4
Statistical and Policy Context for U.S.-Japan Science and Technology Relations

SUMMARY POINTS

  • Japan and the United States are the world's two leading techno-industrial nations. On several important measures of science and technology inputs, such as nondefense research and development spending and full-time researchers, Japan leads the world on a per capita basis. Japan is also planning significant increases in public support for science and technology at the same time that U.S. government R&D spending is likely to remain flat or decrease.

  • Japan 's performance on measures of science and technology outputs also is impressive. The United States still leads the world in the production of scientific and technical literature, and recent U.S. assessments of international capability in critical technologies show the United States ahead or at parity in all areas. However, Japan's contribution to the world's scientific literature is rising steadily, Japanese inventors account for about one-fourth of U.S. patents granted annually, and Japan leads the world in exports of several important high-technology market categories.

  • Over the past decade the focus on the US.-Japan science and technology relationship has grown, and a number of policy changes and new programs have been implemented to develop human resources for cooperating and competing with Japan in science and technology and for facilitating greater U.S. industry access to Japanese scientific and technical information. Although by themselves these efforts will not have a significant short-term impact on US. competitiveness or science and technology relationships with Japan, they represent valuable long-term investments in important national human resource and institutional capabilities for maximizing U.S. interests.

BASIC DATA ON SCIENCE, TECHNOLOGY, AND INNOVATION

By all of the available relevant measures, the United States and Japan are the two leading techno-industrial nations in the world. The tables and figures in this chapter provide an overview of where the two countries stand in terms of human and financial resource inputs to innovation; scientific, technological, and economic outputs; and key aspects of international science, technology, and trade relationships.

Input Measures

Figures 4-1 and 4-2 provide an overall picture of U.S. and Japanese R&D spending in 1993, the most recent year for which comparable data are available, broken down by source of funds (mainly industry and government) and performing sectors (mainly industry, universities, and government). The figures illustrate the relatively larger role of government in funding R&D in



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Maximizing U.S. Interests in Science and Technology Relations with Japan 4 Statistical and Policy Context for U.S.-Japan Science and Technology Relations SUMMARY POINTS Japan and the United States are the world's two leading techno-industrial nations. On several important measures of science and technology inputs, such as nondefense research and development spending and full-time researchers, Japan leads the world on a per capita basis. Japan is also planning significant increases in public support for science and technology at the same time that U.S. government R&D spending is likely to remain flat or decrease. Japan 's performance on measures of science and technology outputs also is impressive. The United States still leads the world in the production of scientific and technical literature, and recent U.S. assessments of international capability in critical technologies show the United States ahead or at parity in all areas. However, Japan's contribution to the world's scientific literature is rising steadily, Japanese inventors account for about one-fourth of U.S. patents granted annually, and Japan leads the world in exports of several important high-technology market categories. Over the past decade the focus on the US.-Japan science and technology relationship has grown, and a number of policy changes and new programs have been implemented to develop human resources for cooperating and competing with Japan in science and technology and for facilitating greater U.S. industry access to Japanese scientific and technical information. Although by themselves these efforts will not have a significant short-term impact on US. competitiveness or science and technology relationships with Japan, they represent valuable long-term investments in important national human resource and institutional capabilities for maximizing U.S. interests. BASIC DATA ON SCIENCE, TECHNOLOGY, AND INNOVATION By all of the available relevant measures, the United States and Japan are the two leading techno-industrial nations in the world. The tables and figures in this chapter provide an overview of where the two countries stand in terms of human and financial resource inputs to innovation; scientific, technological, and economic outputs; and key aspects of international science, technology, and trade relationships. Input Measures Figures 4-1 and 4-2 provide an overall picture of U.S. and Japanese R&D spending in 1993, the most recent year for which comparable data are available, broken down by source of funds (mainly industry and government) and performing sectors (mainly industry, universities, and government). The figures illustrate the relatively larger role of government in funding R&D in

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-1 U.S. and Japanese R&D spending by source of funds, 1993. SOURCE: National Science Board, Science & Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996). FIGURE 4-2 U.S. and Japanese R&D spending by performing sector, 1993. SOURCE: National Science Board, Science & Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996).

