An International Comparative Analysis
New Horizons in the Economics of Innovation series
Chapter 2: The Japanese Model of Low Government Intervention
The Japanese Innovation System (JIS) is a complex system comprising processes, institutions and forms of organisation. These include the market process, intraand inter-corporate organisation, government regulation and intervention, and university teaching and research. As with any complex system, the analysis of JIS involves a simpliﬁcation, an abstraction of some of the major factors which inﬂuence the system and its behaviour and performance. Like the proverbial elephant, JIS can be all things to all people. For example, those who see market forces as the motor of capitalism see in JIS, cut-throat competition between Japanese companies and a government which spends a relatively small proportion of national income while ensuring that its interventions are exclusively of a market-conforming kind. On the other hand, those who believe in the virtues of government intervention see in JIS a strong state which is oriented to the development of the nation’s economy and which is prepared to put considerable pressure on Japanese companies to move in the directions in which government feels is desirable. (Fransman, 1996) In the previous chapter we saw that government does play an important part in the area of technological development of both the developed and developing countries. In the light of the arguments and experiences presented above, in the present chapter we analyse the experience of Japan. The Japanese model of organising industrial R&D is important for two reasons. First, it is a well-documented fact that technology is an important factor or input in explaining the spectacular growth...
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