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close this bookTechnological Independence The Asian experience (UNU, 1994, 372 pages)
close this folder6. Japan
View the documentIntroduction
View the documentFive stages from ''technology transfer'' to ''self-reliance''
View the documentThree stages to technological self-reliance
View the documentDegree of self-reliance of technology
View the documentLow estimation of imported technology
View the documentHistorical perspectives on self-reliance
View the documentCase-studies
View the documentJapan's experience and Asian perspectives
View the documentJapanese multinational enterprises and their role in technological self-reliance in Asia
View the documentPerformance of Japanese affiliates in Asia
View the documentTechnological self-reliance in Asia: in search of a new international technology order
View the documentNotes

Low estimation of imported technology

In calculating the degree of technology self-reliance, we cannot escape from a low evaluation of imported technology. The degree of self-reliance in Japan is generally highly evaluated (fig. 3 and table 3). For example, according to a calculation made by the EPA, a simple comparison of the Japanese and US technological knowledge stock indicates that, as of 1982, Japan's annual spending reached 17.75 billion yen (R&D expenditure spent by Japan + payments for imported technology), which is less than the one-fifth of the 86 billion yen spent by the US.


Fig. 3. Trends of stock of technological knowledge in Japan (Source: EPA, Current Economy in Japan, 1985)

By 1982, there was no longer a technological gap between Japan and the US, especially in the manufacturing industry. For example, according to an investigation by the Industrial Science and Technology Agency, Japan was at about the same level as the US in material industries and in processing and assembling industries (table 4). Japan was slightly inferior to the US only in the fields of software and product design. As engineers' opinions were included in the investigation, the latter can be considered objective.

Table 3. Degree of technological self-reliance (percentages)

Year

Flow-based (A)

Year

Stock-based (B)

1950

68

1965

-

1960

81

1970

77

1970

91

1975

80

1980

93

1982

86

A = R&D / (R&D+ M)

B = R&D stock / (R&D stock + M (converted to stock))

Table 4. A comparison of the levels of key technologies (numbers of items)


Compared with United States

Compared with Europe


Higher

Same

Lower

Higher

Same

Lower

Raw materials







Development of new materials

6

2

8

7

5

2

Processing of materials

4

1

0

2

3

0

Processing and assembly







Larger content or size

2

1

4

1

2

1

Automative and consecutive

6

6

l

7

6

2

Highly efficient production

12

18

7

18

16

2

Testing and inspection

1

2

2

0

3

2

Production control

6

3

1

5

3

0

Products







Higher performance

13

23

22

13

28

11

Software

2

2

4

1

2

0

Design

2

2

20

6

4

10

Total

54

60

72

63

72

30

Source: Based on Industrial Science and Technology Agency, Survey Section, An International Comparison of Japan's Industrial Technology - A Quantitative Appraisal of Principal 43 Manufacturing Sectors, 1982.

For the technological gap to be reflected as an industrial productivity gap, other factors such as the efficiency of capital and work practices must be considered. But the comparison reveals that the labour productivity of Japan and the US are almost at the same level.

According to an analysis by the Japan Productivity Centre, Japan's productivity in manufacturing had by 1979 already reached 83 per cent that of the US. Taking into account the difference in the growth of labour incentives in Japan and the US, it is quite possible that by 1985 Japan's labour productivity was a little higher than that of the US. It should also be noted that, in 1979, Japan's productivity was already higher than that of the US in such key areas as steel, general machinery, precision machinery, and equipment.

The technology gap between the US and Japan is, therefore, not as big as the estimated technology knowledge stock indicates. The reasons why the gap between the actual level of technology and the estimate of the technology stock is so large are as follows.

1. The US stock of technological knowledge is for military purposes, and therefore is not reflected in labour productivity. According to an investigation by the National Science Foundation, nearly 50 per cent of the total US R&D expenditure was spent on military technology (NASA included) in 1976, whereas Japan's R&D military expenditure was only 2.4 per cent of the total.

2. As Japan's investment in technology development was in applied technology and in private industries, it was effective enough to increase productivity.

3. The role of imported technology is underestimated.

Since imported technology is ready-made, products can be manufactured at low cost if manufacturing process know-how is imported with it. Many countries rely on imported technology, even in terms of paying for a licence fee, because its cost is less than that of indigenous development. In other words, importing technology is something like buying the fruits of investment that has already been made by advanced countries.