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Maximizing U.S. Interests in Science and Technology Relations with Japan the United States. This long standing discrepancy has been narrowing in recent years, mainly because the U.S. government share of overall R&D support has been falling. As Japan follows through on plans to increase government support for R&D in the next few years, it is possible that the two countries will converge toward a 25 to 30 percent level of public support. As for the sectoral breakdown of R&D performance, Figure 4-2 shows that the United States and Japan are quite similar. One caveat that should be mentioned is that many of the activities supported by Japan's general university funds, which are included in the higher-education R&D performance share, would probably not be classified as R&D in the United States. Therefore, the figures may somewhat overstate R&D performed by higher education institutions in Japan. Another significant difference between the two countries is the emphasis on defense-related R&D in the United States. This is illustrated in Figure 4-3, which shows that Japan is first among leading industrial nations in nondefense R&D expenditures as a share of gross domestic product (GDP).1 Figure 4-4 shows that Japan leads the world in another important input measure-the number of full-time equivalent R&D scientists and engineers per 10,000 total labor force members.2 Figures 4-5 and 4-6 illustrate another important ongoing shift. Figure 4-5 compares Japan's total government science and technology investments for fiscal years 1991-1995 with those of the United States, converted at both purchasing power parity (PPP) and current exchange rates (CER). Figure 4-6 compares prospective government investments over fiscal years 1996-2000. While the Japanese government has stated the goal of spending 17 trillion yen over this period, U.S. government R&D spending is expected to be restrained due to continued efforts to close the federal budget deficit. Assuming that about 6 percent of Japan's total will be defense related, as is true today, Japanese government nondefense science and technology investments over the 1996-2000 period are projected to reach almost 90 percent of the U.S. total at current exchange rates. 3 Table 4-1 shows industrial R&D performance in the United States and Japan and the breakdown according to industry. The most striking differences in industry composition are the large role of the electrical machinery industry in Japan's industrial R&D and the large percentage of U.S. industrial R&D performed by nonmanufacturing industries. The latter is a relatively recent phenomenon; the nonmanufacturing sector accounted for 4 percent of U.S. industrial R&D in 1982, versus 25 percent in 1992. To some extent, these statistical shifts have resulted from changes in the industrial classification of companies and more thorough surveying of nonmanufacturing companies, so they should be interpreted cautiously. Still, the increased role in U.S. R&D of the packaged software industry (which is classified as nonmanufacturing) and 1   In 1994, U.S. and Japanese nondefense R&D expenditures were nearly equal on an absolute basis, $140 billion for the United States and $133 billion for Japan, when measured at current exchange rates. When converted at the purchasing power parity exchange rate, Japan's nondefense R&D spending was $75 billion in 1994. See Organization for Economic Cooperation and Development (OECD), Main Science and Technology Indicators (Paris: OECD, 1996). 2   Aggregate data can mask important differences. Some experts emphasize that the United States has more Ph.D. holders working as researchers in industry than does Japan. Akito Arima, ''Strengthening Japan's Science Base: Developments in Education and Research Infrastructure," presentation at the symposium on Science and Science Policy in Japan organized by the Japan Society for the Promotion of Science, March 7, 1997. 3   A complete review of U.S. and Japanese government R&D funding is outside the scope of this study. There is a significant literature on each country's R&D, much of it cited elsewhere in the report. Those who wish to inquire further might start with National Research Council, Allocating Federal Funds for Science and Technology (Washington, D.C.: National Academy Press, 1995), and Science and Technology Agency, ed., White Paper on Science and Technology 1996: Striving to Become a Front-runner in Research Activity (Tokyo: Japan Science and Technology Corporation, 1996).

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-3 Nondefense R&D expenditures as a percentage of GDP for most recent year available for each country. NOTE: United States, 1995; Japan, U.K., Italy, and Germany, 1993; France 1992. SOURCE: National Science Board, Science & Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996). FIGURE 4-4 Number of full-time equivalent R&D scientists and engineers per 10,000 total labor force members, most recent year available for each country. SOURCE: National Science Board, Science & Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996).

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-5 U.S. and Japanese national government spending on science and technology, actual totals for fiscal years 1991-1995. NOTES: Japan spending in yen: total—11.3 trillion, defense—0.7 trillion, nondefense—10.6 trillion. Figure 4-5 is intended to generally illustrate the magnitude and broad composition of U.S. and Japanese R&D funding, and the exact figures should be taken with some caution. Figures for both countries are in current currency, and do not take into account relative inflation trends. Japanese totals include supplementary budgets. U.S. figures are for budget authority, rather than actual spending. Actual fiscal 1995 spending for the United States was somewhat lower than original budget authority due to two large recision bills during the year. Note that the U.S. total in Figure 4-5 does not include investment in R&D plant, while AAAS projections used in Figure 4-6 do include R&D plant. SOURCES: U.S. Department of Commerce, Office of Technology Policy, Japanese Government S&T-Related Expenditures, April 1996, and National Science Board, Science & Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996). FIGURE 4-6 U.S. and Japanese national government spending on science and technology, projected totals for fiscal years 1996-2000. NOTE: Japanese figures are based on the announced goal of 17 trillion yen and reflect the assumption of defense R&D spending at 6 percent of the total. Figure 4-6 is intended to generally illustrate the magnitude and broad composition of planned U.S. and Japanese government R&D funding, and the exact figures should be taken with some caution. Figures for both countries do not take into account future inflation and exchange rate trends. U.S. figures are for projected budget authority, including R&D plant. Note that the U.S. total in Figure 4-5 does not include investment in R&D plant. SOURCES: American Association for the Advancement of Science and the Japanese science and technology plan.

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Maximizing U.S. Interests in Science and Technology Relations with Japan service industries such as consulting, financial services, and telecommunications services reflects real and important shifts in U.S. innovation. 4 Output Measures The measurements given above of inputs to innovation should be interpreted with some caution, since definitions and categories may not be consistent internationally, and it is difficult to measure the quality of certain inputs, even where quantity can be determined. Measuring the outputs of innovation reliably is perhaps even more difficult. Indicators that can serve as proxies 4   A major question for the future is whether the increased role of the service sector in innovation is a U.S. anomaly or a harbinger of what will occur in Japan and other countries. Countries are moving at various speeds in improving data collection in this area, so international comparisons should be made with caution. See Allison Young, "Measuring R&D in the Services," STI Working Papers, Organization for Economic Cooperation and Development, 1996.

