UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

Japan’s postwar experience with technology transfer Goode, James Thomas 1975-12-31

You don't seem to have a PDF reader installed, try download the pdf

Item Metadata

Download

Media
UBC_1976_A4_6 G66.pdf [ 10.98MB ]
Metadata
JSON: 1.0093522.json
JSON-LD: 1.0093522+ld.json
RDF/XML (Pretty): 1.0093522.xml
RDF/JSON: 1.0093522+rdf.json
Turtle: 1.0093522+rdf-turtle.txt
N-Triples: 1.0093522+rdf-ntriples.txt
Original Record: 1.0093522 +original-record.json
Full Text
1.0093522.txt
Citation
1.0093522.ris

Full Text

JAPAN'S POSTWAR EXPERIENCE WITH TECHNOLOGY TRANSFER  by  James Thomas Goode B.A., U n i v e r s i t y o f B r i t i s h  A Thesis  Columbia,  1972  Submitted i n P a r t i a l F u l f i l l m e n t o f The R e q u i r e m e n t s f o r t h e Degree o f Master of in.Business  Science  Administration  i n t h e Department o f Commerce and B u s i n e s s  The  Administration  We a c c e p t  t h i s t h e s i s as c o n f o r m i n g t o t h e  required  standard  U n i v e r s i t y o f B r i t i s h C o l u m b i a , 15 December, 1975.  In  presenting  this  an a d v a n c e d  degree  the  shall  I  Library  f u r t h e r agree  for  scholarly  by h i s of  this  written  thesis at  the U n i v e r s i t y  make  that  ft  for  for  It  financial  is  gain  of  The U n i v e r s i t y Vancouver  8,  of  British  Canada  of  Columbia,  British  by  Columbia  for  the  understood  permission.  Department  of  extensive  may be g r a n t e d  representatives.  fulfilment  freely available  permission  purposes  thes.is  in p a r t i a l  shall  requirements I agree  r e f e r e n c e and copying  Head o f  that  not  the  of  or  that  Study.  this  thesis  my D e p a r t m e n t  copying  for  or  publication  be a l l o w e d w i t h o u t  my  (i)  ABSTRACT  The  i n t e r n a t i o n a l t r a n s f e r o f t e c h n o l o g y i s i n c r e a s i n g l y s e e n as  major e l e m e n t i n economic development f o r b o t h t h e developed c o u n t r i e s . development and technologies. and, and  the The  The  r o l e played  The  frequent  p a p e r i s b a s e d on  an  addition, three are  included  Fallowing  an  t r a n s f e r and treated  on  as  discussion  of  foreign  extensive  r e v i e w o f e x i s t i n g government and English  business o f f i c i a l s  c h r o n o l o g i c a l l y f o r the  present  a s e r i e s of  involved  interviews  i n postwar t r a n s f e r s . out  period:  The  during  that  issues of  technology  postwar Japanese e x p e r i e n c e i s 1945-1955 " J a p a n ' s P o s t w a r R e c o v e r y " , 1963-1973 " L i b e r a l i z a t i o n and  c e n t r a l i m p o r t a n c e t o J a p a n ' s p o s t w a r development  of " s t r u c t u r a l transformation",  current  on  chapter dealing with general  economic development, t h e  period  and  non-  appendices.  introductory  which t o o k p l a c e  the  technology  c a s e s t u d i e s o f t e c h n o l o g y t r a n s f e r s were c a r r i e d  Internationalization".  The  foreign  between t e c h n o l o g y t r a n s f e r  i s considerable  1955-1963 " S t r u c t u r a l T r a n s f o r m a t i o n " , and  of the  imported,  commercial t r a n s f e r s of  c l o s e connection  i n b o t h J a p a n e s e and  w i t h J a p a n e s e government and  and  p r o c e s s by  investment i n Japan.  government m a t e r i a l  In  i n that  f o r e i g n d i r e c t investment, there  direct  less-  t h e s i s examines J a p a n ' s p o s t w a r economic  discussion focuses  because of the  d e v e l o p e d and  a  period,  and  the  technology t r a n s f e r  i s stressed.  s t a t u s of technology t r a n s f e r i n Japan i s a l s o d i s c u s s e d  and  f u t u r e importance t o Japan of t e c h n o l o g y e x p o r t a t i o n  i n d e p e n d e n t t e c h n o l o g y development i s p o i n t e d A concluding  and  out.  c h a p t e r o u t l i n e s major s p e c i a l c h a r a c t e r i s t i c s o f t h e  p o s t w a r e x p e r i e n c e and  s u g g e s t what l e s s o n s  and  i t may  hold  f o r others.  Japanese  It i s  (ii)  a r g u e d t h a t t h e f a v o u r a b l e d o m e s t i c and b e n i g n i n t e r n a t i o n a l a s w e l l a s t h e l a r g e s i z e o f t h e d o m e s t i c market foreign  direct  investment are a l l s p e c i a l  environments  and a b a s i c a n t i p a t h y t o  c h a r a c t e r i s t i c s which  i n f l u e n c e d t h e c o u r s e o f postwar t e c h n o l o g y t r a n s f e r t o Japan. o t h e r hand,  a c o m p e t i t i v e domestic b u s i n e s s environment,  between government development  p l a n n e r s and b u s i n e s s m e n ,  policy,  t e c h n o l o g y change  and w i d e s p r e a d p u b l i c  strongly On  the  consultation  selective or discriminatory  support f o r goals supportive of  a r e a l l a r g u e d t o be a s p e c t s o f t h e p o s t w a r  e x p e r i e n c e which h o l d i m p o r t a n t and g e n e r a l l e s s o n s f o r o t h e r  Japanese countries.  (iii)  TABLE OF CONTENTS  INTRODUCTION AND  ACKNOWLEDGEMENTS Page  I  ECONOMIC DEVELOPMENT 1.  Technology fa) lb) [cj  2.  3.  II  III  The Ideology o f I n d u s t r i a l i z a t i o n Government, t h e P r i v a t e S e c t o r , and T e c h n o l o g y Transfer  The Relevance o f t h e Postwar Japanese E x p e r i e n c e  16  Japan  2.  The Prewar Legacy  i  a)  (1945-1955)  i n Defeat  24 25  N a t i o n a l A m b i t i o n and C o h e s i o n  b) Government I n i t i a t i v e c) The People T h e O c c u p a t i o n , Redevelopment, and T e c h n o l o g y (a) Occupation P o l i c i e s ( b ) D e m o n s t r a t i o n and L i n k a g e E f f e c t s ( c ) Recovery t o Postwar L e v e l s  STRUCTURAL TRANSFORMATION 1.  T h e Consumption  2.  The Technology fa) (b)  25  Transfer  27 28 29 30 33  (1955-1963)  Revolution  36  Revolution  Changes i n I n d u s t r i a l S t r u c t u r e The Role o f Technology T r a n s f e r  Regulation fa) (b)  4.  6 7  9 11 15  1.  3.  1 2 3  V a r i e t i e s o f Technology T r a n s f e r Technology T r a n s f e r as a P r o c e s s T e c h n o l o g y T r a n s f e r a s D i r e c t e d Change  JAPAN'S POSTWAR RECOVERY  3.  Change  and Development  The Role o f Technology fa) fb) (c)  4.  and S o c i a l  Technology T e c h n o l o g i c a l Change S o c i o - t e c h n i c a l Change and I n d u s t r i a l i z a t i o n  Technology fa) (bj  AND TECHNOLOGY TRANSFER  and C o n t r o l o f T e c h n o l o g y T r a n s f e r  F o r m a l Laws and R e g u l a t i o n s Administrative Attitudes  I n t e r - f i r m C o m p e t i t i o n and T e c h n o l o g y T r a n s f e r  39 41 53 54 58 63  (iv)  IV  LIBERALIZATION AND  INTERNATIONALIZATION  1.  R a p i d Economic  Expansion  2.  Japan i n the I n t e r n a t i o n a l (a) (b) (c)  3.  V  VI  70 Economy  Pressures f o r Reciprocity A n t i p a t h y t o F o r e i g n D i r e c t Investment F o r m a l E n t r y i n t o t h e World Economic Community  The C o u r s e and Impact (a) (b) (cj (d)  (1963-1973)  of L i b e r a l i z a t i o n  on T e c h n o l o g y T r a n s f e r  The S t a g e s o f L i b e r a l i z a t i o n The Impact o f L i b e r a l i z a t i o n on T e c h n o l o g y T r a n s f e r L i b e r a l i z a t i o n and F o r e i g n D i r e c t I n v e s t m e n t L i b e r a l i z a t i o n and D o m e s t i c F i r m s  TECHNOLOGY TRANSFER AND  72 72 75  76 80 B3 88  JAPAN TODAY  1.  The C h a n g i n g C h a r a c t e r i s t i c s o f T e c h n o l o g y T r a n s f e r  94  2.  Growth i n C o o p e r a t i v e V e n t u r e s  97  3.  Expansion i n Technology Exports  99  4.  T h e S e a r c h f o r " T e c h n o l o g i c a l Independence"  THE  JAPANESE POSTWAR EXPERIENCE WITH TECHNOLOGY TRANSFER:  CONCLUSIONS 1.  S p e c i a l C h a r a c t e r i s t i c s of the Japanese (a) lb] fc] (d)  101  108 Case  F a v o u r a b l e Domestic Environment Benign I n t e r n a t i o n a l Environment Large S i z e o f Domestic Market A n t i p a t h y t o F o r e i g n D i r e c t Investment  108 1Q9 109 110  2. " L e s s o n s " From t h e J a p a n e s e E x p e r i e n c e (a) (b) fc) (dl (e) 3.  T e c h n o l o g y T r a n s f e r and N a t i o n a l I d e n t i t y N a t i p n a l J . G o a l s and T e c h n o l o g y T r a n s f e r L i c e n s i n g v e r s u s F o r e i g n D i r e c t Investment C o m p e t i t i o n and T e c h n o l o g y T r a n s f e r T e c h n o l o g y T r a n s f e r and t h e R o l e o f Government  111 112 112 115 116  F u t u r e Research (a) (b)  NOTES TO THE  R e l a t i v e I m p o r t a n c e o f Government P o l i c y and M a r k e t F a r c e s an T e c h n o l o g y T r a n s f e r R e l a t i v e Importance o f " D o m e s t i c " v e r s u s " F o r e i g n " d e r i v e d T e c h n o l o g i c a l Change  TEXT  117 119  123  "1  APPENDICES Case Study Case Study Case Study  1. 2. 3.  133 157 171  BIBLIOGRAPHY  181  FIGURES 1.  A Schematic life-cycle,  p r e s e n t a t i o n o f t h e US t r a d e p o s i t i o n  i n the product 14  2.  Diagram o f t e c h n o l o g y t r a n s f e r a p p r o v a l p r o c e d u r e s  3.  Trends  i n t e c h n o l o g y i m p o r t s , p r i v a t e equipment  and ' f o r e i g n d i r e c t  investment:  4.  