Increased reliance on robots and offshore manufacturing can partially offset the decline in the size of the workforce, but scientific research and innovation will inevitably suffer from growing shortages of personnel. It is unlikely that Japan’s lack of receptivity to immigration will change over the near or medium term, and the country’s ability to attract researchers from abroad is unimpressive. Japan’s current government, a coalition headed by the DPJ is reportedly considering changes in the tax system that currently deter women from remaining in the work force (creating incentives for nonworking housewives). Indicators that Japan is succeeding in partially reversing adverse demographic trends would be an increase in the birth rate, a sharp increase in the number of women over 30 years of age with advanced degrees in the workforce, an increase in levels of immigration, and growth in the number of women and immigrants holding S&T-related jobs.


Japan is a leader in terms of the sheer number of patents issued; of the top 10 companies awarded patents in the United States, 6 are Japanese. However, this metric may not be a useful tool for benchmarking Japan’s progress in innovation. The extent to which these patents are defensive in nature and not obtained for the purpose of appropriating returns from inventions is unclear. A proliferation of defensive patents could actually work as a deterrent to innovation—the so-called “patent thicket” problem.


Shaken by the economic stagnation that began after 1990, Japan’s policymakers implemented a series of policy reforms designed to enhance innovation, drawing heavily on the example offered by the United States in areas such as IP protection, industry-university collaboration, start-ups, and industry-government R&D. However, it is too soon to assess whether these gradual reforms will bear fruit. Impediments to the attainment of innovation leadership include Japan’s conservative business establishment, industry’s relatively low level of participation in transnational R&D efforts, the inflexible career trajectories of Japanese researchers, and top-down innovation policies overemphasizing mega R&D projects by large domestic companies and government laboratories.

Finding 6-1. Japan has experienced an erosion of market position relative to other countries in a number of high-technology sectors. Japan is unlikely to reverse this relative decline in 5 years, and even 10 years may be optimistic.

Japan’s S&T initiatives are likely to have a comparatively modest and incremental impact on the United States. It is unlikely that Japan will evolve into an adversary or direct security threat to the United States in the next generation. If the past is any guide Japan’s defense-related S&T research will be of limited utility to the United States, and the coordination of bilateral R&D efforts will remain inadequate. Japan may develop specific national-security-related technologies that prove useful to the United States (such as vaccines, “clean” manufacturing processes, or synthetic alternatives to rare-earth elements). Japanese R&D projects may also enable Japanese companies to achieve competitive gains relative to U.S. firms in some industries, including strategic industries, as has occurred during the past 40 years. However, such developments will not destabilize the bilateral relationship or dramatically affect U.S. national security.

Finding 6-2. Reflecting its national experience, Japan has focused its S&T to address specific nonmilitary threats that could very well confront the United States in the future in areas such as energy, food security, natural resource availability, and environmental degradation.

Recommendation 6-1. The United States should position itself to capture value from Japan’s R&D efforts in niche areas involving energy, food and resource security, and environmental protection.

Finding 6-3. Japanese industry, like U.S. industry, is experiencing pressure from China to transfer proprietary technologies.

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