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Maximizing U.S. Interests in Science and Technology Relations with Japan for innovation, such as quantity and quality of scientific and technical literature and patents, productivity growth, market share, and trade performance, may not tell a complete and accurate story. The industry case studies in Chapter 5 are intended to supplement the statistical overview. Figure 4-7 shows that the United States leads the world in the output of scientific and technical literature by a wide margin, although the U.S. share has been gradually declining since the early 1970s. Japan's share has risen gradually over the years, and stood at 9 percent in 1993, the second-largest single-country share. 5 Table 4-2 gives a breakdown of U.S. patents granted in 1985 and 1995 by residence of the inventor. Productivity growth is a key element in sustaining a competitive economy that creates high-paying, stable employment over the long term. Figures 4-8 and 4-9 show how the major industrial economies have performed over the past decade in manufacturing and overall FIGURE 4-7 Country shares of world scientific and technical literature, 1993. SOURCE: National Science Board, Science & Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996). TABLE 4-2 U.S. Patents Granted by Nationality of Inventor   1985 1995 U.S. residence 55 % 57% Japanese residence 18 % 20% Other 27 % 23% Total patents granted 71,661 113,955   SOURCE: U.S. Patent and Trademark Office. 5   Contributing to Japan's relative rise over the past decade has been slower growth in output by the United Kingdom and an actual decline in output by the former Soviet Union. See National Science Board, Science and Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996), p. 5-31.

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-8 Compound annual growth in manufacturing productivity, 1985-1995. SOURCE: U.S. Bureau of Labor Statistics, as compiled in Competitiveness Index 1996: A Ten-Year Strategic Assessment (Washington, D.C.: Council on Competitiveness, 1996). FIGURE 4-9 Compound annual growth in national productivity, 1985-1995. SOURCE: WEFA Group, as compiled in Competitiveness Index 1996: A Ten-Year Strategic Assessment (Washington, D.C.: Council on Competitiveness, 1996). productivity. The U.S. economy has been a mediocre performer compared with Japan along these measures. The poor U.S. showing in overall productivity compared with manufacturing productivity is due to several factors. Productivity growth in the service sector has been slower than in manufacturing, and U.S. savings and investment levels have been lower than those of most other developed economies. 6 Figure 4-10 shows the relative share of major countries and regions in world GDP in 1988 and 1993. Japan and other nations in Asia have gradually increased their share of world GDP, while the shares of the United States and the European Union (EU) have declined. 6   In addition, measuring productivity and productivity growth in the service sector is more difficult than in manufacturing, which means that U.S. performance may be understated in the statistics. More sophisticated approaches to measurement are required. See Competitiveness Index 1996: A Ten-Year Strategic Assessment (Washington, D.C.: Council on Competitiveness, 1996), p. 31.

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-10 Percentage of major countries and regions in world GDP. NOTES: Because data for Luxembourg and Taiwan are not available in the World Development Report, these are taken from Main Economic Indicators and Key Indicators of Developing Asian and Pacific Countries. They are added to the World Bank estimates to get the world total. The EU is composed of 15 countries. SOURCES: World Bank, World Development Report 1995; Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries 1995; Organization for Economic Cooperation and Development, Main Economic Indicators. Figure 4-11 summarizes the results of the U.S. government's periodic assessment of the U.S. technology position compared with Japan and Europe in a range of significant industrial technologies. In contrast with past surveys, the U.S. position is quite strong, with the chart showing no technologies in which the United States is lagging. Figure 4-12 shows the results of a recent Japanese assessment of Japanese industrial R&D capability relative to the United States and Europe. Such assessments represent snapshot judgments by experts in these fields. Although it is possible to make too much of such results, these surveys do support the widely held notion that U.S. industry has improved its performance in innovation and product development across a 7 range of industries in recent years. 7 Scientific, Technological, and Economic Relationships An examination of several indicators of U.S. and Japanese scientific, technological, and economic relationships confirms long-standing patterns and reveals several interesting trends. Table 4-3 shows U.S. "arms-length" technology trade, or royalty and licensing payments, between U.S. and nonaffiliated foreign residents. Technology trade with Japan constitutes the bulk of the U.S. surplus in this area. In one sense this can be seen as unfavorable in that far more 7   This view is supported by Japanese assessments, such as Sangyo Kozo Shingikai Sogo Bukai Sangyo Gijutsu Shoiinkai (Industrial Structure Advisory Committee, Industrial Technology Subcommittee) and Sangyo Gijutsu Shingikai Sogo Bukai Kikaku Iinkai (Industrial Technology Advisory Committee, Planning Subcommittee), Kagaku Gijutsu Sozo Rikkoku e no Michi o Kirihiraku Shiteki Shisan no Sozo, Katsuyo ni Mukete, (Clearing a Path Toward a Nation Based on Creative Science and Technology; Toward Creating and Utilizing Intellectual Assets), Executive Summary, June 1995.

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-11 National critical technologies: technology position and 1990-1994 trend. SOURCE: National Critical Technologies Report (Washington, D.C.: National Critical Technologies Review Group, 1995), p. vii.

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-12 R&D capability of business enterprises: comparisons between Japan and the United States, and Japan and Europe. NOTE: +1 point was given when a business enterprise assessed Japan to be superior, 0 for equal, and -1 for United States (or Europe) superior, and the sum was divided by the number of business enterprises giving an evaluation to compute the index for evaluating the relative superiority. SOURCE: Japan Science and Technology Agency, Survey of Private Enterprises' Research and Development, for FY 1991 and FY 1994.

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Maximizing U.S. Interests in Science and Technology Relations with Japan FIGURE 4-13 Flow of scientists to and from Japan. SOURCE: Japan Ministry of Justice as compiled in Science, October 4, 1996, vol. 274.

