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Introduction EXPANDING ACCESS TO JAPANESE RESEARCH AND DEVELOPMENT i] In recent years, concomitant with Japan's growing status as a technological innovator and formidable competitor in the global economy, concern in the United States has grown over `'asymmetries," both real and perceived, in U.S. and Japanese reciprocal access to research and development (R&D). Concern over a perceived imbalance in the two-way flow of scientific ideas and information between the two countries has come to the fore in discussions among U.S. scientific, industrial, and political leaders. Due to the "openness" of the U.S. system, Japanese scientists and technical personnel have generally had free access to U.S. R&D information, which they have used to develop technology- based commercial products for the global market. The result has been unprecedented challenges to the U.S. economy. Moreover, as Japan moves into the reahn of truly innovative R&D, concern in the United States has increased, in tandem with trade and economic woes, that this situation will continue. Whether Japan will take the lead in fields of basic research remains an open and important question. Should this occur, opportunities for expanded access will develop, but in the current context debates over reciprocal access highlight the dilemma of structuring collaboration in the midst of intense market competition. As a result, attention in the United States has begun to focus both on the structurally based obstacles in Japan that impede foreign access to Japanese R&D and the self-imposed structural barriers in the United States that prevent 1

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2 American researchers from taking full advantage of available opportunities in Japan. Because the reasons are many and varied and largely due to economic, cultural, and structural differences between the two countries, there is no single solution to the problem. However, there is recognition that failure to address this problem could have unfortunate consequences for both Japan and the United States. Because technology and the free exchange of R&D information across international borders have become inextricably linked to economic progress, it is appropriate that leaders in both countries work to establish a balanced and equitable flow of scientific personnel and information. ACTIONS TAKEN TO IMPROVE ACCESS DURING RECENT YEARS Some significant steps have been taken over the past five years by both Japan and the United States that reflect both the importance of the bilateral scientific relationship and the need to redress perceived or real imbalances. In June of 1988 President Reagan and Prime Minister Takeshita approved renewal of the U.S.- Japan Agreement on Cooperation in Science and Technology, and work has begun within the various agencies and departments of both governments to implement it. A key objective of the agreement from the U.S. perspective is to achieve comparable access for U.S. industry and government researchers to key R&D institutions in Japan. The Japanese government has responded, both independently and as a result of the agreement, through a number of new initiatives aimed at increasing opportunities for foreign researchers in Japan. Concurrent with signing of the agreement, Prime Minister Takeshita announced the allocation by the government of Japan of more than $4 million to the United States to support long-term visits by post-doctoral researchers to Japan. Administered in the United States by the National Science Foundation, these fellowships are open to researchers from government, industry, and academia who can present valid proposals and qualifications. The Japanese have also opened new international R&D consortia to foreign participation in fields such as high-temperature superconductivity. Some industrial R&D consortia such as those sponsored by the Key Technology Center1 have been opened to foreign participation, and the Human Frontier Science Program was initiated to foster cooperative international research in the . 1 The Key Technology Center was set up by the Ministry of Intemational Trade and Industry and the Ministry of Posts and Telecommunications with dividends from the sale of Nippon Telephone and Telegraph (NTT) stock, following the formal privatization of N11. It acts as a kind of venture capitalist, providing 60-70 percent of the investment in projects, with the rest of the capital from the participating companies who actually operate the projects independently of the government. See Appendix A of this report for more information on specific Key Technology Center projects.