Approvals o f t e c h n i c a l  5.  M o t i v a t i o n f o r involvement  ( c a . I960)  investment,  1951-1966  66  a s s i s t a n c e agreements: 1950-1973 with f o r e i g n  55  direct  81  investment i n  Japan  84  6.  Trends  i n a n n u a l no. o f m e r g e r s : 1948-1973  91  7.  T r e n d s i n t h e i m p o r t a t i o n o f "new" t e c h n o l o g i e s a s a p r o p o r t i o n o f t o t a l t e c h n o l o g y i m p o r t s - by i n d u s t r y  93  TABLES 1.  Trends  2.  Trends i n t h e composition o f Japan's 1950-1971  3.  i n employment by i n d u s t r y c a t e g o r y : 1920-1970  I n t e r n a t i o n a l comparison  20  " t o p - t e n " export items* 21  o f t h e share o f e n t e r p r i s e s with  foreign  ownership  4.  Japan's  World  5.  Diffusion  6.  Trends  7.  Postwar Japanese o f -technology  t e c h n o l o g y i m p o r t a t i o n s : 1950-1973, by  Postwar Japanese of o r i g i n  t e c h n o l o g y i m p o r t a t i o n s : 1950-1973, by c o u n t r y  8. 9. 10. 11.  i n manufacturing  industry  23  War Two l a s s e s o f a s s e t s  26  o f some consumer d u r a b l e s  i n t h e o u t p u t o f some p r i n c i p a l  38 p r o d u c t s : 1934-1974  40  field 42  Payments f o r t r a n s f e r r e d y e a r : 1950-1960  43 t e c h n o l o g y by f i e l d  o f t e c h n o l o g y and 44  T e c h n o l o g y t r a n s f e r - r e l a t e d m a c h i n e r y and equipment i m p o r t s a s a p r o p o r t i o n o f t o t a l machinery and equipment i m p o r t s  46  Japan's initial  48  t e c h n o l o g y i m p o r t s by i n d u s t r y and by p e r i o d o f industrial application: 1956 v s 1966  (vi)  12.  A c o m p a r i s o n o f J a p a n and w o r l d i n i t i a l cations of petrochemical technologies  industrial  appli50  13.  T y p e o f t e c h n o l o g y t r a n s f e r r e d by i n d u s t r y 1961 s u r v e y  51  14.  C o n t r o l s on f o r e i g n  57  15.  Development t i m e , s a l e s , t e c h n o l o g y : 1957-1961  16.  Effects of transferred survey  17.  Trends  18.  Japan's 1972  19.  direct  i n Japan's  investment,  and R & D  c a 1959-1960  e x p e n s e by s o u r c e o f 67  t e c h n o l o g y on r e c i p i e n t  company,-, 1961 68  s h a r e o f w o r l d t r a d e : 1938-1972  i m p o r t s by p r o v e n a n c e  71  and e x p o r t s by d e s t i n a t i o n : 196373  J o i n t v e n t u r e s i n Japan: a comparison o f t h e r e s p e c t i v e cont r i b u t i o n s o f t h e J a p a n e s e and f o r e i g n p a r t n e r s a t s t a r t - u p and  over time  85  20.  E s t a b l i s h m e n t o f j o i n t - v e n t u r e s : 1950-1971  21.  National origin of investment:  of foreign  direct  86  investment  i n Japan  by amount  1971  87  22.  F o r e i g n d i r e c t i n v e s t m e n t i n Japan by b u s i n e s s , t y p e o f company, and home c o u n t r y o f f o r e i g n i n v e s t o r  89  23.  Trends  96  24.  J a p a n ' s e x p o r t s o f m a j o r i t e m s o f c h e m i c a l s and s y n t h e t i c t e x t i l e s - r e l a t e d t e c h n o l o g y , 1950-1972  102  Trends i n Japan's balance of i n t e r n a t i o n a l payments: 1950-1973  106  25. 26. 27. 28.  i n Japanese  International payments  overseas t r a v e l  comparison  technology  of balance of i n t e r n a t i o n a l  technology 106  J a p a n ' s t o p t e n g e n e r a l t r a d i n g companies: s h a r e o f e x p o r t s and i m p o r t s , t u r n o v e r as a p e r c e n t o f GNP  114  E c o n o m i c r a t e s o f growth by c o u n t r y and c o n t r i b u t i o n s o f component s o u r c e s  120  (vii)  Introduction  T h i s p a p e r d e a l s w i t h t h e d u a l themes o f t e c h n o l o g y t r a n s f e r Japan's postwar development. technology t r a n s f e r change,  The  s e p a r a t e themes a r e b o t h o f  ( T T ) as a major means o f d i r e c t i n g  and p o s t w a r J a p a n as t h e exemplar f o r r a p i d  the f i r s t  'non-western' a d d i t i o n  interest;  overall  economic  and  technological  growth  and  as  t o t h e r a n k s o f t h e advanced d e v e l o p e d  nations. The  themes a r e , however, i n t e r r e l a t e d .  technological association amazing  development  are p r i m a r i l y  w i t h economic  postwar r e c o r d  growth  T e c h n o l o g y t r a n s f e r and  of i n t e r e s t  and d e v e l o p m e n t .  o f economic growth  overall  because of t h e i r C o n v e r s e l y , Japan's  and development  was  accompanied  by a m a s s i v e t r a n s f e r o f i n d u s t r i a l t e c h n o l o g y f r o m o t h e r c o u n t r i e s t o Japan.  W h i l e no c l a i m  can be made t h a t t h e d i s c u s s i o n  here  definitively  d e a l s w i t h t h e q u e s t i o n o f t h e e x t e n t and n a t u r e o f t h e r e l a t i o n TT  and J a p a n ' s p o s t w a r development,  this  joint  between  examination of the  two  themes shows them t o m u t u a l l y i l l u m i n a t e i m p o r t a n t a s p e c t s o f each The  discussion  i s primarily  t e c h n o l o g y t o postwar Japan. (official  statistics,  and p a r t l y  centered  on c o m m e r c i a l t r a n s f e r s o f  This i s partly  f o r example,  because o f d a t a  explicit  n a t u r e o f such t r a n s f e r s ,  studies,  commercial  s u c h as t h i s TT.  present  one,  concentrate  Further,  to the because  comparison of the  Japanese e x p e r i e n c e with those o f other c o u n t r i e s w i l l if  transfers)  b e c a u s e s u c h t r a n s f e r s seem t o be most c l o s e l y r e l a t e d  of the r e l a t i v e l y  industrial  availability  d e a l almost s o l e l y w i t h such  main c u r r e n t s o f p o s t w a r J a p a n e s e t e c h n o l o g i c a l change.  other.  likely  be  easier  on e x a m i n a t i o n o f  (viii)  E x t e n s i v e use  i s made o f o f f i c i a l  government r e p o r t s and  statistics  which a r e , g e n e r a l l y , f a r more c o m p r e h e n s i v e i n t h e c a s e o f J a p a n , of  official  interest  countries. withall,  d u r i n g the p e r i o d , than they are f o r o t h e r  T h i s data i s not without  p r o v i d e s a depth,  available  i t s d e f e c t s and  b r e a d t h , and  limitations  c o n t i n u i t y exceeding  any  n o n - J a p a n e s e s o u r c e s , and  addition,  carried  m a t e r i a l gathered  and,  concept  as w e l l ,  social than  1.,  2.,  and  i s imbedded i n a body o f l i t e r a t u r e  with a discussion r e g a r d s TT The  and  Chapter  one  generality  clarifies  issues.  t h r e e c h a p t e r s which d e a l s p e c i f i c a l l y  It  the concludes  a s e r i e s of t o p i c a l  discussion  headings  relating  t h e o t h e r hand, t h e a c t u a l as a s e r i e s  argue  with the Japanese  economic and  f o r treatment  of c h r o n o l o g i c a l l y  On  ordered  the  one  organizational  of the p e r i o d under  these., v a r i o u s f e a t u r e s t o  c o u r s e o f p o s t w a r TT  as  i s associated.  pose some o r g a n i z a t i o n a l p r o b l e m s .  of v a r i o u s Japanese s o c i a l ,  f e a t u r e s t o the o v e r a l l  treated  o f meanings  of t h e r e l e v a n c e of the postwar Japanese e x p e r i e n c e  hand, t h e i m p o r t a n c e  On  as  of f a r broader  some o f t h e s e l a r g e r i s s u e s w i t h which TT  subsequent  were  encompassing i s s u e s of  i t s r e l a t i o n s h i p to these broader  p o s t w a r e x p e r i e n c e w i t h TT  TT.  form  ' t e c h n o l o g y t r a n s f e r ' has t a k e n on a v a r i e t y  and  business.  3.  change, economic growth, and m o d e r n i s a t i o n  o f TT  of  p o s t w a r TT  a r e i n c l u d e d h e r e i n summary  p o s t w a r J a p a n e s e development and T T .  concept  material,  i n the course  a s e r i e s of t h r e e case s t u d i e s of s p e c i f i c  o u t by t h e w r i t e r and  appendices The  other  d a t a i s supplemented w i t h o t h e r J a p a n e s e - l a n g u a g e  numerous i n t e r v i e w s w i t h i n f o r m a n t s i n J a p a n e s e government and In  but,  sources.  This o f f i c i a l relevant  i n TT  because  postwar  seems t o be  stages or 'periods'.  best  (ix) The  compromise u l t i m a t e l y a d o p t e d  three c h r o n o l o g i c a l l y ordered dealing, respectively,  social,  headings  and  w i t h c h a p t e r s two  organizational,  and  been r e l e g a t e d t o t h e  c o n t i n u i t y and  1963-1973 ' L i b e r a l i z a t i o n  d e t r a c t s from  that  coherence  On  Following this,  'Notes t o t h e T e x t ' o f t h e main t e x t .  suggests  chapter,  A debt  The  as t h e  discusses the and  'special  ^ c h a p t e r s , and,  of  course, as  The  however,  developed. i n Japan  sixth,  c h a r a c t e r i s t i c s ' of the Japanese  w i t h wisdom, w i t h l i t t l e t o be t h a n k e d  for their financial  J a p a n as i s R i k k y o  University,  The  support  last,  hold f o r others.  suggested.  knowledge I i n d u l g e d m y s e l f ,  restraint.  