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Maximizing U.S. Interests in Science and Technology Relations with Japan TABLE 4-6 U.S. Trade in Advanced Technology Products, 1994 (current billion dollars)   Export Import Balance NAFTA partners 19.0 10.9 8.1 Europe foura 25.3 14.0 11.3 Japan 14.4 28.7 -14.3 Asia, excluding Japan 30.0 35.2 -5.2 Rest of the world 32.1 9.6 22.5 Total 120.8 98.4 22.4 a UK, Germany, France, and Italy. SOURCE: National Science Board, Science & Engineering Indicators-1996, (Washington, D.C.: U.S. Government Printing Office, 1996). TABLE 4-7 Japan's Trade by Region, 1995 (current billion dollars)   Imports % Change from 1994 Exports % Change from 1994 United States 75.4 20.3 120.9 2.8 EU 48.8 25.9 70.3 14.8 Middle East 31.7 13.4 10.1 -8.3 ASEAN 38.4 20.0 53.6 31.9 NIEs 41.2 32.7 111.0 18.8 China 35.9 30.3 21.9 17.4 Other 64.6 18.1 55.1 4.1 Total 336.1 22.3 442.9 12.0   SOURCE: Ministry of Finance, Foreign Trade Statistics advanced technology products, even if Japan is excluded. Table 4-7 shows Japan's overall trading patterns. The United States is still Japan's most important trading partner in terms of imports and exports. However, trade with Asia is growing rapidly for Japan, in particular with the Newly Industrialized Economies (NIEs) of South Korea, Taiwan, Singapore, and Hong Kong and the Association of Southeast Asian Nations (ASEAN)—Indonesia, Thailand, Malaysia, and the Philippines. 10 10   Singapore is included as one of the NIEs, but is also a member of ASEAN.

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Maximizing U.S. Interests in Science and Technology Relations with Japan THE POLICY CONTEXT Although the bulk of U.S.-Japan scientific and technological relationships that affect competitiveness are undertaken in the private sector, official relations form an important part of the context. Until the 1980s, the government-to-government structure for scientific and technological cooperation evolved as an aspect of overall diplomatic relations. As one aspect of efforts to promote democratization in Japan, U.S. occupation authorities cooperated with Japanese scientists to restructure Japanese scientific institutions, with some input from U.S. scientists. 11 The 1961 agreement that set up the U.S.-Japan Committee on Scientific Cooperation emerged from a summit meeting between President Kennedy and Prime Minister Ikeda. During the 1960s and 1970s, a number of U.S.-Japan agreements were reached between specific agencies to conduct or support collaborative research and exchanges in important areas of mutual interests, including energy, space, and life sciences. 12 During the 1980s, the U.S.-Japan science and technology relationship gradually assumed a higher profile and became more difficult for specialists to manage outside the context of growing economic rivalry. An "umbrella" agreement signed in 1980 was extended rather than renewed in 1985 because of growing pressure on the U.S. side to ensure reciprocal benefits from interactions undertaken through the agreement. After contentious and protracted negotiations, a new agreement was signed in 1988 by President Reagan and Prime Minister Takeshita. It included specific provisions for the treatment of intellectual property, established several new oversight bodies, and called for a balanced and reciprocal relationship in terms of science and technology contributions and benefits. The agreement was renewed without change in 1993. While specific agency agreements continue, the renewed umbrella agreement provides a common basis for oversight and the development of metrics. The U.S.-Japan Framework for a New Economic Partnership, signed by President Clinton and Prime Minister Miyazawa in June 1993, also outlines areas for U.S.-Japan science and technology cooperation in the "Common Agenda" (see Box 4-1). Science and technology cooperation at the official level, including various agreements and agency-to-agency research collaboration, does not have as great an impact as private-sector cooperation on U.S. or Japanese economic performance or competitiveness. The fact that a great deal of collaborative, precompetitive research in the United States is university based, and therefore easier to access, while comparable work in Japan is often done in proprietary settings, has played a role in the asymmetrical benefits that the two countries derive from cooperation in science and technology. 13 Although some have called for the United States to aggressively pursue reciprocal benefits and quid pro quo in cooperation with Japan and other foreign partners, there is a strong aversion to jeopardizing the openness of U.S. basic research, which is seen as a major 11   Scientific Advisory Group to the National Academy of Sciences, Reorganization of Science and Technology in Japan, August 1947. For a detailed historical account, see Hideo Yoshikawa and Joanne Kauffman, Science Has No National Borders: Harry C. Kelly and the Reconstruction of Science and Technology in Postwar Japan (Cambridge, Mass.: MIT Press, 1994). 12   See U.S. House of Representatives, Committee on Foreign Affairs and Committee on Science, Space, and Technology, Science, Technology and American Diplomacy 1994 (Washington, D.C.: U.S. Government Printing Office, 1994). Technology and industrial relationships related to defense have also been extensive and are covered in the report of the parallel Defense Task Force. See National Research Council, Maximizing U.S. Interests in Science and Technology Relations with Japan: Report of the Defense Task Force (Washington, D.C.: National Academy Press, 1995). 13   National Research Council, Expanding Access to Precompetitive Research in the United States and Japan: Biotechnology and Optoelectronics (Washington, D.C.: National Academy Press, 1990).

