Designing innovation policy mix: a multi-objective decision-making approach

Abstract

A consistent mix of policy tools can solve complex policy problems. However, the diversity of policy instruments and their interactions make the analysis of various packages difficult. Mathematical methods can help policy makers to choose better alternatives. This article proposes a novel application of a multi-objective decision-making (MODM) method to design policy mixes and applies it to plan a policy mix for increasing business expenditure on research and development (BERD) in Iran. The interactions between the policy instruments were successfully modeled to design policy mix with maximized effectiveness and feasibility. Moreover, constraints regarding the consistency and diversity of instruments were added to the model. Using a genetic algorithm in MATLAB R2016a the optimum mix was searched, and the Pareto frontier was found for the different levels of total cost. The results of this research show that mathematical programing can be effectively used to handle the complexity of designing policy mixes.1