and  postwar  o f g r a t i t u d e i s owed t o t h e many J a p a n e s e i n b u s i n e s s and and  an  coherence  o u t l i n e s t h e c u r r e n t s t a t u s o f TT  some a r e a s f o r f u r t h e r r e s e a r c h a r e  has  It i s felt,  t h e l e s s o n s t h a t e x p e r i e n c e may  time,  flaw  the  compromise a d o p t e d  be t h e t r e n d s i n t h e y e a r s a h e a d .  ment i n whose i n t e r e s t ,  academic  Japanese  i n order to maintain  themes which a r e t h e f o c u s o f t h e p a p e r a r e  what w i l l  e x p e r i e n c e w i t h TT Finally,  International-  c o m p e n s a t i n g g a i n i n t h e c o n t i n u i t y and  chapter f i v e  1955-1963  o c c a s i o n , r e l e v a n t background m a t e r i a l  of the Japanese b u s i n e s s environment, per se.  t h e r e i s mare t h a n  under  four  w h a t e v e r i n c i d e n t a l m e r i t t h i s p a p e r might have had  w i t h w h i c h t h e two  and  and  economic e n v i r o n m e n t a r e d e v e l o p e d  l e d a t o some d i s p r o p o r t i o n i n t h e l e n g t h o f t h e  outline  through  W i t h i n each o f t h e s e c h a p t e r s v a r i o u s a s p e c t s o f the  of the n a r r a t i v e n e c e s s i t a t e s . has  t r e a t s J a p a n ' s p o s t w a r TT  w i t h ; 1945-1955 'Japan's P o s t w a r R e c o v e r y ' ,  'Structural Transformation', ization'.  here  govern-  i f not  always  Japanese M i n i s t r y of E d u c a t i o n i s during the p e r i o d of study i n  i n Tokyo, f o r p r o v i d i n g a s u p p o r t i v e  environment.  A special  debt  Takezawa o f R i k k y o  o f g r a t i t u d e i s owed, r e s p e c t i v e l y , and  t o P r o f e s s o r W.  t o P r o f e s s o r S.  Winiata of the U n i v e r s i t y  of  British  (x)  Columbia, i n Vancouver, f o r t h e i r for their interest completed merit less  u n d o u b t e d l y , would have l a c k e d much o f w h a t e v e r  More i m p o r t a n t l y ,  instructive  Were!it not  and c o n c e r n , t h i s p a p e r would u n d o u b t e d l y have been  sooner, but, a l s o  i t has.  s u p p o r t and encouragement.  t h e ' d o i n g o f i t ' would have been a f a r  and p e r s o n a l l y r e w a r d i n g  experience.  - 1 -  I . ECONOMIC DEVELOPMENT AND  1.  Technology (a)  and  S o c i a l Change  Technology Technology  and  p r o f o u n d l y a f f e c t s t h e l i v e s we  f o r m s o f o u r work and  lives,  TECHNOLOGY TRANSFER  t h e c o n t e n t and  o f t h e w o r l d around  leisure,  where we  live  l e a d ; t h e amount  and t h e l e n g t h o f  forms o f our e d u c a t i o n - i n s h o r t ,  us and  o u r p e r c e p t i o n s o f them.  To  our  both the  say t h i s  realities  i s merely  t o echo what has become a common p e r c e p t i o n o f p e o p l e i n t h e i n d u s t r i a l i z e d , _ world of the c e n t r a l r o l e surprising,  however, i s t h a t  t e c h n o l o g y was now,  absent  t e c h n o l o g y was  t h e y plowed f i e l d s Technology, men  lead.  i n the p r e - i n d u s t r i a l world.  o r hunted,  how  o f c o u r s e , i s and  t h e y d i d so and f o r whom. was  not t h e o n l y d e t e r m i n a n t  And  c e n t u r i e s ago. impact  lives  y e a r s o r so moved from  being perceived, i f at of the  central  t h i s i s t r u e even where, as i n much o f t h e l e s s - d e v e l o p e d changed from t h o s e o f  F o r , even where modern i n d u s t r i a l t e c h n o l o g i e s have  on t h e l i v e s  people are l i v i n g ,  on t h e l i v e s t h e y a s p i r e t o l i v e p r o c e s s e s which w i l l 'Technology*  of the  mens* p e r c e p t i o n s o f i t w h i c h  w o r l d , t h e b a s i c t e c h n o l o g i e s employed a r e l i t t l e  no  l e d ; o f whether  as p e r i p h e r a l t o t h e c o n c e r n s o f mankind t o b e i n g one  concerns.  of  F o r t h e n t o o , no l e s s  o f t h e l i v e s men  I t i s , however, t e c h n o l o g y and hundred  What i s somewhat  some s i m i l a r p e r c e p t i o n o f t h e r o l e  a major d e t e r m i n a n t  have i n t h e p a s t two all,  of technology i n t h e i r l i v e s .  and  i t has  had  enormous  impact  on what t h e y p e r c e i v e t o be the  e n a b l e them t o do  1  so.  can be d e f i n e d i n a m u l t i t u d e o f ways but a u s e f u l  ment, f o r our p u r p o s e s ,  had  d e f i n e s technology as:  " . . .  state-  knowledge o f a  than  - 2 -  vector of a c t i v i t i e s predictability, and  services."  referred sense,  technical the  i n p u t s such I t should  1  t o both  should  which t r a n s f o r m s ,  can  be  and,  a more o r l e s s h i g h  as r e s o u r c e s , l a b o u r , and be n o t e d  that the  i n t e r p r e t e d as i n c l u d i n g  not  'transforming  social  changes a t once demanded and have made t e c h n o l o g y hundred y e a r s  (b)  'mix'  concern  change we  be b r o a d l y what we  classified  will  here  now  place. and  the  o f mankind d u r i n g t h e p a s t  r e c o g n i z e as  term  i n t o one  but,  also,  It i s social  two  'industrialization . 1  of i n p u t s .  To  can  of t h i s type  be  of technology, t e c h n o l o g i c a l  o f two  categories.  producing  t h e e x t e n t t h a t such relative  t h e same  n e c e s s a r i l y , from a  change e c o n o m i z e s on  different t h e use  p r i c e s ) i t means t h a t more goods  which i s most commonly r e f e r r e d  which Schumpeter  first  consists in  essentially  o b t a i n e d f r o m t h e same amount o f i n p u t s .  2  The  'new-production t e c h n o l o g y ' ,  v e c t o r of a c t i v i t i e s  f a c t o r inputs (at e x i s t i n g  and  outputs'  i m p l i c a t i o n s of technology  (goods o r s e r v i c e s ) u s u a l l y , but not  services  o n l y t h e more o b v i o u s l y  T e c h n o l o g i c a l Change  a^change t o a new output  goods  i n i t s most g e n e r a l i z e d  inputs into  In t e r m s o f t h e above d e f i n i t i o n  of these,  into  of  made p o s s i b l e by t e c h n o l o g i c a l change which  a central  of r a p i d  degree  activities'  e n v i r o n m e n t i n which p r o d u c t i v e a c t i v i t i e s t a k e  perhaps p r e c i s e l y these  change can  capital  'vector of  t a k i n g the d e f i n i t i o n  aspects of processes  social  with  t o as  of  and  I t i s a change  'technical  progress*  3 and  others  have i d e n t i f i e d  as a prime s o u r c e  of  economic g r o w t h . The  o t h e r broad  technology*. in  the  category  In t h i s  production  o f t e c h n o l o g i c a l change we  instance, the  o f new,  will  change i n v o l v e s t h e use  term  'new  of f a c t o r  h i t h e r t o n o n e x i s t e n t , goods o r s e r v i c e s .  product inputs  Such  - 3 change, o f c o u r s e , i n v a r i a b l y i n v o l v e s a new mix o f f a c t o r vector of a c t i v i t i e s ,  o r both.  i n p u t s o r a new  T h e s i g n i f i c a n c e o f change o f t h i s  latter  t y p e i s a f a r mare c o n t e n t i o u s i s s u e - i n v o l v i n g ,  a s i t does,  'new p r o d u c t s ' a s t h e a i r p l a n e ,  n u c l e a r weapons, and  v a g i n a l deodorants.  colour television,  C o n t r o v e r s y c a n c e n t r e around  such d i s p a r a t e  t h e e x t e n t t o which  such  change r e p r e s e n t s a change i n v a l u e s - a s opposed t o t e c h n o l o g i c a l p r o g r e s s and,  i n any e v e n t ,  Additionally,  argument i t s e l f  there i s the prior  t h e change, i n f a c t , abstraction, and  almost  be v i e w e d  tends t o i n v o l v e value  judgement a s t o whether, o r t o what e x t e n t ,  i n v o l v e s a 'new p r o d u c t ' . any such  judgements.  F o r , a t some l e v e l o f  change can be i d e n t i f i e d  w i t h some p r i o r  a s a mere i n c r e m e n t a l metamorphosis o f an e x i s t i n g  as a new m a n i f e s t a t i o n o f a good o r s e r v i c e m e e t i n g  product  product,  or  some immutable human  need.  In  fact,  of course, t e c h n o l o g i c a l  change seldom f a l l s  t h e o t h e r o f t h e s e two c a t e g o r i e s and a l m o s t of  both.  a l w a y s i n v o l v e s some  T h e v a l u e o f t h e two c o n c e p t s , t h e r e f o r e , l i e s  taxonomic p r e c i s i o n than i n t h e i r i d e n t i f i c a t i o n t e c h n o l o g i c a l change; t h e o b j e c t i v e , technical efficiency reflecting broader  n e a t l y i n t o one o r  the social  significance  criterion,  less i n their  o f two a s p e c t s o f a l l  i n which change can be measured by some  and t h e s u b j e c t i v e ,  environment  elements  i n which v a l u e  judgements  o f change a r e i n e v i t a b l y r e l e v a n t .  of this technical-social  duality of technological  The change  i s e s p e c i a l l y e v i d e n t when we examine t h e changes a s s o c i a t e d w i t h t h e p r o c e s s of  industrialization. (c)  S o c i o - t e c h n i c a l Change and I n d u s t r i a l i z a t i o n The  I n d u s t r i a l R e v o l u t i o n i s g e n e r a l l y d a t e d from  England  and s i n c e t h e n numerous o t h e r c o u n t r i e s , m a i n l y  varying  degrees  18th Century  'western',  undergone a p r o c e s s o f i n d u s t r i a l i z a t i o n .  