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Maximizing U.S. Interests in Science and Technology Relations with Japan Box 4-1 The U.S.-Japan S&T Agreement and the Common Agenda U.S.-Japan S&T Agreement The U.S.-Japan Agreement on Cooperation in Research and Development in Science and Technology (the S&T Agreement or "Umbrella Agreement") was signed by President Reagan and Prime Minister Takeshita in 1988 after several years of sometimes contentious negotiations. The S&T Agreement establishes the policy framework for the overall science and technology relationship between the two countries, superseding a 1980 agreement. 1 It was renewed in 1993 and comes up for renewal again in 1998. The S&T Agreement states that cooperation should meet four criteria: (1) the United States and Japan have complementary R&D capabilities, resource bases, and centers of excellence, (2) the subject is important to both countries, (3) benefits are distributed equitably, and (4) cooperation accelerates progress in science and technology. The countries commit themselves to provide comparable access to major government-sponsored or-supported programs and exchange of information. The S&T Agreement also seeks to expand dissemination of scientific and technical information and personnel exchanges, particularly opportunities for U.S. scientists and engineers to do research in Japan. The S&T Agreement established a Joint High Level Committee and Joint Working Level Committee of government officials, and a private-sector Joint High Level Advisory Panel to assess major developments and monitor implementation. In a recent assessment of U.S.-Japan trade agreements, the American Chamber of Commerce in Japan (ACCJ) rated the S&T Agreement as seven on a scale of one to ten. 2 Over 150 projects have been undertaken through the agreement and dissemination of information has increased significantly. Although some exchange programs have not succeeded, opportunities for U.S. scientists and engineers to perform research in Japan have expanded a great deal (see Chapter 4). The ACCJ assessment made four recommendations to improve implementation: (1) all pertinent meetings should be posted on a single, common Internet site in both languages, (2) the United States should make requests of Japan based on long-term needs, (3) industry and universities should work more effectively on direct interaction outside government auspices, and (4) the U.S. government should devote more resources to monitoring the agreement and related programs. Common Agenda The Common Agenda for Cooperation on Global Perspective was signed by President Clinton and Prime Minister Miyazawa in July 1993 as part of the US.-Japan Framework Agreement The Common Agenda was intended to provide an impetus for expanded U.S.-Japan cooperation to address pressing long-term global problems "such as environmental degradation, population growth, disease prevention, and development of technology and human resources for the future." 3 Most of the Common Agenda's emphasis is on cooperation in areas such as health and environment. For example, the two countries have embarked on a program to eradicate polio in the Western Pacific and Southeast Asia, with the ultimate goal of eradicating the disease worldwide by 2000. The two governments have launched joint environmental conservation efforts in Indonesia and the Philippines.

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Maximizing U.S. Interests in Science and Technology Relations with Japan Several of the cooperative science and technology programs also address health and environment, in areas such as Arctic research, addressing emerging and re-emerging infectious diseases, earthquake mitigation, and sustainable agriculture. In the area of civil industrial technology, collaboration has been launched in intelligent transport systems, ceramics, technology databases, and bioprocessing. No formal evaluation of the Common Agenda has been done, but information gathered by the task force during the course of the study indicates that it has been useful in gaining high-level visibility and support in the two governments for joint efforts on global issues. 1   Agreement Between the Government of the United States of America and the Government of Japan on Cooperation in Research and Development in Science and Technology, June 20,1968 2   American Chamber of Commerce in Japan, Making Trade Agreements Work, (Tokyo: ACCJ, 1997). 3   U.S. Department of State, Bureau of East Asian and Pacific Affairs, "The U.S.-Japan Common Agenda Fact Sheet," August 30, 1996. strength of the U.S. system. The official structure of agency agreements and government-to government cooperation could become more important in the future, particularly if Japan follows through on plans to increase support for fundamental research. The agreements could be used to encourage Japan to increase R&D support in critical areas and to ensure that Japan's growing basic research base is open and accessible. 14 International cooperative science and technology initiatives launched by each country also have raised the visibility of the U.S.-Japan relationship. Several of these initiatives, such as Intelligent Manufacturing Systems and the Superconducting Supercollider, were described in Chapters 2 and 3. Although international sharing of risks and resources in large science and technology programs has a compelling logic, the mixed record of these efforts by the United States and Japan illustrates the inherent difficulty of reconciling the interests of various participant countries. In particular, some believe that the difficulties of the U.S.-initiated projects resulted from lack of consultation with potential international partners early in the planning process. 15 These difficulties appear to rise with the cost, scale, and visibility of the project. A final aspect of the evolution of the official relationship has been a series of initiatives and programs under the auspices of one or both governments to rectify the large imbalances in the flows of technically trained personnel and scientific and technical information. The task force had an opportunity to learn about these programs at several of its meetings. Exchanges of Scientific and Engineering Personnel Growing awareness of Japan's technological prowess and concern over continuing wide imbalances in the flow of scientists and engineers between the two countries led to a number of new programs and initiatives since the early 1980s. These initiatives have been aimed at 14   These issues are discussed in National Research Council, Strategies for Achieving US Objectives in Science and Technology Relations with Japan Report of a Workshop (Washington, D C National Academy Press, 1996) 15   The task force endorses this statement from William J Clinton and Albert Gore, Jr, Science in the National Interest, Office of Science and Technology Policy, 1994, p 13 "We must enter international collaborations with clear responsibilities and secure commitments from each partner. For this, we must establish with the Congress mechanisms for prioritizing, committing to, and then sustaining long term support for large projects. This need applies equally well to large American projects with multi-year time scales."