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3 biosciences. In addition, some of Japan's largest companies such as NEC have further opened their laboratories to foreign student researchers, and the Research Center for Advanced Science and Technology (RCAST) at the University of Tokyo has established chairs for foreign professors. On the U.S. side, programs of applied Japanese studies have been established at U.S. research universities; those established earlier are flourishing. These programs focus on Japanese language training and Japanese laboratory internships for science and engineering students. The largest of these is the MIT- Japan Program established in 1981. Other leading U.S. universities such as Stanford have established campuses in Japan to train young scientists and engineers, and many others are offering specialized Japanese language training for science and engineering students. In the summer of 1990 a summer institute was established at Tsukuba Science Park for undergraduate science and engineering students from the United States. The U.S. government has sponsored numerous studies to improve understanding of R&D in Japan. One of the largest of these efforts is the Japan Technology Evaluation Program (JTECH) led by the National Science Foundation and other government sponsors such as the U.S. Department of Defense and the U.S. Department of Energy. Since its establishment by the National Science Foundation and the U.S. Department of Commerce in 1983, over a dozen JTECH reports have been issued on Japanese activities in a range of technologies, including biotechnology and optoelectronics.2 In 1987 the Commerce Department established an Office of Japanese Technical Literatures to promote the wider acquisition and use of Japanese technical information in the United States. The office has produced an annual Directory of Japanese Technical Resources in the United States, translations of key Japanese government and industry documents, and reports on technical developments in Japan in such areas as biotechnology, advanced ceramics, and superconductors.4 Within the private sector, the American Electronics Association has established a highly regarded fellowship program to send young engineers to Japan to work in Japanese laboratories, and a number of organizations are expanding Japanese language programs. The National Academies of Science and Engineering have established an Office of Japan Affairs (OJA) within the National Research Council (NRC). OJA works with the NRC's Committee on Japan in developing programs and other activities to consider science and technology as cnt~cal dimensions of the U.S.-Janan relationship. -red rat 2 Further information about JTECH can be obtained by contacting the National Science Foundation. 3 The office was made an element of the Technology Policy Administration in 1989. 4 A complete listing of reports and services available through this office can be obtained by contacting the Japanese Technical Literature Program, Technology Administration, U.S. Department of Commerce, Washington, D.C. 20230.

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4 DIALOGUES ON SYMMETRICAL ACCESS Despite these efforts, significant asymmetries in access to R&D (information, people, and institutions) still remain, as does the controversy in political circles over how to create a"level playing field" not only in the context of international trade but also in the international scientific community. With the aim of addressing these inequities and devising solutions to the problem, representatives from the National Academies of Science and Engineering and Committee 149 of the Japan Society for the Promotion of Science (JSPS) met in 1987 to affirm the importance of improving access, particularly to R&D information and organizations, in order to create an improved two-way flow of technical ideas and personnel between the two countries. It was at this meeting that the term "symmetrical access" was first developed. As a result of these bilateral discussions, the participating organizations agreed to convene a series of meetings to explore the issue of symmetrical access and the potential means of achieving it. The first meeting on symmetrical access was held in April 1988 at the East- West Center. The purpose of the meeting was to explore the general concept of symmetry in R&D. Realizing that the research systems and markets of the two counties are different, the participants identified structural asymmetries created by these differences that present obstacles to symmetrical access. The term symmetrical access was adopted to emphasize the need to focus on structures and mechanisms rather than a simple numerical companson. In order to begin developing workable solutions to the problem, the p~cipants at the first meeting concluded that discussions of symmetry must take into account the realities of R&D in particular fields. It was agreed that there should be a second meeting to focus on two specific technologies. As a result, a meeting on "Expanding Access to Precompetitive Research in the United States and Japan: Biotechnology and Optoelectronics," was held at the East-West Center in January 1990 by the NRC (the operating arm of the National Academies of Science and Engineering) and the JSPS. The two cheapen were Dr. Gerald Dinneen, Foreign Secretary of the National Academy of Engineering, and Dr. Michiyuki Uenohara, Executive Advisor to the NEC Corporation of Japan. FOCUS OF U.S.-JAPAN MEETING: BIOTECHNOLOGY AND OPTOELECTRONICS . In keeping with the participants' desire to focus on the actual circumstances of access in key fields of R&D, two cutting-edge high-technology fields were chosen in which there is a great deal of R&D activity in Japan and the United States and where both countries have areas of demonstrated excellence. The two