have i n  T h e p r o c e s s has  by no means been u n i f o r m  from case  time,  non-social resources,  initial  events, of  social  and  among o t h e r f a c t o r s ,  'industrialized  major a s p e c t s  i n d u s t r i a l technology  In f a c t , and  variations in  many i n c i d e n t a l  'autonomous' forms  I t i s possible nevertheless, to i d e n t i f y  some  change which have t e n d e d t o accompany t h e r e v o l u t i o n i n  wherever i t has  occurred.  W h i l e t h e r e have been many a t t e m p t s t o q u a n t i f y t h e r e l a t i v e and  starting  have l e d i n v a r i o u s ways t o a v a r i e t y o f  country'.  of s o c i a l  to case.  to e s t a b l i s h the temporal o r d e r i n g of these  aspects  importance  of s o c i a l  change  4  associated few  with  industrialization,  broad, t o p i c a l  or temporal  headings without  will,  here,  treat  i n t e n d i n g to imply  them u n d e r a  relative  importance  ordering.  Economic o r g a n i z a t i o n : processes  we  of production  In t r a d i t i o n a l ,  are l a r g e l y  carried  s u b s i s t e n c e economies on w i t h i n t h e  confines  f a m i l y - o r v i l l a g e - b a s e d g r o u p s i n which b a r t e r i s common and ' r e l a t i o n s h i p s are importantly r e l a t e d to r e l i g i o u s Industrialization,  in contrast to'this,  the  or k i n s h i p  i s a s s o c i a t e d with  of  exchange factors.  the e v o l u t i o n  o f a d i f f e r e n t i a t e d market economy i n which money commands t h e movement o f an  i n c r e a s i n g l y l a r g e p r o p o r t i o n o f goods and  particularistic, in relative that the  importance.  Of  course,  importance of manufacturing  i n d u s t r i e s and, and  exchange r e l a t i o n s h i p s d i s a p p e a r  with  this,  further differentiation  by  s e r v i c e s and  traditional,  or are g r e a t l y  definition,  industrialization  grows i n r e l a t i o n  to the  means  primary  there i s i n c r e a s e d u r b a n i z a t i o n of the o f work t a s k s and  reduced  population  i n c r e a s e i n t h e numbers  and  importance of b u r e a u c r a t i c forms of o r g a n i z a t i o n . Political parallels be  forms:  Political  change a s s o c i a t e d w i t h  changes i n t h e economic s p h e r e .  separated  from i t s t r a d i t i o n a l  familial,  The  industrialization  political  system comes t o  caste or r e l i g i o u s contexts  and  - 5 t a k e s on  an  increasingly  become, as  Almond and  autonomous  . . . new  action As and as  independent e x i s t e n c e .  P o w e l l put t y p e s of  roles  becomes) . . . i n c r e a s i n g l y  a result,  the  political  s e r v i c e s from t h e a symbol o f t h e Social  (or  industrialization  society,  The  considerations to  Ideological  mankind t o  There  change:  With  a shift  existing  religious  Considering  the  industrialization let  . .  extract to  role  of  ."  goods  serve  the  accompanies  c o n t r o l s on  nepotism i n the  and  behaviour.  social  prior  often,  changes i n t r a d i t i o n a l  r e p l a c e or  s e r v e as  the  industrialization  f o r and e t h i c a l i t y o f  to  as  importance.  f a t a l i s t i c view of  n a t i o n a l i s m to  of  greater  mobility  to)  rational  practices  sanctions diminish in  potential  i d e o l o g i e s and,  hiring  a tendency to  economic and  from a s t a t i c and  t h e r e i s a tendency f o r  industrialization.  s a n c t i o n s and  (some might say  i n b o t h the  drastic  empirical.  able to  political  i s , similarly,  roles  Further,  the  political  r e g u l a t e b e h a v i o u r i n i t and  supplant those of  a belief  and  p a r t i c u l a r i s t i c g r o u p s ) which  traditional  there i s usually  analytical  r e d u c e d economic and  inter-generational  particularistic  . . . (and  more  example, i n a t e n d e n c y f o r u n i v e r s a l i s t i c ,  economic o r g a n i z a t i o n s . and  to  or  roles  a whole.  similar  for  established  rational,  weakens t r a d i t i o n a l  This i s reflected,  individual  are  political  . . more s p e c i a l i z e d  system becomes i n c r e a s i n g l y  s t a t e as  structure:  extended f a m i l y  many o f  i t : ".  With t h i s ,  society  and  change.  subsume  a means o f  sanctioning  s o c i a l f o r m s b r o u g h t about  by  ? d e p t h and one  alone i n a v a r i e t y  breadth of  the  social  might w e l l wonder t h a t of c o u n t r i e s .  p e o p l e would i n t e n t i o n a l l y  court  changes a s s o c i a t e d  i t should  More t h a n t h i s ,  such d r a s t i c  social  have o c c u r r e d one  with at a l l ,  might wonder t h a t  u p h e a v a l by  seeking  -  to set t h e i r  nations  on  t h a t i s , were i t not has  the  fact  managed t o i n d u s t r i a l i z e and  less  world.  It i s precisely  that f a c t  avoided but,  T e c h n o l o g y and  (a)  The It  now  long  l o t o f man.  industrialized high  social  certain the  be  term  evident  'industrialization*  become e v i d e n t  i s not  countries,  the  l e v e l of i n d u s t r i a l  panacea f o r the  has  the  then only can  to  capacity  i n the  a l s o be  and  under  prethe  - so  that  society  environmental  technology - extant  o r as  can costs.  yet  o f mankind i s p e r h a p s even more  or n o n - i n d u s t r i a l i z e d c o u n t r i e s .  words  'modern', "advanced', and  which a r e  most  however,  rather, to adjust  or " p o s t - i n d u s t r i a l "  to  excessively  seek a r e t u r n t o t h e  less-  countries  of  with i n d u s t r i a l i z a t i o n  l e v e l of s o c i a l  ills  synonymous w i t h i n d u s t r i a l i z a t i o n . industrialized  a and  complex  - perhaps through f u r t h e r i n n o v a t i o n  same t e n d e n c y t o view i n d u s t r i a l  i n the  that there  c o n d i t i o n but,  m a i n t a i n e d a t a more a c c e p t a b l e  unknown - as t h e  not  f o r most o f humanity  o n l y r e c e n t l y , and  or l e s s - i n d u s t r i a l i z e d  same o r a h i g h e r  This  a goal  s i n c e been d e m o n s t r a t e d t h a t t h e  exceptions,  form of i n d u s t r i a l i z a t i o n the  non-industrialized  Even where t h e s e c o s t s have become a p p a r e n t  i m p u l s e , w i t h a few  industrial  i n the  better,  made i n d u s t r i a l i z a t i o n  environmental costs associated  conditions.  deemed t o l i v e  Industrialization  I t has  countries,  and  o f mankind which  Development  s o c i o - t e c h n o l a g i c a l change we improve t h e  rather,  might wonder,  proportion  brethren  which has  One  o f modern,or p e r h a p s o f a l l , t i m e s .  Ideology of has  small  i s almost u n i v e r s a l l y  most s u c c e s s f u l i d e o l o g y  2.  t h a t the  b r u t i s h l i v e s than t h e i r  s o c i a l t r a u m a t o be the  -  path t o i n d u s t r i a l i z a t i o n .  f o r the  fuller,  6  Indeed, i n t h e s e  ' d e v e l o p e d ' have become a l l  In t h e s e c o u n t r i e s  however, u n l i k e  concerned with incremental  the  adjustments  - 7 -  to  the form of t h e i r  and  adaptation A great  of  the  industrialization,  industrialization  which i t i m p l i e s have y e t t o o c c u r  deal of t h e o r e t i c a l  and  the  change  o r have o n l y j u s t  empirical effort  * industrialization-modernization * process.  i n v o l v e d a n a l y s i s of the h i s t o r i c a l processes  and  has gone i n t o Most o f t h i s  begun. examination  effort  of i n d u s t r i a l i z a t i o n  in  has the  8 western, developed and  nations  men  i n both  and,  i n the  In t h i s  the developed  e v e r was,  an  task of t r y i n g  (b)  central cations  less-developed  maintain  Government, t h e  industrialization  i n the past,  ceased  t o be,  and  T h i s i s most  seemed t o be an of t h e i r  socialist,  difficult evolutionary societies.  communist,  development has  Moreover, the p o l i t i c a l  ( i n the n o n - d o c t r i n a i r e sense) of i n d u s t r i a l i z a t i o n , simple  and  the  r e l a t i o n s h i p to p o l i t i c a l  institutions  a l l t h a t comprises a c u l t u r e .  implicit  in  become  a  change  categorThe  industrialization  t o some d e g r e e o r a n o t h e r  In r e f l e c t i o n  or  impli-  on t h e o w n e r s h i p o f t h e means o f p r o d u c t i o n . v a l u e s and  process.  i f indeed  'natural process'  or f u r t h e r i n d u s t r i a l  e x t e n d s f a r beyond t h e economic s p h e r e and on  has  industrialization  and T e c h n o l o g i c a l Change  persuasion;  g o a l o f governments everywhere.  based simply  today  industrialization  c o u n t r i e s which f a c e t h e  'Private Sector',  of p o l i t i c a l  challenge to t r a d i t i o n a l  touch  an  a directed, revolutionary transformation  c o n f l i c t i t i m p l i e s , b e a r no  izations  of i n d u s t r i a l i z a t i o n ,  a s t r a t e g y f o r development.  