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Maximizing U.S. Interests in Science and Technology Relations with Japan increasing opportunities for American researchers and engineers to visit and work in Japan and expanding language and cultural training programs so that American technical personnel can derive maximum benefit from these interactions. Through a workshop held in 1994 and additional follow up research, the task force gathered information to assess the overall need and effectiveness of personnel training and exchange programs. Although this broad assessment cites examples, the purpose was not to evaluate specific programs but to develop conclusions on the broad U.S. effort, with a view toward long term national needs. A range of programs trains U.S. scientists and engineers in Japanese language and sends them to Japan. A report by the National Science Foundation in 1994 included all known noncorporate programs to send American researchers to Japan, primarily in science and technology.16 In the 1993-1994 U.S. fiscal year, listed programs supported 809 Americans to visit Japan for one week to a year or more. Nearly half of these were for periods of three months or longer, with one fourth staying for a year or more. MIT-Japan Program Established in 1981, this is the longest running program to train U.S. scientists and engineers in Japanese language and to provide research opportunities in Japan. Most of the students participate in the program at the graduate level. The program requires two years of language training, followed by an internship that generally lasts for a year. Most of the interns go to Japanese companies, although some go to universities or government laboratories. The MIT-Japan Program is supported by several sources, including private foundations, corporate members, and the Air Force Office of Scientific Research-managed Japanese Industry and Technology Management Training Program (JITMTP, see below). For the internships, the Japanese hosts provide considerable in-kind support (room and board). Of the 371 program alumni from the 1981-1996 period who responded to a survey earlier this year, 179 worked in areas that were Japan-related.17 From discussions during the 1994 workshop organized by the task force, it is clear that many of these graduates are doing valuable work for U.S. organizations in their dealings with Japan.18 The MIT-Japan Program is a good illustration of the task force's main points on this issue: (1) federal support is well leveraged with private and Japanese support, and (2) U.S. industry clearly utilizes a significant number of Japan-capable scientists and engineers, although the demand does not amount to thousands per year. AFOSR-JITMTP This program was launched in 1991. In most years it has divided $10 million into 4 two year competitive grants. For 1996-1997, the money has come through the Defense Advanced Research Projects Agency budget, but it is still managed by AFOSR. 16   National Science Foundation Tokyo Office, "Current Status of Programs to Support American Researchers in Japan," Report Memorandum #94-7, November 1994. 17   Communication from the MIT-Japan Program, May 1997. 18   Specific case examples are included in Patricia Gercik, On Track With the Japanese (New York: Kodansha America, 1992)

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Maximizing U.S. Interests in Science and Technology Relations with Japan The NRC's Manufacturing Studies Board conducted an assessment of the program which was released in 1994.19 The report was favorable overall, and contained suggestions for more effective program management. It also recommended that the government provide stable five year funding to grantees, in order to improve effectiveness. JITMTP grants support a range of activities, including research, internships, shorter stays, development of technically-oriented language curricula, and information access programs. According to the NSF report, the grantees send several hundred researchers to Japan per year. The programs have various approaches on issues such as whether students are required to study Japanese language. NSF Programs Many of the U.S. government funded exchanges are managed by NSF. These mainly send academic scientists and engineers to Japan for visits of one week to over a year. Several programs utilize Japanese funding. One very popular program is the Tsukuba Summer Institute that NSF runs jointly with the National Institutes of Health. Under the program 40-50 Ph.D. candidates spend the summer at Japanese government labs. As with the MIT-Japan program, the NSF experience shows that there is considerable interest in research opportunities in Japan among U.S. scientists and engineers, particularly when programs are structured so that large opportunity costs are not incurred in order to participate. In addition to NSF programs, the Japanese government funds and manages several programs directly. Manufacturing Technology Fellowship Program This is a joint program between MITI and the Department of Commerce (DOC) launched in 1993 following a visit by Vice President Quayle. The purpose is to place U.S. engineers in Japanese manufacturing environments for one year internships. The fellows participated in a one month orientation program before traveling to Japan. Although it was contemplated that 50-100 fellows per year would go through the program, it has not been able to fulfill those expectations. The current year is the final one for DOC funding. The major problems included difficulties in making arrangements on the Japanese side to make the program more attractive to U.S. companies, and the leaner organizational approach of U.S. companies. The American Society for Engineering Education is trying to continue the program on a private basis. Lessons Learned The task force draws several lessons from this experience. First, the investment by the U.S. government in direct support of American researchers and engineers in Japan appears to be very cost effective. A large number of science and technology personnel are influenced by a relatively small U.S. government investment.20 19   National Research Council, Learning from Japan: Improving Knowledge of Japanese Technology Management Practices (Washington, D.C.: National Academy Press, 1994). 20   Precise figures are not available, but discussions at the 1994 workshop indicated that appropriated U.S. government funding for long-term stays was roughly $1.5 million annually. In addition, the U.S. government receives approximately $1 million annually from Japan's Center for Global Partnership, and American researchers selected by U.S. government agencies receive approximately $2.2 million annually through the fellowship programs of the Science and Technology Agency and the Ministry of Education. As noted in discussion of the MIT-Japan Program, in some cases fellowships and internships leverage in-kind support from Japanese hosts, and additional support from private foundations and corporate sponsors.

