and professionalizing the use of public procurement for innovation, creating robust monitoring and evaluation mechanisms, and integrating different policy instruments around national technological transformation objectives.
In a global context of digital, energy, and productive transition, Brazil faces a decisive opportunity: to balance the use of supply-side support models with demand-driven instruments capable of aligning innovation, productive development, and social well-being. The experience of the Brazilian Space Agency (AEB) demonstrates that qualified public demand can be the engine of national innovation, transforming complex challenges into opportunities for learning, autonomy, and sustainable development.
*Felipe Massami Maruyama, researcher at the ABES Think Tank
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
Article originally published on the Connected Smart Cities website: https://portal.connectedsmartcities.com.br/2025/11/21/politicas-de-inovacao-pelo-lado-da-demanda-um-caminho-estrategico-para-o-brasil/