t o r e s h a p e what has,  Regardless capitalist,  and  industrialization  i d e o l o g y and  evident i n the  into  to i n i t i a t e  sense then,  industrialization  undeveloped c o u n t r i e s c o n s c i o u s l y seek t o ,  s o m e t h i n g t h a t c o u l d be viewed as a  become both  process  and  of  However,, i n c o n t r a s t t o  shape t h e f u r t h e r e v o l u t i o n o f t h e i r  l a t t e r case,  important  clearly  and  understanding  r e l a t i v e l y undirected h i s t o r i c a l processes  i n the former case,  has  most o f our  i t s c o n c o m i t a n t s d e r i v e s from such a n a l y s e s .  these  it  and  of t h i s , there  can remain  - a c o n s i d e r a b l e d i f f e r e n c e s among e x i s t i n g can e x p e c t  f u r t h e r ' v a r i a n t s ' t o a p p e a r as t h e  c o u n t r i e s , r e p r e s e n t i n g a broader west, a c h i e v e But,  industrialized  their  cultural  c o u n t r i e s and  p r e s e n t l y underdeveloped  spectrum than  the  pre-industrial  industrialization.  r e g a r d l e s s of the c u l t u r a l  setting  or the  political  doctrine  which p r e v a i l s i t i s c l e a r t h a t s u c c e s s f u l i n d u s t r i a l i z a t i o n upon b o t h  t h e government ( l e a d e r s h i p ) and  a society.  W h i l e both  industrialization  and  e l e m e n t s need not change a t l e a s t one  the be  The  responsive  role  istration  to the  of i n d u s t r i a l i z a t i o n  i d e o l o g i e s can  play  s e r v e s as a s o u r c e  to the  (and  But,  c o n f l i c t s and  detailed  The  admin-  responsiveness  government  traumatic  'national interest' i s  - as a j u s t i f i c a t i o n the passing  f o r the  of t r a d i t i o n a l  world  p e r c e i v e d by t h e masses as a m o t i v a t i o n I t may,  today, for  4  values  a t r o o t , be  of  indus-  T h i s need n o t ,  related  to  as d i f f u s e and  a s t h e d e s i r e f o r p e r s o n a l advancement.  there i s a  industrialization,  f o r change s u p p o r t i v e  among t h e masses o f s o c i e t y i s e v i d e n t .  process.  and  almost i n v a r i a b l y , the  c e n t r a l planning  t h e i m p o r t a n c e t h a t t h e r e be m o t i v a t i o n  motivation  planning  industrialization.  s t r o n g g o v e r n m e n t a l commitment t o and  industrialization  (most o f t e n  more o r l e s s amenable o r  E v e n where, a s i n much o f t h e l e s s - d e v e l o p e d  be  to  i t i s here t h a t d o c t r i n a i r e p o l i t i c a l  industrialization.  i n s t i t u t i o n s which accompany  course,  so committed  o f n a t i o n a l s a n c t i o n f o r much o f t h e more  of the i n t e r n a l  trialization  committed  o r may be c o n f i n e d t o a p a s s i v e  - with v a r y i n g degrees o f success  resolution and  extend  a major r o l e ) .  change a s s o c i a t e d w i t h invoked  positively  process.  o f government may  to private sector i n i t i a t i v e s  i s dependent  p r i v a t e e l e m e n t s (masses) i n  must be  the l e a d e r s h i p ) while the other i s at l e a s t positively  one  Of  of  the personal  course,  the  a  mere  prospect  of a  crucial  'better l i f e *  p a i n t - i t must be  man's i n h e r e n t  can  provide  such m o t i v a t i o n  a motivation  conservative  nature.  sufficiently  As  but  - and  this i s a  strong  as t o  overcome  W..-E. Moore has  put i t :  G i v e n t h e o p t i o n , o r even t h e knowledge o f a l t e r n a t i v e s e x i s t i n g e l s e w h e r e , . . . most p e o p l e i n most p l a c e s p r e f e r f o o d t o hunger, h e a l t h t o s i c k n e s s , p h y s i c a l c o m f o r t t o s u f f e r i n g and l i f e t o d e a t h . Whether t h e y a l s o p r e f e r work t o " l e i s u r e " , urban a g g l o m e r a t i o n t o v i l l a g e ' l i f e , c l o s e t e m p o r a l s y n c h r o n i z a t i o n t o t h e uneven pace o f t r a d i t i o n a l p r o d u c t i o n i s more d o u b t f u l , and i t i s a t t h i s l e v e l t h a t p r o b l e m s a r i s e i n t h e p r o c e s s o f development and i n d u s t r i a l i z a t i o n . E v e n where c o n d i t i o n s i n t h e government and for  industrialization  there  p r i v a t e s e c t o r are  remains, of course,  the  f u r t h e r requirement  i n d u s t r i a l t e c h n o l o g y o r t h e means o f a c q u i r i n g i t . t h i s requirement acquisition  i s met  from other  however, t h e r e  3.  use  First,  the term  the term  within  the  acquired countries.  on  necessity  to  one  or  basis  12  (TT)  useful to c l a r i f y  the  i s used  s e n s e i n which  can  be made between process  (or country,  'vertical'  and  and,  process.  T h i s need not  f o r that matter).  production  process).  scientific  take  It is,in  place essence  conceptually  second, i n p r a c t i c e (as i n the  p r o d u c t o r s t a r t - u p o f a new  'horizontal  o f moving f r o m b a s i c  a b s t r a c t knowledge t o human needs f i r s t ,  (as i n a p p l i c a t i o n s r e s e a r c h ) o f a new  be  product or production  of r e l a t i n g  nor  by  countries,  t r a n s f e r ' ( h e r e i n a f t e r , 'TT')  r e f e r s to the  a single organization  a process  and  nations  here.  V e r t i c a l TT  knowledge t o a new  capability  of  Transfer  'technology  a useful distinction  transfers.  be  developed  less-developed  capability  as t h e s e can  a v a r i e t y o f meanings, i t w i l l  will  In t h e  V a r i e t i e s of Technology T r a n s f e r As  we  countries.  domestically  Role of Technology  (a)  with  developed  means o f t r a n s f e r from more d e v e l o p e d  The  In t h e  a domestic i n n o v a t i v e  i s , most o f t e n , n e i t h e r t h e  develop t e c h n o l o g i e s a n o t h e r by  both by  favourable  manufacture  -10In c o n t r a s t t o t h i s , existing  t e c h n o l o g y meeting  environment one  h o r i z o n t a l TT can be viewed  as t h e t r a n s f e r o f an  s p e c i f i c needs i n one e n v i r o n m e n t  - i n o r d e r t o meet i d e n t i c a l o r s i m i l a r n e e d s .  company, i n d u s t r y ,  h o r i z o n t a l TT. particular  of technology.  T r a n s f e r s from  o r c o u n t r y t o a n o t h e r would a l l be examples o f  The l a s t  sub-type  t o another  o f t h e s e , TT a c r o s s n a t i o n a l b o u n d a r i e s , i s t h e  o f TT o f c o n c e r n t o us h e r e - i n t e r n a t i o n a l  Hereinafter,  unless otherwise i n d i c a t e d ,  'TT  1  transfer  will  signify  such i n t e r n a t i o n a l t r a n s f e r o f t e c h n o l o g y . A second,  or further,  d i s t i n c t i o n i s o f t e n made between TT t o d e v e l o p e d  and t o l e s s - d e v e l o p e d c o u n t r i e s . the d i s t i n c t i o n t h e view matter  that,  Though t h e c o n c e p t u a l r e a s o n s f o r making  a r e o f t e n n o t made e x p l i c i t , i n t h e case o f t h e developed  o f economic o r t e c h n i c a l f a c t o r s  i n most c a s e s i t c o r r e s p o n d s c o u n t r i e s , TT i s l a r g e l y a  ( e g . market s i z e ,  l e v e l s o f income,  transportation  costs,  less-developed  c o u n t r y , i t i s much more p r o f o u n d l y a f f e c t e d  or s o c i a l  factors  sources o f supply, e t c . ) while, i n t h e case o f t h e  (eg. l e v e l s of education, values, s o c i a l  In a sense, then, t h i s f u r t h e r i n t e r n a t i o n a l TT a c r o s s n a t i o n a l w i t h an i m p l i c i t  with  dichotomy  distinction  by 'non-economic' structure,  can be viewed  a s b e i n g between  b o u n d a r i e s and TT a c r o s s c u l t u r a l  between t h e c u l t u r a l f o r m s  etc.).  'modern,  boundaries -  industrialized'  13 and  'other*.  While  the distinction  obscures a great deal o f v a r i e t y a broad,  intuitive,  distinction Finally,  i s obviously a simplification  w i t h i n both  sense with r e a l i t y  c a t e g o r i e s i t does a c c o r d i n  and we, h e r e , w i l l  a l s o adopt  this  where i t seems a p p r o p r i a t e . a s e r i e s of f u r t h e r conceptual d i s t i n c t i o n s  r e g a r d s t h e form  i n which t e c h n o l o g y i s t r a n s f e r r e d .  t r a n s f e r r e d by i n t e r n a t i o n a l movements o f i d e a s , and  which  can be made a s  Technology  can be  people, l i t e r a t u r e , e t c . ,  t h e a c t u a l TT may o r may n o t be t h e p r i m a r y , e x p l i c i t  purpose  of the  - 11  activity.  The  goods and  i n t e r n a t i o n a l t r a n s f e r of products - e s p e c i a l l y  the i n f o r m a t i o n r e q u i r e d  of technology. most o f t e n  The  t o use them - can a l s o be a  direct  distinct  themselves  ( F D l ) and  In f a c t ,  i n v o l v e movement o f i d e a s ,  as a n e c e s s a r y p a r t  that the concrete, d e l i m i t e d ,  of carrying  and  licensing.  more i m p o r t a n t t h a n  from) o t h e r forms of TT.  usually  documentation  v e n t u r e s - w i t h t h e main  investment  such t r a n s f e r s a r e , i n sum,  clearly  such  T h i s i s not  than are o t h e r forms o f TT.  ' c o n t r o l l a b l e ' t h a n o t h e r f o r m s o f TT  always  commercial  transfers written  I t i s true,  however,  of t h i s ,  most d i s c u s s i o n  f o c u s e s on  such p u r p o s i v e , c o m m e r c i a l ,  more amenable t o  M o r e o v e r , t h e y t e n d t o be more  and  thus of g r e a t e r i n t e r e s t t o  an a c a d e m i c o r c o n c r e t e , a p p l i e d ,  reflection  o f TT  interest  i n TT.  - including this  persons  In  p r e s e n t one  -  t r a n s f e r s of technology.  T r a n s f e r as a P r o c e s s  A g r e a t d e a l has been w r i t t e n , l a r g e l y by e c o n o m i s t s , broader  to  c o n t r a c t u a l nature o f such p u r p o s i v e ,  examination  Technology  alternative  ( o r , even,  out t h e TT.  t r a n s f e r s makes them b o t h more e v i d e n t and  (b)  transfer  p e o p l e , p r o d u c t s and  commercial,  with e i t h e r  producer's  p u r p o s i v e i n t e r n a t i o n a l t r a n s f e r o f t e c h n o l o g y i s , however,  a s s o c i a t e d with commercial  forms b e i n g f o r e i g n say t h a t  -  subject of technological  change b e c a u s e  about  of i t s association  the  with  14 economic g r o w t h .  Comparatively  has been d e v e l o p e d implicit  i n TT.  f o r that There  a r e , however, two  which d e s e r v e b r i e f mention  of TT.  t h e r e i s what we  The  conclusion  of t h e o r e t i c a l  models  change which i s  models drawn from  some a p p l i c a t i o n  international  i n d i s c u s s i o n s o f TT  and  here. might  ( s t a t i c ) comparative that  i n t h e way  sub-species of technological  t r a d e t h e o r y which have f o u n d  First,  little  nations w i l l  term  a  'dynamic c o m p a r a t i v e  advantage  advantage  model*  t r a d e theory l e a d s to the  tend t o s p e c i a l i z e i n the production of  those  -  t h i n g s i n which t h e i r r e l a t i v e greatest  however, much e v i d e n c e  static  efficiency  ( v i s - a - v i s other nations) i s  and t o exchange some p o r t i o n o f t h a t p r o d u c t i o n f o r goods f o r  which o t h e r n a t i o n s p o s s e s s is,  12 -  a comparative  advantage i n p r o d u c t i o n .  t h a t comparative  advantages a r e not, i n f a c t ,  o v e r t h e l o n g e r term and, a s c o m p a r a t i v e  o f v a r i o u s goods t e n d s  to shift  a d v a n t a g e s change,  f r o m one c o u n t r y t o a n o t h e r .  Unfortunately,,  sense t h e t r a d e t h e o r y  models o f t h i s s o r t  suggests  beg  crucial  Perhaps t h e c l a s s i c a l textile  The  suggested  into the  a d v a n t a g e and,, t h u s ,  seems t o a c c o u n t  tend t o  Nevertheless,  f o r some t y p e s  o f TT.  example would be t h e r e p e t i t i v e t r a n s f e r o f t h e  i n d u s t r y and i t s t e c h n o l o g y  s e c o n d model, t h e ' p r o d u c t  to successive areas  life-cycle  life-cycle  of lower-cost  labour.  model', i s c l o s e l y a s s o c i a t e d  w i t h Raymond V e r n o n and h i s a s s o c i a t e s a t H a r v a r d . the product  take  a model o f TT a s a p r o c e s s .  q u e s t i o n s a s t o t h e p r i m a l c a u s e s o f such T T .  something l i k e t h e p r o c e s s  shifting  may  seldom p r o v i d e much i n s i g h t  f a c t o r s which le,ad t o a change i n c o m p a r a t i v e  production  This  of p r o d u c t i o n i m p l i e s t h a t a t r a n s f e r o f p r o d u c t i o n technology p l a c e , and i n t h i s  There  approach: " . . . puts  As V e r n o n p u t s i t ,  l e s s emphasis upon  comparative  c o s t d o c t r i n e and more upon t h e t i m i n g o f i n n o v a t i o n , t h e e f f e c t s o f s c a l e economies and t h e r o l e s o f i g n o r a n c e patterns."  T h i s a p p r o a c h t a k e s t h e view t h a t i n n o v a t i o n -  of the a c t u a l a p p l i c a t i o n o f a new p r o d u c t is  likely  o f a new p r o d u c t i o n t e c h n o l o g y  - i s n o t a random e v e n t .  t o be f i r s t  to innovations originating  t h e US c a s e  The p o t e n t i a l  a p p r e c i a t e d by an e n t r e p r e n e u r  p o t e n t i a l market f o r t h e i n n o v a t i o n . limited  and u n c e r t a i n t y i n i n f l u e n c i n g  in', t h e s e n s e  or the production f o r an i n n o v a t i o n  i n o r o f t h e major  Though t h e a p p r o a c h need n o t be  i n t h e USA i t i s c o n v e n t i o n a l t o u s e  i n d i s c u s s i n g t h e model.  ( e g . a f f l u e n c e ) and r e l a t i v e f a c t o r  trade  I n t h e US c a s e ,  market  characteristics  costs (eg. high-cost labour) tend t o  -  generate  13  -  t h e r e c o g n i t i o n o f o p p o r t u n i t i e s f o r l a b o u r - c o n s e r v i n g and, h i g h -  income consumers' goods i n n o v a t i o n s . The will  model f u r t h e r a r g u e s  t a k e p l a c e i n t h e US  associated  that the i n i t i a l  - d e s p i t e the f a c t  with the i n i t i a l  on t h e one  market.  as t h e y a r e r e v e a l e d and,  of a  from  and  t o market  demand c u r v e s i n c e such new  'luxury item*  initially  and  f o r production  e v o l v i n g form  response  i n any  f o r t h e consumer t o compare on t h e b a s i s o f p r i c e .  also,  costs  be so, t h e model  on t h e o t h e r hand, t h e f i r m ,  price-inelastic  a r e something  This will  hand, t h e u n s t a n d a r d i z e d and  p r o d u c t r e q u i r e s prompt f e e d b a c k  a relatively  t h a t t h e i n p u t s and  p r o d u c t i o n p r o c e s s might a r g u e  o v e r s e a s f o r e x p o r t t o t h e US because,  p r o d u c t i o n o f t h e s e goods,  argues,  of the  new  preferences  typically,  faces  products  usually  event  are  difficult  This inelasticity  of  demand r e d u c e s t h e p r e s s u r e s t o s e e k o u t t h e l o w e s t - c o s t l o c a t i o n f o r production.  As  the product  becomes s t a n d a r d i z e d and  the domestic  e x p o r t m a r k e t s expand however, t h e b a l a n c e o f i n c e n t i v e s s h i f t s either foreign  producers  are e s t a b l i s h e d  or f o r e i g n  t o meet f o r e i g n ,  s u b s i d i a r i e s o f t h e US  and t h e n US  domestic  so  and that  innovators  demand ( s e e f i g u r e  1  on page 1 4 ] .  Thus, the product  life-cycle  approach  also  p r o v i d e s a model f o r TT  the t r a n s f e r of a production technology being a f u n c t i o n o f s t a n d a r d i z a t i o n and T h i s model, l i k e  the comparative  t o some f u n d a m e n t a l primal causes  degree  market c o n d i t i o n s i n t h e r e c i p i e n t n a t i o n . a d v a n t a g e model, does n o t a d d r e s s  questions - i n t h i s l a t t e r  itself  c a s e , f o r example, t o  the  o f changes i n non-US m a r k e t s which c r e a t e t h e c o n d i t i o n s  n e c e s s a r y f o r TT for  of l o c a l  o f i t s own  with  t o them.  some t y p e s o f TT  N e v e r t h e l e s s , t h i s model., t o o , seems t o  - p a r t i c u l a r l y TT  o f t h e consumer d u r a b l e s g o o d s .  account  o f p r o d u c t i o n t e c h n o l o g i e s f o r many  - 14 -  Figure K A Schematic Presentation of tha U.S. Trade Position in the Product Ufa Cycle  Net Exporter  Net Importer  Priose I  Phase!  • Phase EI  AH production Production in U.S. started in Europe U.S. exports lo many countries  Phose  Europe Europe exports to exports . LDCV to U.S.  LDC's export to U.S.  U.S. exports U.S. expar's mostly to to LDC's LDC's displaced  S o u r c e : L.T. and  P'nass Iff  Wells  International  (ed.) The  Product L i f e - C y c l e  Trade. Boston, D i v i s i o n of  R e s e a r c h , G.S.B.A., H a r v a r d  University.  - 15  Both limit  -  o f t h e models d i s c u s s e d , however, s h a r e two  t h e i r v a l u e as models o f T T .  In the f i r s t  b e g i n t o encompass more t h a n a s m a l l p a r t i n h e r e s i n i s s u e s o f s o c i e t y and On  this  o f t h e two. or l e s s  In t h e s e c o n d  'natural'  environmental  model i s p r o b a b l y t h e more  o f c o u r s e , has  not  thus, i n the i s s u e of  i s , as a p r o c e s s a r i s i n g  This,  which  c o m p l e x i t y which  from  TT.  satisfactory  i n s t a n c e , b o t h models c o n c e p t u a l i z e TT  process, that  realities.  i n s t a n c e , t h e y do  of the t o t a l  t e c h n o l o g y and,  point, the product l i f e - c y c l e  characteristics  as a more  existing  (an i n t e n d e d ) v a l u e i n  s e e k i n g t h e , o r some o f t h e , u n d e r l y i n g e n v i r o n m e n t a l f a c t o r s - which f a v o u r TT.  In f a c t ,  one  however, TT  (along with i n d u s t r i a l i z a t i o n ,  a f t h e means c o n s c i o u s l y used  underlying and  realities  maintain t h e i r (c)  industrialization.  role  - t o f u r t h e r extend  and  destinies.  has  became  in spite  or to  of  initiate  17  T r a n s f e r as D i r e c t e d  In b o t h d e v e l o p e d t o shape t h e i r own  by n a t i o n s e v e r y w h e r e - o f t e n  i n i m i c a l t o t h e TT  Technology  itself)  Change  l e s s - d e v e l o p e d c o u n t r i e s n a t i o n s seek  I n both c a s e s t e c h n o l o g y p l a y s an  important  i n n a t i o n a l development p o l i c i e s which i n c o r p o r a t e v a r i o u s l a w s ,  regulations, a fact that  and  t o t e c h n o l o g i c a l development.  