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Japan's Industrial Competitiveness and the Technological Capability of the Leading Japanese Firms
Pages 165-188

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From page 165...
... In recent history, technological leadership has passed from Britain to the United States, and in very recent times it has switched from the United States to Japan. A complementary perspective on these occasional changes in technological leadership has been provided by Schumpeter~an economists such as Freeman and Perez.3 Schumpeter had held that long waves of economic development are initiated by pervasive new technologies that have an impact 1J.
From page 166...
... The new technology paradigm now taking shape is instead grounded on the economies of scope gained through an interaction between flexible but linked production facilities, in which individual plant flexibility and network linkages both depend upon the new information and communication technologies. The pioneers in this case are Japanese institutions.
From page 167...
... While in some respects the international diffusion of new technology brings production systems closer together, in other respects technological development reinforces differences between countries and firms. In their seminal work in this field, Nelson and Winter laid the theoretical foundations for our understanding that technological change is typically cumulative, incremental and differentiated.7 Their theoretical conclusions were entirely consistent with the insights gained from historical studies of technological evolution by Rosenberg.8 Because technological change is differentiated between firms and between countries, the differences between them persist over time; and because technological change is cumulative and incremental, existing leaders tend to preserve their position within the confines of an unchanged paradigm.
From page 168...
... and J.A. Cantwell, "The Theory of Technological Competence and Its Application to International Production," in D.G.
From page 169...
... The favorable relationship between the Japanese pattern of technological specialization and the distribution of technological opportunities across fields of activity can be illustrated from an analysis of U.S. patent data.
From page 170...
... The positive association between Japan's national pattern of technological specialization and the subsequent extent of technological opportunities across sectors is evident from the estimated regression line. In this regression the coefficient on RTA was significantly different from zero at the 1 percent level.
From page 171...
... established a regular trade surplus. Meanwhile the leading Japanese companies have on average grown faster than their major international nvals, and have consistently increased their share of international markets through exports and international production.
From page 172...
... So in this model the level of accumulated technological capability dete~n~ines the level of productivity and output. It follows that the rate of technological accumulation determines the rate of growth of productivity, the growth of output, and the rate of capital accumulation.
From page 173...
... , x* is the share of wages in output that would prevail if technological accumulation and thus productivity growth ceased.
From page 174...
... lk* Hence, in this model output growth and capital accumulation as well as productivity growth come to depend upon the rate of technological accumulation.
From page 175...
... A stronger rate of technological accumulation in the past leads to a higher (T/Q) ratio.
From page 176...
... Even in terms of the absolute levels of technological capability and productivity, Japan appears to have caught up with the United States by around the late 1980s. So a high rate of technological accumulation (T)
From page 177...
... The model of technological competitiveness suggested here provides an alternative or additional perspective on the international differences in savings rates that are associated with persistent trade imbalances. It has been supposed that with technological accumulation, productivity growth tends to run ahead of a rise in wages.
From page 178...
... . Moreover, it seems that during the 1969-1986 period the rate of technological accumulation of the same Japanese firms rose significantly, while for European firms the rate remained steady, and for U.S.
From page 179...
... of the leading U.S., Japanese, and European Industrial Firms in 1969-1972 and 1983-1986 United States Japan Europe 19691972 19831986 19691972 19831986 19691972 19831986 Food products 43.2 7.6 19.6 9.4 - 16.0 7.4 Chemicals 465.0 111.2 173.4 133.7 245.9 82.9 Pharmaceuticals 246.6 74.9 155.2 76.5 248.8 84.8 Metals 106.0 21.3 24.4 24.0 58.0 24.0 Mechanical engineering 273.9 68.9 16.5 32.2 113.5 57.3 Electrical equipment 296.1 90.4 142.2 148.2 151.5 55.3 Office equipment 325.6 82.2 206.5 276.5 179.6 40.3 Motor vehicles 84.7 26.1 43.1 73.0 73.5 28.8 Textiles 25.7 7.8 67.1 60.5 31.4 10.2 Paper products 62.1 22.4 2.5 8.5 16.3 6.2 Printing and publishing 16.3 3.3 10.1 24.5 1.7 0.7 Rubber products 166.5 50.4 79.8 82.2 34.2 6.1 Nonmetallic mineral products 215.5 63.5 118.8 39.0 43.8 15.5 Coal and petroleum products 126.7 18.8 7.9 4.2 58.4 7.5 Total manufacturing 182.8 41.5 67.0 70.3 100.5 30.8 SOURCE: Data base on the world's largest industrial firms held at the University of Reading.
From page 180...
... For this purpose consider firms in the industries with the highest levels of patenting: chemicals and pharmaceuticals, taken together, and electrical equipment and office equipment, taken together. In the introduction the recent link between Japan's overall pattern of technological specialization (RTA)
From page 181...
... In the electrical equipment industry the fields of greatest patent growth and high Japanese RTA were road vehicles and engines, and image and sound equipment. This is indicative of a crucial area of Japanese success under the new technology paradigm.
From page 182...
... To test this, the growth of patenting across different fields of activity was compared in two different periods. Considering again firms in the electrical and chemical industries, total industry patent growth between 1978-1982 and 1983-1986 was regressed on the growth of patenting by Japanese companies in the same industry between 19691972 and 1973-1977.
From page 183...
... In the chemical industry, though, there is no correlation at all between total patent growth in the two periods; the distribution of technological opportunities underwent a substantial change. This is consistent with the view that a new technology paradigm begins by affecting leading industries before moving out to influence others.
From page 184...
... The change in technology paradigm may have assisted the rate of technological accumulation of Japanese firms in some industries more than others (in electrical equipment more than in chemicals) , but it has given Japanese companies some impetus in most industries.
From page 185...
... Just as there was no necessary reason why the United States had to have the highest rate of innovation when it had the largest technological capability, so now there is no reason why Japan should not continue to sustain its high rate of technological change with the greatest overall level of capability. It is only likely to fall back if there is another change in the technology paradigm that provides a new window of opportunity to others on a different technological course.
From page 186...
... Moreover, even though in the core fields of the new technology paradigm Japan's absolute level of technological capability may exceed that of the United States, the scope for Japanese imitation is not over. Since technological development is localized and differentiated, the course followed by Japanese firms is to some extent different from the path of U.S.
From page 187...
... The growth in cross-border exchanges between firms, formalized in some cases by strategic alliances, may be partly explained by the increasing interrelatedness between formerly separate types of technology, such that imitation becomes an even greater mutual benefit or necessity. Although Japanese firms are likely to continue to sustain an overall rate of technological accumulation higher than their major rivals in the immediate future, this will vary across industries.
From page 188...
... government may come to pick up the signals to this effect only late in the day: "American government officials and businessmen negotiating economic matters feel at a great disadvantage because Japanese officials are much better informed, not only about Japanese companies, but often about American companies."27 Economists and policy advisors tend to overemphasize the efficacy of their policy recommendations, since it is in this way that they persuade their audience and ultimately the policymakers. It seems unlikely that through policy changes alone the United States could raise the rate of technological advance in her industry to Japanese levels.


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