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3
National Laboratories,
Special Corporations, and Other
Government-Owned Organizations
In the United States, there are 400-700 federal labs,~3 ranging from the govern-
ment-owned contractor-operated (GoCo) labs of the DOE to the government-
owned government-operated (GoGo) labs under other departments.~4 They in-
clude large multipurpose labs (eg., Oak Ridge National Laboratory), single-
purpose labs (eg., Fermi High Energy Laboratory), and user facilities (eg., the
synchrotron light source at Brookhaven National Laboratory). There are 94
national labs under 17 different ministries in Japan. Although Japan has no
counterpart to the large multi-program labs of the DOE, its labs are nonetheless
varied, ranging from industrial engineering-oriented labs to those with a policy
orientation.~5
The U.S. government performs about 12 percent of the nation's R&D, com-
pared to the Japanese government, which performs 9 percent of that nation's total
R&D. Japan's national laboratories, however, operate on only 3.3 percent of
total national R&D expenditures, a share that has been declining with increasing
R&D expenditures by Japanese industry. Japan's 1988 national lab budget was
256,544 million yen ($2 billion), compared to U.S. federal lab expenditures for
R&D of an estimated $15.5 billion in 1987. If national laboratories are strictly
defined, Japanese national labs receive a relatively small share of the government's
R&D budget as well 14.1 percent-compared to U.S. federal labs, which re-
ceive 25.6 percent.~7 While the share of the government R&D budget allocated to
national labs has remained fairly constant in both countries since 1980, the overall
U.S. government R&D budget has grown more quickly than the Japanese govern-
ment R&D budget.
10
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11
These data do not, however, include Japan's eleven public research corpora-
tions, eight of which conduct their own R&D with significant government fund-
ing. An additional 21.5 percent of the Japanese government R&D budget goes to
these institutions. According to the STA, six of these research organizations
received 293,172 million yen ($2 billion)' in government capital funds, and an
additional 63,512 million yen ($439 million) in subsidies in 1987.~9 On the U.S.
side, the data do not reflect expenditures made in federally funded research and
development centers (~KDCs), which are administered by universities, industry,
and non-profit institutions. In 1987, the U.S. federal government spent an esti-
mated $3.8 billion for R&D in the FFRDCs administered by universities and
colleges alone.
HISTORICAL EVOLUTION
Whereas the overall role of Japanese national labs has been to reinforce the
nation's industrial base, increase the Japanese standard of living, and promote
science and technology generally, the role of U.S. labs has included a major focus
on R&D needed for national security, energy, the environment, and health, and
the construction of large user facilities. Japanese national labs have continued to
be more oriented toward research that is useful to industry than have their U.S.
counterparts. A review of the historical evolution of U.S. and Japanese national
labs helps to explain these differences.
Government performance of R&D has a long tradition in both the United
States and Japan, particularly in areas like agriculture and the standardization of
measurements. One of MITI's most prestigious labs, the Electrotechnical Labo-
ratory (ETL), for example, began testing porcelain insulators for telegraph cables
during the 1870s. Formally established in 1891, ETL has been compared to the
U.S. Department of Commerce's NIST, which was founded in 1901 as the Na-
tional Bureau of Standards to establish basic measurement standards for industry.
In both countries many new government labs were created after World War II.
After 1945, the U.S. government reverted to its prewar position that it should not
be responsible for private sector R&D, while the Japanese government focused on
helping industry as part of its efforts to mend its war-torn economy and "catch up"
with Western technology. Between 1945 and the mid-1960s, DOE labs trans-
ferred nuclear technology to industry, in part through educational efforts, and
moved into basic, non-industrial research areas such as nuclear medicine.20 Dunng
the same period, ETL took on a leading role in adapting and developing transistor,
integrated circuit, and information processing technologies for industrial use.
During the 1960s the Japanese government made its first serious attempt to
establish a comprehensive policy concerning its national labs. Japan's Council on
Science and Technology made recommendations in 1960 and 1963 that identified
fields considered appropriate for national lab R&D, laid the foundations for
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Japan's public research corporations, and initiated construction of a science city
in Tsukuba, now the world's largest. Although the Council included recommen-
dations that the labs focus on R&D that would contribute to the improvement of
public welfare and long-term R&D that could not be performed by private
industry, in retrospect it is clear that in this era of "catching up," the public
welfare was defined in terms of industrial and economic strength. In other words,
R&D that industry was interested in but that industry itself could not perform was
seen as appropriate for national laboratories. One of ETL's raisons d'etre during
this period was to adapt Western technology for Japanese industrial use.2t
With the rise of environmental concerns and the onset of the first energy crisis,
the missions of U.S. federal labs, particularly the DOE labs, were expanded in the
late 1960s and 1970s. DOE laboratory missions were expanded to include R&D
on all energy technologies and on the generation, conservation, and effects of
alternative sources of energy. Japan's AIST labs also began focusing more on
alternative energy sources and energy conservation R&D during the 1970s, al-
though this was not part of a comprehensive policy to change the role of Japanese
national labs.
