National Systems of Innovations and the Role of Demand. A Cross Country Comparison

This article focuses on the role of demand in the National System of Innovations: why it is so important, and how does it affect the dynamics of the system and the flow of inventions and innovations. To study the evolutions and the dynamics of the different systems a series of composite indicators will be build up. In the paper it will be argued that the system of innovation can be defined by four different dimensions: Social and Human Capital, Knowledge Creation, Innovation capacity of the Supply and Innovation from the Demand. The evolution of these dimensions is studied over a period of fifteen years and compared across fourteen European countries. This structure allows to study different dynamics, and evolution over time of different systems. The study highlights the weak links of the system, comparing each national system with the performance of the rest of the states members. The identification of the weakness and the evolution of the weakness over the time gives interesting policy conclusions. The aim of the paper is also to contribute to the theory of composite indicators by offering a new approach to select, after carrying out a sensitivity analysis, the best indicator.