U.S. research activities and results.2 Added to these and other challenges for public policy is that of assessing the "lessons," if any, of postwar Japanese government industrial and technology policies for a U.S. economy that has produced minimal growth in overall productivity or median household incomes during the past two decades.

Our survey of these issues begins with a brief overview of Japan's emergence as a producer of "state-of-the-art" technology during the past 20 years. We then describe U.S. firms' evolving links to Japanese technology development through alliances, R&D activities conducted in Japan, and other means. The next section discusses some of the complexities for corporate managers and public policy created by these links and by other efforts by policymakers and scholars to divine the "lessons" of Japanese policy.


A number of indicators suggest that Japanese firms have progressed during the postwar period from borrowing, modifying, and successfully commercializing foreign technologies to operating at the technological frontier. No individual indicator is definitive, but together they are suggestive. Okimoto and Saxonhouse noted that the ratio of Japanese exports of technology to imports increased from 0.12 in 1971 to 0.30 in 1983.3 This indicator reflects historical trends in licensing and therefore includes royalty payments for technologies licensed years ago. The ratio of technology exports to imports in new contracts alone, however, has risen from 1 in 1972 to 1.76 in 1984—in other words, Japanese firms are now net exporters of intellectual property as measured in new contracts.4 The average annual rate of


See Christopher Freeman, Technology Policy and Economic Performance: Lessons from Japan (London: Frances Pinter, 1987) and Richard R. Nelson, ed., National Innovation Systems: A Comparative Study (New York: Oxford University Press, forthcoming).


See Daniel I. Okimoto and Gary R. Saxonhouse, "Technology and the Future of the Economy," in K. Yamamura and Y. Yasuba, eds., The Political Economy of Japan, vol. 1, The Domestic Transformation (Stanford: Stanford University Press, 1987), pp. 384–395.


This conclusion is corroborated by other data from the Japan Science and Technology Agency, reported in the 1985 Japan Economic Almanac : "Technology exports in fiscal 1983 totaled 6,403 cases, up a significant 35.1 percent of 1,665 cases from the previous year. On the other hand, technology imports came to 7,839 cases, up 13.0 percent or 903 cases. In this area, imports continue to surpass exports. However, what deserves attention is that exports of new patents, excluding exchanges on a continuous basis, have stayed substantially above imports since the latter half of the 1970s, showing a stable surplus. Exports of new patents in fiscal 1983 stood at 2,494 cases as compared with 1,073 cases of imports, with a surplus of Y32.5 billion" See Y. Nakazora, "Science and Technology: Private sector holds initiative in research and development," Japan Economic Almanac 1985 (Tokyo: Nihon Keizai Shimbun, 1985). For a report of similar findings for fiscal 1984, see Industrial Review of Japan: 1984 (Tokyo: Nihon Keizai Shimbun, 1984).

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