THE CHANGING ROLES OF NATIONAL LABS
Although the 1980s have brought a reevaluation of the roles of national labs in
both countries, significant, concrete shifts in direction have not yet manifested
themselves in either the United States or Japan. Despite recent Japanese policy
emphasis on more creative, basic research, many national lab efforts in Japan
continue to focus on applied areas expected to be useful to industry. Similarly,
despite increased attention in the United States to technology transfer from
federal labs to industry, it appears unlikely that technology transfer will become
the primary mission of many U.S. federal labs.
Recognizing that Japan had "caught up" with the West in industrial technol-
ogy, the Council on Science and Technology in 1984 and 1987 encouraged more
"creative" research and international cooperation. Japanese policymakers view
science and technology as critical to an emerging new role for Japan in the
twenty-first century. Because creative research is seen to be hampered by the lack
of mobility of technical personnel in Japan, the Japanese government passed the
Research Exchange Promotion Law in 1986 to facilitate cooperation between
national labs and other sectors through personnel exchange and the use of com-
mon facilities. This law also allows national labs to hire foreign researchers as
employees. The Research Development Corporation of Japan aRDC) is estab-
lishing a new program to promote and administer international research exchange
in fundamental fields. The JRDC has also been placed in charge of STA fellow-
ships for foreign researchers.
This reevaluation of the roles of Japanese national labs was stimulated primar-
ily by improvements in the R&D capabilities of Japanese influstry that have made
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some national lab programs redundant. In the past, Japanese national labs were
able to remain one step ahead of private corporations, first by revising Western
technology, and later by developing their own. Examples of technology adapted
or developed by ETL and transferred to the private sector include transistorized
computer technology in the 1950s, pattern recognition in the 1960s, intelligent
robot technology in the 1970s, and Josephson junction and synchrotron radiation
technology in the 1980s. A basic dilemma of Japanese national labs is how they
can, with stagnant government budgets, continue to be of assistance to an indus-
trial base that has surpassed them technologically in many areas.
In the absence of a consensus on what constitutes "basic research," Japan's
current policy emphasis on promoting more basic research raises some questions.
On the one hand, in conjunction with a new emphasis on internationalization,
Japan's official policy is oriented more toward scientific research that will add to
the global pool of knowledge. On the other hand, there is no expectation that
national labs should divorce themselves from the needs of industry; nor is there
any evidence that they intend to do so. In fact, some national lab representatives
see a way to lead private industry by conducting research in fields that are of
interest, but unfamiliar, to Japanese companies. Some argue that this amounts to
a "reduction theory": national labs should be responsible for R&D not conducted
in other sectors of the R&D system. As a result, Japanese national labs have
begun to see their role in "high-risk, large-scale" R&D. In keeping with historical
trends, however, large-scale projects, such as those sponsored by IvIITI, tend to be
in applied areas expected to be useful to future industries and depend upon
. . . .
Industry participation.
Increased concern about global competitiveness and its importance to national
security have also made the roles of U.S. national labs increasingly difficult to
define. Although many have been charged with more long-term, high-risk re-
search since the onset of the 1980s, their role in transferring technology to
industry, long taken for granted in Japan, has recently received considerable
attention in the United States. This new mission is not, however, universally
accepted as a wise one.
In order to accomplish more technology transfer from federal labs, a number
of steps have been taken. These include the creation of offices of technology
transfer in the federal labs, changes in patenting and royalty mechanisms that
permit companies to acquire exclusive licenses and federal lab researchers to
receive a percentage of the royalties from commercialized technology, and reim-
bursement schemes that allow private companies to conduct proprietary research
at federal user facilities like the synchrotron light source at Brookhaven National
Laboratory. Many of these changes have been embodied in legislation.22
The responsibilities of U.S. federal labs have also grown to include the con-
struction and operation of major user facilities, including particle and photon
accelerators, environmental research parks, and materials labs. These facilities
are open to industry researchers and have become popular with foreign research
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ers as well. Last year, 600 of Oak Ridge's 2,300 guest researchers came from
industry, up dramatically from just a few years ago.23
Disagreement continues, however, on the extent to which links between fed-
esl labs and industry have been built and on whether they should be attempted.