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Maximizing U.S. Interests in Science and Technology Relations with Japan A second insight of the task force is that the expectations of some observers and participants may be unrealistically focused on short term impacts. A number of workshop participants noted that the full value of the Japan experience is unlikely to be realized in the first job after returning from Japan. A number of alumni who participated in the 1994 workshop indicated that the value of their Japan experience was eventually put to good use after several years of employment, through a combination of self-motivation and taking advantage of opportunities within the organization. Clearly, several programs have not met demand expectations, such as the Manufacturing Technology Fellowships, and funding has been cut. In the short term, this ensures that the government does not expend resources where there is a small apparent demand, but it does foreclose the possibility that the program could have been restructured to be more attractive to U.S. industry. In short, the task force concludes based on its examination that there is a continuing demand and need for Japan-trained scientists and engineers, and that the modest U.S. government investments in this area are effective and well leveraged. The task force believes that the long term issues are particularly important to bear in mind. With Japan increasing its investments in basic research, the need for U.S. capabilities to access Japanese scientific and technological know-how, particularly human resources, is also likely to increase. Japan represents a special case among countries with which the United States has significant science and engineering ties. Compared with the flow of scientists and engineers from China and Korea, many of whom stay to work for U.S. companies and organizations after receiving advanced training in the United States, a much larger percentage of Japanese scientists and engineers who receive training here return to Japan. As opportunities improve in their home countries, the percentage of non-Japanese Asian scientists and engineers who return is rising. The United States is unlikely to build the necessary human resources in this area without public support and incentives. Particularly when combined with the rigors of pursuing a science and engineering curriculum, the difficulty of learning the Japanese language and cultural skills discourages students from making the substantial commitment required to develop the requisite skills on their own. Because of the relatively high rate of job mobility in the United States and other factors, U.S. industry employers are also reluctant to invest in Japan-related language and cultural training for their employees. Although some university programs can show increasing industry involvement and support, it is unlikely that the private sector will make investments in skills and expertise that will only pay off over the long term and that may not be appropriable by individual companies. In addition to confirming the overall value of Japan-related technical personnel training and internship programs, the task force discussed and considered various specific issues related to their orientation and management. One question is whether university-based or government exchange programs should be focused on specific technical areas or on more general country expertise. Targeting specific technical areas might help participants maximize the value of their experience and develop expertise of interest to American industry. On the other hand, a broader experience can provide a better foundation for participants' long-term careers. Perhaps a variety of approaches, as are supported now through the AFOSR-supported programs and by other government efforts, can be effective and mutually reinforcing. Another management issue considered by the task force is the development of follow-up and evaluation efforts on the part of programs. Although the modest funding levels of these programs

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Maximizing U.S. Interests in Science and Technology Relations with Japan do not justify extensive follow-up and evaluation efforts, significant value could come from relatively simple follow-up activities such as keeping track of alumni of the programs and performing periodic surveys on their experiences and subsequent career paths. Utilization of Japanese Scientific and Technical Information A focus on efforts to improve U.S. access to and utilization of Japanese scientific and technical information (JSTI) also increased during the early 1980s. In 1986 Congress passed the Japan Technical Literature Act, and the Japan Technology Program at the U.S. Department of Commerce was established to coordinate collection and translation efforts.21 Information access became a topic for ongoing bilateral consultations under the U.S.-Japan Science and Technology Agreement. A series of joint conferences held by the Japan Information Center for Science and Technology and the National Technical Information Service have publicized these programs and served as a continuing forum for exchange on JSTI-related issues. The task force examined a number of public and private efforts to obtain and disseminate JSTI, trends in U.S. industry needs, and possible new approaches. One problem in assessing U.S. industry utilization of JSTI is the fact that systematic surveys and data are lacking. Any assessment, therefore, must rely heavily on anecdotal information. Still, in discussions with the task force both large and small U.S. companies reported concrete benefits from their JSTI collection and utilization activities. One clear message is that U.S. companies have a variety of motivations and strategies for accessing and using JSTI. In order for U.S. policies to have an impact, the diversity of U.S. industry needs and capabilities must be taken into account. At the same time, given the current environment of severely constrained resources for corporate R&D activities, JSTI-related activities must be cost effective and have a highly focused technical or business rationale. Finally, the rapid expansion of access to the Internet is changing the way that organizations and individual researchers access and use information. Large U.S. companies employ a variety of strategies for accessing and utilizing JSTI. The corporate R&D division of one large U.S. conglomerate, for example, maintains a permanent staff of three to four people in Japan to access information and facilitate technical interactions between U.S.-based technical staff and a variety of Japanese institutions, including companies, universities, and government laboratories. In the view of this company the most useful insights into Japanese technical developments are gained from actually engaging in collaborative R&D. Another American multinational in the computer industry has a specialized Japanese staff that monitors patent applications and technical papers. This helps the company stay abreast of what its competitors are doing and contributes to its own Japanese patenting activities. Commercial newsletters and translation services also are frequently utilized. However, the scale and quality of in-house JSTI programs of U.S. companies vary a great deal.22 Small U.S. companies have special needs and concerns related to JSTI. Small companies just becoming aware of their needs for JSTI may waste time and resources, since they generally do not possess specialized Japan expertise and may lack knowledge of the extensive U.S. resources that are available. Despite these barriers, participants in a discussion organized by the Competitiveness Task Force observed that most small U.S. high-technology companies seriously tackling the challenge of accessing the Japanese market find that they need to develop a focus on 21   The Japan Technology Program is now part of the Asia Pacific Technology Program. 22   In addition to information programs, several large U.S. companies, such as Motorola, Kodak, and AT&T, have established a policy presence in Japan in recent years, in light of the significant impact that changes in Japanese policies will have on market participation prospects.