developed  One  s t u d y o f 110  n a t i o n s and,  o f them, the US  significant  commercially e x p l o i t e d  ;  postwar  somewhat, even (in t h e to the other developed Among t h e d e v e l o p e d  has  i n n o v a t i o n s f o u n d t h a t SO/o D e s p i t e t h i s , US  not i n c r e a s e d but has,  ' s c i e n c e - i n t e n s i v e ' manufactures, countries.  2  a  i s by f a r t h e b e s t endowed.  i n t h e USA.  of world t r a d e i n manufactures  18  o f them were  dominance  in fact,  as a r e s u l t  decreased o f TT  0  c o u n t r i e s a t l e a s t , TT  has been a f a i r l y  efficient  21 activity.  It is  t h e b u l k o f modern i n d u s t r i a l t e c h n o l o g y i s p o s s e s s e d by  few  first  incentives related  In the l e s s - d e v e l o p e d c o u n t r i e s ,  however, TT  has  been  -  complicated alluded  to  considerably earlier  (see  b o t h d e v e l o p e d and  may  be  4-6).  the  'social engineering  Increasingly  takes place  While there are  form o f TT  pp.  -  problems of  less-developed  j u s t w i t h whether TT place.  by  16  countries but  t h o s e who  of recent  argue t h a t form  - s u c h as years,  the  23  those  however,  have c o n c e r n e d t h e m s e l v e s  a l s o with the  most e f f i c i e n t  1  not  form i n which i t t a k e s  foreign  direct  o r even t h a t  investment  in certain  cases  OA  it  may  be  necessary,  increasingly, investment.  to  i s , primarily,  o f t h e FDI  or imagined, with control  not  mode o f TT  at  but,  engendered i n governments and  rather, and  of  of the  n a t i o n s by  are  transferred  transferred  and  seeking,  at the  r i g h t t i m e but little  independence.  In  as  only  indigenous capacity  4.  The  Relevance of the Much has  and  possible  developed  Not  not  on  appropriate  they  are  feelings  foreign  of been  direct  invest-  foreign-developed  tendency, at l e a s t i n  t o t r y t o encourage the  the  developemnt o f  the  innovation.  Postwar Japanese E x p e r i e n c e  been w r i t t e n  understandably so.  ranks of the  which i n v o l v e s ,  for technological  that  p r a c t i c a l t e r m s , t h i s has  a l s o been a p a r a l l e l  developed nations,  foreign  in their efforts  also that  l i c e n s i n g o f i n d i g e n o u s companies t o use  advanced  sense  presence of  ment, but  T h e r e has  efficacy  of  a p r e f e r e n c e f o r TT  technologies.  technical  diminished  e v i d e n c e d by the  direct  real  the  increasingly  i n a form which i m p i n g e s as  sovereignity  foreign  i t s association,  change o f t h e i r s o c i e t i e s , t o e n s u r e not  technologies  national  involving  25  a c o n s e q u e n c e , governments a r e  directed  not  a r e f l e c t i o n of the  'economic i m p e r i a l i s m '  companies o r t h e i r s u b s i d i a r i e s . As  tendency f o r governments,  e n c o u r a g e o t h e r f o r m s o f TT  This  or i n e f f e c a c y  there i s a contrary  only  of the  p o s t w a r J a p a n e s e "economic  i s Japan the  (some would say  most r e c e n t  a f f l u e n t ) nations,  addition but  miracle", to  i t is  the  also  - 17  the f i r s t  of the "non-western" n a t i o n s t o u n e q u i v o c a l l y  of development. used  t h e o r i e s and  is  such,  hypotheses  p r e s e n t day J a p a n has  reach that  case"'' f o r a s s e s s i n g t h e g e n e r a l i t y  as t o t h e c o n c o m i t a n t s  examined f o r t h e c l u e s i t may  Two  of the advanced  provide regarding that  c a s e , however, t h e i m p o r t a n c e  and  of  industrial industrialization  process i n general.  of developments p r i o r t o World  q u i c k l y becomes a p p a r e n t . • As r e g a r d s t h e J a p a n e s e a d a p t a t i o n t o  industrialization,  t h e r e i s c o n t i n u i n g debate  be s a i d t o have begun b u t , i n any began a t l e a s t scholarship  as e a r l y  as t o e x a c t l y when t h i s  can  c a s e , t h e r e i s g e n e r a l agreement t h a t i t  as t h e l a t e N i n e t e e n t h C e n t u r y .  s t r e s s e s the importance  of s o c i a l  and  Indeed,  economic  during the p e r i o d of self-imposed i n t e r n a t i o n a l i s o l a t i o n era  stage  come t o s e r v e as an o f t -  S i m i l a r l y , • the Japanese process of modernization  In e i t h e r War  As  p o i n t of r e f e r e n c e or " t e s t  state.  -  (1600-1868] f o r t h e s u b s e q u e n t ,  and  more o b v i o u s ,  recent  developments i n t h e Tokugawa  process of  modernization/  industrialization. Similarly,  the importance  of the importation of f o r e i g n  J a p a n e s e development i s n o t o f r e c e n t o r i g i n . have had  major impact  o f T'ang C h i n e s e (though ment.  in  M o r e o v e r , even i f we  as t h e S e v e n t h  and  Century  Japanese s o c i e t y ,  influencing  wave  irrevocably  a l l subsequent  developtech-  l i e i n the l a t e Nineteenth  the formal reopening  to  transfers  c o n f i n e o u r s e l v e s t o modern, i n d u s t r i a l  of i n t e r n a t i o n a l  Century  contacts  1850's.  In s h o r t , c o n s i d e r e d from and  i t  f i n d t h e b e g i n n i n g s o f such TT  i n some c a s e s p r e c e d e d the  as e a r l y  Such t e c h n o l o g y  i n f l u e n c e s which swept t h r o u g h  not immutably) a l t e r i n g  n o l o g i e s we and  s i n c e at l e a s t  technology  the broad  technology t r a n s f e r outlined  an e x a m i n a t i o n  s t a n d p o i n t o f economic  i n the preceeding  development  s e c t i o n s of t h i s  o f t h e p o s t w a r J a p a n e s e e x p e r i e n c e can  o n l y be.a  chapter,  part of  the  -  story.  The t h r e a d s o f s o c i a l ,  18 -  ideological,  which t r a c e J a p a n ' s modern development s e v e r e d by to  World War Two.  history,  political,  and economic  change  do n o t b e g i n w i t h n o r were they,  But, g r a n t i n g  some f u n d a m e n t a l " s e a m l e s s n e s s "  t h e r e remain p e r s u a s i v e reasons f o r f o c u s s i n g  on t h e p o s t w a r  period. There i s , f i r s t , dividing a  line  t h e f a c t t h a t t h e use o f World War Two  i s more t h a n a c o n v e n i e n t c o n v e n t i o n .  major t u r n i n g p o i n t  which, i n i t s e l f , separate e r a . as by  a result  i n world p o l i t i c a l ,  would  of Japanese  was  distinguish rapidity  and economic g r o u p i n g s  t r u e i n the case of Japan  f o r the f i r s t  time i n i t s h i s t o r y  by a power i n t e n t  on e f f e c t i n g  o f J a p a n ' s p o s t w a r development  i t f r o m t h e prewar p e r i o d .  from which J a p a n ' s p o s t w a r development appearance of f o r e s h o r t e n e d , r a p i d ,  ;  In p a r t ,  of course t h i s  The s t a t e o f d e v a s t a t i o n and began c r e a t e s an  artificial  o f t h e prewar p e r i o d .  development,  from  as GNP  but a l s o  as as  Thus, f o r a l l  prewar J a p a n r e m a i n e d a  s o c i e t y w i t h a s much as 50/o o f i t s employed  wartime  and  T h i s i s t r u e not o n l y  and q u a l i t a t i v e measures o f d e v e l o p m e n t .  considerable industrial'  agricultural  o f m o d e r n i z a t i o n and  r e m a i n s a much more r a p i d  r e g a r d s s u c h g r o s s a g g r e g a t e i n d i c a t o r s o f development  its  poverty  development f r o m extreme p o v e r t y t o  d e s t r u c t i o n , J a p a n ' s p o s t w a r development  regards s t r u c t u r a l  a fundamental  drama and  y e t , even a l l o w i n g f o r t h e d i s t o r t i o n s a r i s i n g  dramatic process than t h a t  occupied  which a l s o t e n d s t o  a f f l u e n c e and o b s c u r e s J a p a n ' s i m p r e s s i v e prewar r e c o r d And  which,  on t h e p o s t w a r p e r i o d r e l a t e s t o t h e v e r y  a r e more a p p a r e n t t h a n r e a l .  development.  rather,  society.  A second reason f o r f o c u s s i n g drama and r a p i d i t y  It reflects,  ideological,  T h i s i s perhaps p a r t i c u l a r l y  power and, moreover,  transformation  historical  j u s t i f y t h e treatment o f t h e postwar p e r i o d as a  o f World War Two,  a foreign  as an  largely  population  engaged  -  in  19 -  p r i m a r y i n d u s t r y a s l a t e a s 1930.  As a g a i n s t t h i s ,  p e r s o n s employed i n p r i m a r y i n d u s t r i e s f e l l y e a r s between 1950 and 1970. Japanese and  In f a c t ,  from  the percentage of  48% t o 19% i n t h e twenty  i f we c o n s i d e r t h e s t r u c t u r e o f  employment i n terms o f t h e t h r e e c a t e g o r i e s ,  tertiary,  the primary  (41%) t o b e i n g t h e l e a s t  i n d u s t r y group important  moved from  primary,  secondary,  b e i n g t h e most  important  (25%) i n t h e b r i e f t e n y e a r s f r o m 1955  t o 1965 ( s e e t a b l e 1 . ) . Similarly, seriously  t h e content o f Japan's  challenged that  marketplace  prewar i n d u s t r i a l  o f the developed  e x c e p t where J a p a n ' s  western  output  world  had n e v e r  i n the international  lower l a b o r c o s t s and/or  lower q u a l i t y  l o w e r p r i c e ) p r o v i d e d economic advantage  i n some few i n d u s t r i e s and  A g a i n , t h e postwar  different.  