To many, U.S. government labs make research contributions in their own right,
and solutions to the specific needs of industry cannot be found by making
technology diffusion a major role of the federal labs. Although there is evidence
of an increase in the number of patents issued by some federal labs to industry,
skeptics wonder if more patents might not have resulted had the same research
been conducted within industry.24
It may just be too early to judge the success or failure of efforts to increase
technology transfer from U.S. federal labs. Technology transfer takes time; some
estimate that it takes thirty years for research results to be fully integrated into
product technology and to demonstrate all the potential impacts on the economy.
Changes in U.S. judicial attitudes toward antitrust to allow experimentation with
cooperative industrial R&D have occurred only recently. There is a long tradition
of tension between U.S. government and industry to be overcome before new
mechanisms can be created that encourage the two to join forces.
In fact U.S. federal labs have already made major contributions to some sectors
of U.S. industry. DOE labs, for example, have played a crucial role in interactions
with industry in light source research, small angle neutron scattering, polymer
research, high temperature aqueous chemistry, and ceramics. Many believe that
defense procurement and research contributed to the development of the U.S.
computer industry.
In some ways, NIST has been a model for govemment-industrial collabora-
tion. NIST has a high proportion of guest researchers to staff, published 1,600
papers last year, and holds countless meetings every year that are attended by
researchers from universities, industry, other federal labs, and foreign countries.
NIST has long been a "meeting ground" for researchers from all sectors. NIST,
and its technology transfer activities in particular, have not, however, been well-
funded. The controversial nature, even within NIST, of many newly mandated
functions related to technology transfer leaves the outcome of these programs in
doubt.
Thus, although there is some support for the notion that U.S. federal labs can
make modest contributions to global industrial competitiveness, few believe that
technology transfer is likely to become the major role of the labs. The materials
and instrumentation industries are considered likely candidates to benefit from
DOE lab contributions, but many U.S. federal labs focus on basic research and
some companies have complained that preference for access to expensive user
facilities is provided to firms conducting "exotic" research (as opposed to routine
qualification work). Corporate researchers do not see federal labs as a major
source of technological information useful to industry.
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ORGANIZATION AND MANAGEMENT OF RESEARCH
In both the United States and Japan, the official research program planning
process begins with proposals from the lab's researchers, which are reviewed by
the lab's management and then presented to the department or ministry in charge.
The planning process in both countries involves considerable discussion between
the lab and the administrative agency. DOE labs make plans with five and fifteen
year horizons. Major changes in the research agenda of both U.S. and Japanese
national labs are, however, difficult to accomplish from within.
The large, multipurpose DOE labs are organized in a matrix-type management
system. Program directors with no permanent research staff of their own are
responsible for allocating funds and managing particular projects. These program
directors gather their staff for individual projects from a central disciplinary
division, which manages the lab's technical research staff. The fact that the
disciplinary division is responsible for the quality control of the research staff
helps to ensure uniform, high quality research.
In a similar type of organization, the Japanese National Institute for Research
in Inorganic Materials ~RIM) assembles research teams for particular projects,
which usually last about five years. NIRIM is, however, different from most
Japanese national labs, in that it is organized around materials that are the subject
of research, rather than by scientific discipline. NIRIM's directors also include
industry representatives. Most Japanese national labs draw their directors and
research division directors from within the national lab or from the lab's parent
. .
ministry.
In theory, Japanese national lab responsibilities are divided by research field.
The number of labs involved in materials research, however, belies the ostensible
division of labor (see Table 3-1~. In the United States, too, there are many federal
labs working in similar fields of research. Basic energy research, for example, is
conducted by labs supported by DOE, NSF, and the Department of Defense.
INDUSTRY-NATIONAL LAB RELATIONS IN JAPAN
As noted above, the role of national labs in transferring technology to industry
continues to be somewhat controversial in the United States but has long been
accepted in Japan. There are a variety of ways in which industry is involved with
the work of Japanese national labs.
Although most Japanese national labs are not like NIRIM, where industry has
a direct say in oversight of the research agenda, Japanese ministries all have
advisory committees consisting of representatives from industry and academe.