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Maximizing U.S. Interests in Science and Technology Relations with Japan Japanese information access. Small companies seeking to break into the Japanese market often are able to build effective mechanisms for accessing information over time but report that more complete and timely information is needed in some areas. This is particularly true for patent-related information. This is a crucial issue, since success or failure in obtaining intellectual property protection in Japan has a major impact on the overall market access prospects for small high-technology companies.23 Despite the large volume of JSTI available in various forms, task force discussions revealed that it is still difficult for both large and small U.S. companies to obtain answers to some specific questions quickly and easily. For example, a U.S. biotechnology company researched the question of how many biotechnology companies there are in Japan and came up with a wide range of answers. The company also reported problems in locating information about the incidence and demographics of various diseases and medical conditions in Japan-information that is readily available in the United States. Legal and regulatory information also can be difficult to obtain. Despite growing interest in JSTI and a number of initiatives over the past decade to improve U.S. capabilities to collect, translate, and disseminate such information, developing new capabilities that successfully fill user needs has not been a simple process. Scan C2C, a commercial enterprise established to collect and disseminate JSTI, was ultimately unable to secure a sustainable business base. Some efforts supported by the U.S. and Japanese governments, such as computer terminal access to databases of the Japan Information Center for Science and Technology, have not been extensively utilized. A news report in 1995 stated that a new collaborative effort by Stanford University and Nippon Telephone and Telegraph (NTT) to put Japanese information on the Internet was enabling NTT to learn a great deal about software and the Internet but had made only limited progress toward facilitating access to Japanese information.24 A General Accounting Office report of several years ago faulted overall U.S. government efforts for being too concentrated in military agencies and not being well connected with commercial industries and technologies.25 Although the U.S. public and private sectors do not expend nearly the resources that Japanese organizations such as the Japan External Trade Organization or general trading companies do to collect and disseminate foreign science and technology information, and interest in JSTI has not led to the development of large markets, the United States does possess a number of institutions and capabilities that collectively fill the needs of a wide variety of general users of JSTI. Among U.S. government agencies, the Commerce Department's Office of Technology Policy and the Japan Technology Program play a coordinating and policy role that includes tracking the foreign science and technology information activities of other agencies and the private sector.26 The Japan Technology Evaluation Center (JTEC), which undertakes expert assessments of Japanese technologies for various federal sponsors, has spawned offshoot programs that evaluate technological developments in Europe, the former Soviet Union, and 23   In what the task force believes to be a positive and important step, the Japan Patent Office has launched an experimental database of patent publication abstracts available on the World Wide Web. Entries include English and Japanese versions of abstracts from patent applications that are published eighteen months after filing. 24   See Michael Zielenziger, ''Dream Team? U.S. Researchers Hook Up with NTT," Far Eastern Economic Review, May 4, 1995, pp. 60-61. Stanford reports that as the Japan Window project has proceeded much more Japanese information has been made available, and that NTT has made important technical contributions. Communication from Stanford University, May 1997. 25   U.S. General Accounting Office, Collection and Dissemination of Japanese Information Can Be Improved (Washington, D.C.: U.S. Government Printing Office, 1993). 26   See U.S. Department of Commerce, Office of Technology Policy, Foreign Science and Technology Information Sources, July 1996.

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Maximizing U.S. Interests in Science and Technology Relations with Japan elsewhere. The Japan Documentation Center (JDC) of the Library of Congress provides access to a range of sources, including unpublished, or "gray" literature. The Asia Technology Information Program, which is supported by federal and private sponsors, provides free abstracts of its proprietary reports over the Internet. The National Science Foundation's Tokyo Office publishes occasional report memoranda on various aspects of Japan's science and technology policies. R&D consortia such as the Microelectronics and Computer Technology Corporation, nonprofits such as the Japan Information Access Project, industry associations such as the American Electronics Association and several of the Japan Industrial Technology Management Training programs provide ongoing information collection, analysis, and dissemination to their members. The task force believes that collection and dissemination of JSTI and improved utilization are important national tasks where the public and private sectors have essential roles to play. The task force identified three U.S. priorities for improving access to and utilization of JSTI. First, it is important to maintain public support for government programs such as Japan Technology Program, JDC, JTEC, and others that focus on Japanese and Asian technology information and analysis and to make as much of the resulting information as possible available to the public. These are not expensive activities, and they leverage activities and programs that the government will be undertaking in any case. Government and other programs that provide JSTI to the public at little or no charge may also play a positive role by pressuring proprietary services to perform at a higher standard. One positive recent example is the Machine Translation Center for Japanese Science and Technology Literature at the U.S. Department of Commerce. The service is provided at no charge in cooperation with the Japan Science and Technology Corporation. Only raw machine translation output is provided. Response to the service, particularly from industry, has been very favorable. Many of the documents submitted for translation are patent filings. The machine translation allows the company to judge whether a document is important enough to be hand translated.27 Second, public and private organizations involved with JSTI should focus on utilizing advances in technology to ensure that the organizations engaged in these efforts are linked to the extent possible and to increase access to information for small companies and individual researchers. A significant amount of progress in this area has been made in the past several years, and most of the prominent programs make significant amounts of information available electronically. Finally, there is a continuing need to eliminate barriers to timely access to a range of important and potentially useful Japanese information. Although some barriers reflect inherent characteristics of Japan's "information culture," others appear to be amenable to change through Japanese government policy changes that could be sought through the U.S.-Japan Science and Technology Agreement. One possible goal would be to make all Japanese government reports available on-line immediately in Japanese. Although much of this government information (laws, regulations, gray literature) is not directly related to science and technology, timely access could enable U.S. companies to participate in the Japanese market more effectively. In some cases the Japanese government could make JSTI more accessible as well. For example, some large databases are only accessible electronically during business hours in Japan, which is inconvenient for many potential U.S. users. 27   Communication from the U.S. Department of Commerce, March 1997.