Does the focus of renewable energy policy impact the nature of innovation? Evidence from emerging economies

Abstract

Prior research has demonstrated the importance of government policy in fostering innovation in sectors that face market failures, such as renewable energy. We examine the impact of policy on renewable energy innovations in emerging economies, which face market as well as institutional failures. We investigate how differences in the focus of policies may drive technology development efforts in different directions. Specifically, we propose that demand pull policies foster innovations in mature technologies by encouraging exploitation of readily available technologies, while supply push policies foster innovations in novel technologies by encouraging exploration and alleviating resource constraints in research and development. Using information on policy initiatives and renewable energy patents, we develop comparative case studies of four emerging economies over the years 2000–2015 in the renewable energy sector – Turkey, India, Brazil, and China. Our case findings illustrate that countries with a focus on pull policies innovate primarily in mature technologies, whereas ones with a focus on push policies have substantial innovations in novel technologies. We present a typology of policy and innovation focus, informed by our conceptual framework and case studies.