Through these advisory committees, representatives from other sectors can ex-
change information and contribute to national lab agenda setting. Japanese
corporations also send researchers to national labs and support contract research
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TABLE 3-1 Sampling of the Vanety of Japanese National Laboratories
in Materials Research
involved
Ministry of InternationalTrade andIddustry, Agency for Industrial Science end technology:
Mechanical Engineering Laboratory
National Chemical Laboratory for Industry
Research Institute for Polymers and Textiles
Electrotechnical Laboratory
Government Industrial Development Laboratory, Hokkaido
Government Industrial Research Institute, Tohoku
Government Industrial Research Institute, Nagoya
Government Industrial Research Institute, Osaka
Government Industrial Research Institute, Kyushu
Government Industrial Research Institute, Shikoku
Industrial Products Research Institute
Science and Technology Agency:
National Research Institute for Metals
National Institute for Research in Inorgamc Matenals
by paying for the work of national lab researchers. The National Research Insti-
tute for Metals (TRIM), for example, conducts creep and fatigue tests for indus-
try. The number of joint programs between industry and national labs has also
been on the rise in recent years. Whereas there were only six such programs
between industry and the national labs of the STA, MITI, the Ministry of Con-
struction, and the Ministry of Agriculture, Forestry, and Fisheries in fiscal year
1985, that number had increased to 32 by fiscal year 1988. The government
budget for these programs has correspondingly increased from 157 million yen to
547 million yen.25
Japanese industry also makes considerable use of Japanese national lab equip-
ment and facilities. One quarter of the companies surveyed by the STA in 1988
and 40 percent of those worth over 10 billion yen made use of national lab
facilities.26 ETL also has a "tutoring" program, through which it has transferred
many newly developed technologies to industry. ETL offers over 200 tutoring
programs every year; all five of the aforementioned technological advances made
by ETL have been transferred to industry via its tutoring program.
Despite recent efforts to encourage greater researcher exchange from national
labs to the private sector, the flow continues to be one-sided in Japan. A recent
survey indicated that for nearly 500 industry researchers dispatched to national
labs in 1988, there was only one national lab researcher who spent time in an
industry laboratory.27
There are a number of specialized organizations that have been created in
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Japan specifically to serve a technology transfer function from government labs to
industry. These include the Japan Industrial Technology Association PITA),
established by MITI. JITA participates in MITI's R&D planning process, publi-
cizes national lab research accomplishments, and conducts technological ex-
change activities and technology assessments.
The JRDC, mentioned above, is particularly active in technology transfer.
Established in 1961 by the STA, the JRDC functions primarily to exploit govern-
ment-owned patents by selecting and supporting companies that develop technol-
ogy based on national university and government lab research results that might
not otherwise be exploited in the commercial marketplace. If the company is
successful, JRDC support is considered a loan to be repaid and the company is
permitted to license the patent from JRDC; if the company is not successful, it is
under no obligation to repay.28
The JRDC funds and administers the Exploratory Research for Advanced
Technology (ERATO) program, created in 1981 to join the research efforts of the
private and public sectors in creative, multidisciplinary research in advanced
technologies. The ERATO program, which is open to foreign researchers, con-
sists of a number of five-year projects, for which researchers from public and
private institutions are hired on one or two-year contracts. As it has no research
facilities of its own, ERATO research is conducted at the home institutions of the
researchers involved or in rented laboratories all over Japan. The JROC coordi-
nates the projects and moves the research results into technology development by
licensing resulting patents.29
Despite a lack of consensus on the most appropriate relationship between
federal labs and industry in the United States, there are a number of mechanisms
through which U.S. industry and federal labs can cooperate. These include
sponsored research, employee exchange, industrial use of special facilities such as
that at Brookhaven National Laboratory, recently instituted regulations that allow
exclusive licenses to be issued from federal labs to private companies, and the
activities of the Federal Laboratory Consortium, established in part to help indus-
try identify appropriate research under way in federal labs.
NTT A SPECIAL CASE
One former public corporation, N=, deserves special mention. With 1988
sales of nearly $40 billion, NUT ranks among the world's largest corporations.30
The company's operating revenues are about $43 billion and, with 270,000
employees,3i it is Japan's largest employer.32 A public corporation for over thirty
years before it became legally privatized pursuant to the Nippon Telegraph and
Telephone Corporation Law in 1985,33 N1l, with 50 million subscribers, contin-
ues to dominate Japan's telecommunications market.
NIT devotes $1.6 billion (3.8 percent of its yearly operating revenues) to
R&D, employing 6,000 people in its eleven laboratories and two development
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centers. NTT has always focused on applied, industry-oriented R&D. The fact
that Japanese industry has long been willing to send its best researchers to work
on collaborative projects with NTT is testimony to the high quality of NTT's
applied research. NTT's R&D efforts include telecommunications network de-
velopment and services (ISDN, intelligent networks, personal communications),
components technology (LSI, photonics, software engineering, satellite commu-
nications), and related technological areas such as artificial intelligence and new
materials.