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s fields biotechnology and optoelectronics illustrate contrasts in leadership and capabilities and varied incentives for expanded access. Both biotechnology and optoelectronics have been identified as emerging technologies that are likely to offer substantial economic benefits to both countries by the year 2000.5 Contrasts in research capabilities and market positions and differences in the R&D structures of the two countries were also seen to provide clues for expanded cooperation. Finally, there is a record of U.S.-Japan collaborative activity in the form of international projects, joint ventures, and university exchange in these two fields, although the mechanisms are quite different, as will be discussed in more detail below. Biotechnology and optoelectronics were selected for discussion, and experts in both fields from the two countries participated. Biotechnology is a multidisciplinary technology based on the manipulation of organic cell life to produce a range of applications and products in many industries, including agriculture, chemicals, food, energy, pharmaceuticals, and water treatment. The marriage of electronics and optics, optoelectronics combines electronic data processing with photonic switching and transmission to produce greater efficiency in data processing and transmission than electronics can achieve itself. These technologies are representative of fields where one country has the lead, at least in major areas of R&D. For example, although Japan is advancing rapidly, the United States is recognized as a world leader in biotechnology.6 Conversely, Japan is considered a world leader in many areas of optoelectronics.7 PRECOMPETITIVE RESEARCH Discussions at the U.S.-Japan meeting focused on "precompetitive" work because the prospects for collaborative R&D are, in theory, most apparent here. 5 See Technology Administration, U.S. Department of Commerce, Emerging Technologies: A Survey of Technical and Economic Opportunities, Spring 1990. According the report, the United States was ahead of Japan in biotechnology in 1989 and behind in optoelectronics. However, the analysis led to the conclusion that, over the longer term, the United States is likely to continue to lose ground in optoelectronics and may "lose badly" in biotechnology vis-a-vis Japan. 6 Japan Technology Evaluation Program, JTECH Panel Report on Biotechnology in Japan, June 1985, pp. xiii-xc, 7-17. Ibis report predicted that, while the United States would continue to lead in basic biotechnology research, the Japanese could well surpass the United States in the commercialization of biotechnology. 7 A recent Nihon Keizai survey of 301 Japanese leaders in science and technology scored Japan higher than the United States in optoelectronics, both for the current period and for the anticipated scenario by the year 2000 "Kiso Kenkyuu de Yuryo na Seika wo" [The Result of Excellence in Basic Research], Nihon Keizai, Feb. 21, 1989, p. 13. See also National Research Council, Photonics: Maintaining Competitiveness in the Information Era, National Academy Press, Washington, D.C., 1988).

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6 Precompetitive research can be defined in numerous ways, as it can occur across the range of R&D from basic and applied research to the manufacturing and development stage. There is no fixed, absolute definition of what constitutes precompetitive research, since it can and does vary widely according to field. Within each field the following factors can influence the determination of what research is seen as precompetitive: overall R&D investment (as the commitment of resources increases so does the inclination toward proprietary research); structure of the industry (size, diversity, vertical or horizontal integration); segmentation of research (by technology or category); and overall productivity and"vision" of the industry. In general, it can be said that precompetitive research is a middle ground of focused cutting-edge research that lies between proprietary research performed at corporate laboratories and fundamental basic research conducted mainly at universities (see Figure 1~. The results of this research are openly published, although the research may also lead to commercial applications. There are several motivating factors that encourage bilateral cooperation in precompeii~ave research: first, the potential to share the high cost of major facilities and equipment; second, the avoidance of possible duplication of effort in generic research areas; and, third, an improvement in initial return on investment. .! MATURITY BASIC APPLIED RF9F.AR~H RF.RF.AR~H DF.VF.l.OPMF.NT MANITFA~TITR - Hi. ~ DEVELOPMENT Hi\ PRE-COMPETITIVE RESEARCH ~ STAGE ^\\\\\\\\\\\\\\\\\\\\\V IIIIIIITIIITTTTTTTT "GREY AREA" 1111111111111111111 /// ~ ////////////// .. Jay id// PROPRIETARY RESEARCH /// ///////~////////////~///V PROPRIETY CONTENT FIGURE 1

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7 WHO DEFINES WHAT IS PRECOMPETITIVE? PRIMARILY THE ORGANIZATION PERFORMING THE RESEARCH SECONDARILY THE ORGANIZATION SUPPORTING IRE RESEARCH COOPERATING ORGANIZATIONS INDUSTRY TRENDS FIGURE 2 There are some fairly significant differences in the way that researchers and business planners in Japan and the United States view precompetitive research, due to the fact that a system of collective research has become institutionalized in Japan. It is important to note that the organizations performing the R&D have the biggest voice in defining precompetitive research, and the definition changes over time (see Figure 2~. In many of Japan's collective projects, the numbers of participating firms from different industries have increased, although the increases vary by field. In the United States, antitrust regulations and other internal restrictions make the establishment of collective research groups among competing companies more difficult. The Japanese have shown collective research to be "rational" in economic and technological terms, at least in the context of their own experience.8 8 See Fumio Kodama, National Institute of Science and Technology Policy, Science and Technology Agency of Japan, "Rivals' Participating in Collective Research: Its Economic and Technological Rationale," paper presented at International Conference on Science and Technology Policy Research, Feb. 2-4, 1990, Shimoda, Japan, and at session on Expanding Access to Precompetitive Research in Japan and the United States, Honolulu, Hawaii, Jan. 22-23, 1990. See Jonah Levy and Richard J. Samuels, '`Institutions and Innovation: Research Collaboration as Technology Strategy in Japan," MIT-Japan Program Working Paper 89-02, for analysis of the political rationale for collaborative research in Japan.