An Investigation into the Maximum Utilization of National Production and Service Capacity Act

Lack of demand and market is one of the most important obstacles to technology development and innovation dissemination, especially in developing countries. This qualitative research analyzes one the most important experiments to formulate the demand-side policies in Iran, that is, Maximum Use of Country's Production and Service Capacity Act. The changes of this act were investigated longitudinally relying on seven semi-structured interviews. Analyzing different versions of the act shows that during two revisions, the number of policies with systemic approach has been gradually reduced while the number of policies stimulating private demand has been increased. In the first revision in 2012, the policies that stimulate the demand of final consumers are emphasized, while in the second revision in 2019, a pattern similar to the act of 1996 (stimulating the demand of large companies) is observed, indicating the inefficiency of the 2012 reforms. Clearly, the results show that during this period, direct demand stimulation policies have played a more prominent role compared to policies with the logic of integration and coordination of supply and demand. In addition, over the past revisions of the act, support for the improvement of local technological capability and stimulation of private demand have increased consistently, while reinforcement of the act has not been improved. Moreover, other than a short interval in the 2000s, the implementation of the act has not been considered by Supreme Economy Council. Findings have implications for future policy making efforts on industrialization and innovation policies.