sible but also undesirable. Carefully structuring the transfer of product and process technology, on the other hand, is not only desirable but also more feasible. No matter how much the faucets are tightened, technology will continue to flow out. Indeed, the semiconductor industry is today inherently global—no company (U.S. or foreign based) is completely self-sufficient in terms of technology.

Japanese companies are still importing technologies developed in the United States, such as reduced instruction set computing (RISC), parallelism, and video compression. At the same time, there is now evidence of export of technologies developed in Japan. Intel has a strong position in flash memories and will shore up its market position through an alliance with Sharp. Although Toshiba published early work on flash memories, it was Intel that developed the first application of the technology that was widely successful in the market. Semiconductor companies cannot survive without global technology linkages. The question today, then, is not how these linkages can be reduced or avoided, but how to make them work best for participating U.S. companies and for the United States as a country.6

America's early postwar experience with a continued outflow of technology has led to an outpouring of concerns about its corrosive long-term effects on the competitiveness of U.S. companies in the high-technology sectors and on the U.S. economy as a whole.7 Measures to slow or control the outflow of technology have been prescribed, including stricter monitoring and restriction of foreign direct investments and the imposition of tighter reins on certain types of strategic alliances. Arguments in favor of tighter controls clash with the deeply entrenched ideology of free market economics and the presumed advantages of security alliance structures (especially the U.S.-Japan alliance). Although everyone wants to protect U.S. national interests, analysts disagree on how this might best be accomplished. This report seeks to highlight some of the problems and some of the opportunities associated with U.S.-Japan alliances for practitioners and policy-makers who must consider how to make these rapidly expanding relationships demonstrate concrete benefits for the United States.


For purposes of this report, a "U.S. company" is one in which more than half of the equity is held by U.S. citizens. This approach is convenient but not totally satisfactory because some foreign-owned companies may contribute more to the U.S. industrial and technology base than U.S.-owned companies. See Robert Reich, "Who is Us?" Harvard Business Review, January–February 1990, pp. 53–64.


See, for example, Linda Spencer, Foreign Investment in the United States: Unencumbered Access (Washington, D.C.: Economic Strategy Institute, May 1991).

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