businesses to use capital efficiently. In recent years, the U.S. economy has reaped benefits from this efficiency.27
Although recent trends in innovation and competitiveness have been favorable for U.S. companies in a number of industries, there is no guarantee that they will continue or that Japanese and other foreign companies will not be able to adapt U.S. innovations more quickly and effectively. Despite progress by some U.S. companies in meeting the demands of global competition, other important aspects of the manufacturing environment, such as inadequate capital formation caused by low savings rates and stagnant growth in real incomes, remain and are likely to persist. The future federal role in science and technology is still subject to intense debate, particularly federal support for applied research and appropriate modes of government industry partnerships in areas of research that are applied and close to commercialization. What is clear from this examination of overall U.S. and Japanese innovation policies and paradigms is that considerable differences in orientations and capabilities between the two systems remain, despite some measure of evolution and adaptation in each country.