Japan's Growing Technological Capability Implications for the U.S. Economy (1992) / Chapter Skim
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Macroeconomic and Schumpetarian Features of Japanese Innovations in the 1980's
Macroeconomic and Schumpetarian Features of Japanese Innovations in the 1980's
Pages 98-105
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From page 98... ...
The other purpose is to explain what accounts for the dynamic technological developments in Japan during the 1980s. Japan's Schumpetarian system appears to be responsible, but a more fundamental question is what makes it possible for Japan's economic system to be both dynamic in Schumpetarian innovation and consistent with Ricardian static comparative advantage.
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From page 99... ...
Technically, the production function can be specified as a Cobb-Douglas function, with the coefficients of capital and labor constrained to be equal to their shares in output or income.1 On this basis, total factor productivity can be estimated as residuals that cannot be explained by contributions of capital and labor input to output. Industry comparisons in Japanese manufacturing suggest that the higher the R&D expenditure, the higher is the growth rate of total factor productivity.
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From page 100... ...
progress that enhances the productivity of both capital and labor, its key determinant is the net stock of R&D capital. An International Monetary Fund study has found that in Japan the net stock of R&D capital rose at an annual rate of 9.25 percent in the 1980s, contributing nearly one percentage point to the overall real growth in gross national product (GNP)
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From page 101... ...
Together with these developments, the aforementioned strong business investment has resulted, through greater addition of new investment to existing capital stock, in younger vintage of installed capital. The vintage of TABLE 4 Industrial Robots in Operation, Endofl989 Units (thousands)
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From page 102... ...
, Heisei San Nendo Keizai Hakusho (Economic White Paper 1991) , (Tokyo: Okurasho insatsu kyoku, 1991)
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From page 103... ...
These two industries have the highest total direct and indirect intensity of R&D, but mainly thanks to their own high input of R&D (Table 5~. SCHUMPETARIAN FEATURES OF JAPAN'S INNOVATIONS All in all, these dynamic technological developments contributed greatly to overcoming the recessionary effects of the drastic appreciation of the yen and to upgrading industrial and trade structures in Japan in the 1980s.
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From page 104... ...
This dynamic competition results in the equally dynamic development of national resource endowments themselves in the form of increasing abundance of R&D and skilled labor inputs per unit of output, relative to other national resources. For this reason, the Schumpetarian dynamic evolution of comparative advantage is not at all inconsistent with the Heckshire-Ohlin trade theory, once one admits the dynamic and endogenous creation of national resource endowments themselves through deliberate policies at both enterprise and government levels.
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From page 105... ...
The dynamic evolution of comparative advantage through Schumpetarian innovations supported by R&D activities of private enterprises must be consistent with the static comparative advantage at a given point in time. This is because the relative endowments of domestic resources dynamically evolve over time through increasing inputs of R&D and physical capital relative to labor and natural resources.
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