With no manufacturing capability of its own, one of NTT's chief roles has
been to disseminate the results of its research widely to industry; technology is
transferred through licensing. The company is composed of R&D and business
sectors. NTT maintains close relationships with industry through its business sec-
tors, and can translate the needs of industry into efficient R&D targets via close
ties between NTE's internal business and R&D sectors. The movement of
technology from basic to applied research and to developmental stages is accom-
plished in part by the fluidity of personnel within NTT: Some of the researchers
involved in the early stages of a research project are later assigned to the devel-
opment of the technology, shortening development time and increasing produc
. .
tlVlty.
FUNDING AND EMPLOYMENT
Together, the eight DOE multipurpose labs spend about $4.5 billion a year,
with the average DOE lab budget about $400 million. While the DOE labs are
some of the largest in the United States and there are no multipurpose labs in
Japan with which to accurately compare them, some Japanese national labs also
have large budgets. JDA's 1988 national lab budget, for example, was 81,756
million yen (about $638 million);34 the next largest agency in terms of national lab
budget was the Ministry of Agriculture, Forestry and Fisheries, which received
56,502 million yen ($441 million).
The sixteen MITI labs specifically created to conduct research useful to indus-
try together had a budget of 113 billion yen ($885 million) in 1988.35 The largest
of these, ETL, had a budget in 1987 of 9,447 million yen ($65 million), smaller
than NIST's total budget of $225 million for the same year.36 In terms of both
share of GNP and of government R&D budgets, however, NIST is smaller than
similar labs in Japan.37
NIST's technology transfer activities have also received scant funding. Only a
small percentage of its R&D budget is allocated for the dissemination of results.
Similarly, although NIST has recently been tasked with establishing Manufactur-
ing Technical Centers (MTCs) for technology transfer, extension services similar
to those of the Department of Agriculture, a coordinating function for state
services, and an advanced technology program to support government-industrial
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academic consortia, only three MTCs were funded in 1989
Both countries' national labs have multiple funding mechanisms to allow
flexibility in choosing research projects. Japan distinguishes between "ordinary"
and "special project" research. Funds allocated for "ordinary" ongoing research
efforts represent steady annual funding for the lab and amount to about 1.4 million
yen per researcher per year. These funds can be spent with more flexibility than
those allocated for special research projects, which are larger projects selected by
the lab. Special research project funding is obtained by a separate request to the
Ministry of Finance.
In the United States, DOE labs have a seed money system that allows individ-
ual researchers to propose projects. Formally, DOE lab directors are empowered
to set aside 2 percent of the lab's research funds under this system. Creative
researchers can also receive funding by developing a cooperative program with
industry or another federal lab. The Advanced Energy Project program of basic
energy sciences at DOE is one mechanism by which creative, unusual proposals
that might not be funded through regular channels can be pursued. In addition,
U.S. federal agencies are required to allocate 1.25 percent of their R&D budgets
to Small Business Innovative Research grants.
U.S. federal labs are much larger than their Japanese counterparts in terms of
employment. Most civilian DOE labs, for example, employ 2,000-5,000 people;
DOE weapons labs can be twice as large. In comparison, all of Japan's national
labs employ less than 16,000 people. ETL, one of Japan's largest national labs,
employs only 560 research staff. Japanese national labs are also troubled by
government budget stagnation, which has resulted in a leveling off in the number
of new hires.38
In the United States, visiting and guest researchers account for a significant
portion of the work conducted at federal labs. The 2,300 guest researchers at Oak
Ridge National Laboratory, which has a total scientific and engineering staff of
1,600-1,800, for example, represented the equivalent of 600 full time employees.
The contribution of guest researchers to a lab like NIST is especially significant.
Although not expressed in terms of full-time equivalence, the numbers are none-
theless striking. With nearly 3,000 employees, about half of whom are profes-
sional and technical staff, NIST hosted 1,090 guest researchers in residence
during 1988.
Information on visiting researchers in Japanese national laboratories is incom-
plete, but available data indicate that they do not play as significant a role in Japan
as they do in some U.S. federal labs. In fiscal year 1987, for example, the AIST
labs invited a total of 382 guest researchers 145 from abroad and 237 from
within Japan (most from universities). This can be compared to a total researcher
force in 1988 of 2,577.39 Other national labs on which data are available invited
far fewer guest researchers.
Representative terms from entire chapter:
japanese national
