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S&T and Japan Edward Lincoln For presentation at University of Illinois April 3, 2008 Background Japan as a successful absorber of technology from the world, 1870s-1970s. Emphasis on math and engineering in education rather than science Emphasis on scouring the world for technology Assisted by government trade policy Pressure to spread technology at home rather than protect (licensing policy and joint R&D projects). Success implies a new environment 1980s to the present “catch up” over Implies a need to generate more technology within the corporation Greater interest in protecting technology A need to refocus education toward science to underpin development of new commercial technology So what has been happening? Preview: Japan certainly a major player in global technology But not as dominant as one might think Concerns over “productivity” of spending on R&D Concerns about how to alter the education system Concerns about how to enhance universitybusiness partnerships R&D spending has been rising: Ratio of R&D to GDP 3.5 3.0 Percent 2.5 2.0 Japan U.S> Germany 1.5 1.0 0.5 0.0 1970 1975 1980 1985 1990 1995 2000 2005 Japan has more technology to export: Royalties andLicense Fees in the Balance of Payments 3,000 Receipts Payments 2,500 Yen billion 2,000 1,500 1,000 500 0 1985 1993 1998 2003 Or, tech trade more narrowly (apparently): Payments/Receipts for Technology in the Balance of Payments 2,500 BIllions of Yen 2,000 1,500 Receipts Payments " 1,000 500 0 1980 1985 1990 1995 2000 But still lags in basic research expenditures: Basic Research As a Share of GDP 0.6 0.5 Percent 0.4 0.3 Japan U.S. France Germany 0.2 0.1 0 1980 1985 1990 1995 2000 2005 And no change in low emphasis on science education: Science and Engineering Degrees as a Percentage of Total B.S., M.A., and Ph.D.s Japan (total enrollment) Year Science United States (degrees awarded) Engineering Science Engineering BS MS PhD BS MS PhD BS MS PhD B.S. MS PhD 1970 3.1 10.8 17.1 21.1 37.0 17.8 10.1 8.5 29.3 6.0 7.1 11.3 1980 3.1 10.5 14.2 19.4 41.5 12.9 10.0 6.3 23.7 7.4 5.4 7.7 1995 3.6 10.2 11.5 19.6 44.0 20.6 9.8 6.5 25.3 6.7 7.5 13.8 2000 3.6 9.0 10.3 18.9 41.4 18.9 10.5 6.3 24.0 5.9 5.8 12.0 2005 3.6 8.6 9.6 18.6 40.4 18.6 10.6 6.6 23.1 5.8 5.8 12.4 A strong player in patenting tech in US, but little relative change in 20 years: Shares of Patents Award in the U.S. 60 Percent of Total 50 40 1988 2006 30 20 10 0 U.S. Japan Germany France U.K. No change past decade in production of S&E articles: S&E Articles in All Fieds, by Country of Author 40 30 25 U.S. Japan 20 Germany U.K. 15 China 10 5 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 0 1995 Percent of World Total 35 Essence of the Japan puzzle: more R&D but less impact: R&D and Growth of GDP per Worker 9 8 3.5 Growth of GDP/Worker -- 3-yr. moving average (left scale) 3 GrowthRate for GDP/Worker (%) average growth GDP/worker 7 R&D as Share of GDP (right scale) 2.5 6 5 2 4 1.5 3 2 1 1 0.5 0 1970 -1 1975 1980 1985 1990 1995 2000 2005 0 And once dominant global share in electronics slipping: Share in Global Electronics Exports 50 45 Japan 40 EU-15 U.S. Korea Percent 35 30 25 20 15 10 5 0 1980 1985 1990 1995 2000 2005 Why? Difficult to reform education toward “creativity.” Rigid university systems with little competition for research money or peer review of research results. Little industry-university cooperation Little commercialization of university research Government sponsored joint R&D centers stifle alternative approaches Language barriers inhibiting more extensive international collaboration Responses: National university reform 2003 (more competition, peer review, independence). Is it working? More Japanese educated abroad? Numbers falling past 10 years (currently 35,000) More scholars spending time in U.S.? Stagnant or falling numbers since 2000. Efforts to enhance spin-off of university research into new businesses Still little corporate financing of university research: Sources of University Research Funds ¥ billion share Total University research 3,274 Own funds 1,542 47.1 Government 1615 49.3 Corporations 87 2.7 Non-profits 28 0.9 Contrast: Total University research spending: Japan, 2004: ¥3.2 trillion = $30 billion U.S., 2005: $49 billion Corporate financing role: Japan: 2.7 percent U.S. 5.0 percent University-business connections: 1998 law establishes technology licensing offices for universities (enabling universities to own technology created by government funds. 2001 government plan to push “technology parks” and a goal for 100 spin-off companies from universities by 2005 (goal reached) Kyoto area exhibits some success in university spin-offs (e.g. in biotechnology) Conclusion Japan doing OK but not great. Spending on R&D up but productivity falling. Model still based mainly on efforts within large corporations rather than on vibrant universities and start-up businesses Venture capital market remains poorly developed Labor markets still less flexible than in U.S. Does Japan really need more emphasis on basic science? Maybe not.