record i s s t a r t l i n g l y  compete i n e x p o r t m a r k e t s r a p i d l y products of l i g h t direct  shifted  markets.  ability to  the r e l a t i v e l y  i n d u s t r y t o complex-technology  c o m p e t i t i o n with a broad range  western  from  Japan's  (thus  simple-technology  p r o d u c t s o f heavy i n d u s t r y i n  of"the i n d u s t r i a l  output o f t h e developed  nations (see t a b l e 2 . ) .  T h i s second for focussing  point  s u g g e s t s , o r can be r e f o r m u l a t e d i n t o ,  on t h e p o s t w a r  period.  Many non-western  a third  reason  (and, f o r t h a t  matter,  w e s t e r n ) n a t i o n s have l a u n c h e d development programmes aimed a t a t t a i n i n g the l e v e l s  of i n d u s t r i a l i z a t i o n  Many o f t h e s e , n o t a b l y i n c l u d i n g  common i n t h e w e s t e r n prewar J a p a n ,  advances along t h e path t o i n d u s t r i a l i z a t i o n .  developed n a t i o n s .  have made c o n s i d e r a b l e I n a l l t o o many  however, t h e gap between t h e s e c o u n t r i e s and t h e advanced remained  relatively  industrial  unchanged, o r widened.  development,to  western  nations.  T o f o c u s on t h i s  at a point "arrival  n a t i o n s has  Thus o f a l l t h e " t a k e o f f s "  borrow Rostow's term,  v e r y few t o have a r g u a b l y " a r r i v e d "  cases  postwar  Japan  in  i s one o f t h e  o f e q u a l i t y w i t h t h e advanced  p r o c e s s " , on, t h a t i s , t h e postwar  Table 1 Trends i n Employment by I n d u s t r y Category:  'Ntjategoi "  TERTIARY  SECONDARY  PRIMARY Employed persons \  %  1920  14,672,164.  1930  y  1920-1970  20 .53  Employed persons 6,463,586.  23.71  6,002,032.  20 .26  8,836,206.  29.83  44.31  8,442.502.  25 .99  9,429,391.  29.03  17,208,447.  48.30  7,811,950.  21 .93  10,568,475.  29.67  1955  16,111,216.  41.04  9,219,905.  23 .48  13,928,005.  35.48  1960  14,239,420.  32.57  12,761,770.  29 .19  16,703,590.  38.21  1965  11,737,950.  24.64  15,242,410.  32 .00  20,622,955.  43.30  1970  10,087,190.  19.36  17,705,915.  33 .98  24,297,675.  46.63  53.82  Employed persons 5,597,905.  14,710,820.  49.67  1940  14,392,482.  1950  Year  %  Source: J i n k o Mondai S k i n g i k a i ( P o p u l a t i o n C o u n c i l ) . Nihon J i n k o no DoKo - S e i s h i J i n k o o Mezashite (Japanese p o p u l a t i o n  trends - towards a s t a b l e p o p u l a t i o n ) .  - Japanese - 1974, pp.326-327.  %  .fl CO CU rH •rl  fi X) CU  4-1  o u  cu H  fi cd  CO CU t-l  3  CO  CJ cd m  cu  4-1  CO  0)  fi cd  i—1  •H ,P rH CU OJ 4-1  CO  ,o e o 4-1  <  >  CO p. •H  x: CO  >—1 cd  •rl CU O CU  Pi  cu  a  CO cu  •rl  u  JJ  X  •rl  ft o  Pi  •H  <4H  4-1  •H CO •H  cu •rl CJ CO  CU rH CU H  o  4J  >.  cu  O  4-1  CO  o 4-1 o  o •rl •rl  fi  fi o  >  •H  .fl CO  CO  cd  cu  rH  c  o  -C •rl  fi n  13  cd  O CJ cu Pi  ••  CU A! cd •rl  cu  3  •rl  U  cu u  ft  O CO  cd H  C7i cd  60  o fi fi fl o  >  •H cu CJ cu  fi  CN  60 fl •rl  4-1  •1-1  CO l-l a)  CO CU rH CJ  •H  o  4->  CO r-l CO  Ra  CTl  •1-1  CO  4J  c  Cd XC!U O  60  O rH O  M  a cu  cu co  cu  C  cu CO  cd ft cd •-3  Xr !H  co  3  cd  60  3  O !^ cd  H  ft  CU CO CU  C  cd ft cd >->  A T e l e v i s i o n recexvers O Motorcycles © Synthetic P l a s t i c s Q Television receivers O Tape R e c o r d e r s  O Synthetic ©Chemical  0 * Q O —  _•  CO  .—  cd  CO  4-1  CU  cu  o m  rH •rl 4-1  CO  X CU  3 O  H  u M  fi O  rH  O  4-1  4-1 4-1  CO CU  £  rH •rl 4-1  CO  CU  cu  u  CO  rH  CN  CU Fn 1  fi O  CO  cd  ^r H •rl  CO  X CU  H  fi O cd  i-i  CO  fi  4J  4J  fi -fi  14H  a  a cd  o  u  60  p-l CU  fi •rl U cd  Pi  a  in  vO  fi  CO  ft  •rl  X CO  fi fl cd  •rl  X4-1 O  rH  CJ  00  rH  cd  4-1  ca  T3  o o  O  cu  rH •rl  cy>  O rH  CO  Fertilizers  Automobiles Scientific opticals Radio r e c e i v e r s Rayon F i b r e s  cu  rH  F i b r e s and T e x t i l e s  CO CU •rl  fi a) H  4-1 fi CU  H  U  ft o  g. Toys  period,  i s to focus  p r o c e s s and  on  Finally, was,  the  on  a particularly  r o l e t h a t TT  accompanied by  of f o r e i g n t e c h n o l o g i e s  and  to  i n that  increased  them w i t h o u t any  t o advanced  the be  (see  a p p e a r s t o be  Japanese a b i l i t y i n the  major p e n e t r a t i o n t a b l e 3 on  page  the  same t i m e , t h e  postwar Japan s u g g e s t s t h a t  point  o f TT  incidental  t o compete w i t h t h e i r  can  yield  but,  imported  techniques  technology  Japan managed t o  of i t s economy by  most d r a m a t i c and and  development p r o c e s s - t h e At  importations  acquire  foreign direct  23). i s of p a r t i c u l a r i n t e r e s t . s u c c e s s f u l example o f TT  a s p i r a t i o n s i n the  a r g u e d , moreover, t o i l l u s t r a t e  status. in  perhaps the  status  Moreover, w h i l e t h e s e  developed nations,  s e r v i c e of n a t i o n a l goals  i n the  industrial  major t e c h n o l o g i c a l changes and  transformation.  development  stage.  Thus t h e J a p a n e s e p o s t w a r e x p e r i e n c e w i t h TT It  stage i n the  were i n c r e a s i n g l y s o p h i s t i c a t e d , s t a t e - o f - t h e - a r t ,  supplier-competitors  investment  significant  t h e s e appear t o have been not  fundamental to that  technologies leading  plays  -  Japan's postwar t r a n s f o r m a t i o n  in fact,  rather,  22  a critical,  and  postwar world.  relatively  t r a n s i t i o n from " d e v e l o p i n g "  unique, to  examination of the  useful i n s i g h t s into that  period  period  can  period  "developed"  apparent s i g n i f i c a n c e of t e c h n o l o g i c a l an  It  in  from t h e  change stand-  of J a p a n e s e h i s t o r y .  -23-  T a b l e 3. I n t e r n a t i o n a l Comparison of the Share of E n t e r p r i s e s w i t h F o r e i g n Ownership (E.F.O.'s) i n M a n u f a c t u r i n g I n d u s t r y .  Year  Country  Share of E.F.0's(%)  % of Parameters Foreign Ownership  Canada  1969  58.1  25%+  Sales  Japan  1970  3.0  20%+  Sales  Belgium  1968  33.0  n.a.  Turnover  Finland  1970  7.0  France  1970  10.0  Germany (West)  1970  21.3  50%+  Turnover  Netherlands  1971  18.9  1%+  Turnover  Sweden  1970  9.7  20%+  Turnover  Turkey  1968  7.6  10%+  Turnover  U n i t e d Kingdom  1963  9.1  n.a.  Sales  Turnover  15%+ ( a )  20%+  ( a )  Turnover  Source: O.E.C.D. I n t e r i m Report of the I n d u s t r y Committee on I n t e r n a t i o n a l E n t e r p r i s e s , P a r i s ; P u b l i c a t i o n s Centre, Note:  (a) e s t i m a t e  1974,  - 24  II  JAPAN'S POSTWAR RECOVERY  1.  task of r e c o n s t r u c t i o n . the c a p i t a l  city  and  much o f t h e c a p i t a l  people  i t was  fire-bombing  quickly,  o f World War  Two,  t h e J a p a n e s e f a c e d an  I f i n t h e days i m m e d i a t e l y  o f Tokyo showed l e s s e v i d e n c e  European c a p i t a l s ,  Very  (1945-1955)  Japan i n Defeat In t h e a f t e r m a t h  tion  -  had  city  enormous  following surrender  of d e s t r u c t i o n than  o n l y because the combination  o f wood c o n s t r u c -  made t h e d e s t r u c t i o n more c o m p l e t e and i n t o a neat,  of course, makeshift  struggled to establish  and  but l i f e l e s s ,  plain  b u i l d i n g s a r o s e out maintain  a new  many  of  turned  ashes.  o f t h e waste  as  subsistence f o r  themselves. While  the m a j o r i t y of the Japanese concerned  immediacies  of a catch-as-catch-can  or r e s p o n s i b i l i t y , struction  existence, those  to consider the longer-term  were seldom o p t i m i s t i c  s t a t u s o f an advanced  themselves few  with  who  had  the the  i s s u e s of postwar  time,  recon-  about J a p a n ' s c h a n c e s o f r e t u r n i n g t o  industrialized  nation.  T h e r e was  much t o  the  support  26 such  pessimism.  The and  l o s s o f t h e war  sources  o f s u p p l y as t h e  dismantled.  The  the r e p a t r i a t i o n 1945 in  and  meant t h e l o s s o f J a p a n ' s major e x p o r t  1949  markets  'Greater E a s t - A s i a C o - p r o s p e r i t y Sphere  l o s s of overseas  t e r r i t o r i e s was  a l s o accompanied  - accounting,along  t h e prewar l e v e l o f 145.9 t h e r e had  was  by  o f 6,220,000 o v e r s e a s J a p a n e s e e x p a t r i a t e s between w i t h n a t u r a l i n c r e a s e , f o r an i n c r e a s e  p o p u l a t i o n d e n s i t y on t h e main i s l a n d s d u r i n g t h e same p e r i o d  time,  1  t o 211.9  per square  kilometre.  2  7  At the  been c o n s i d e r a b l e l o s s e s o f i n d u s t r i a l a s s e t s  from same  through  - 25 -  bombing and, i n t h e o v e r s e a s t e r r i t o r i e s , on  page 2 6 ) .  2.  T h e Prewar L e g a c y  (a)  N a t i o n a l Ambition Despite  possessed  and C o h e s i o n  the considerable  by J a p a n i n i t s d e f e a t  many r e s o u r c e s  which f r o m t h e with  t h e advanced imbued w i t h  Allied  earliest nations  by  an a l i e n  was t h e r a c i a l  with  damage s u f f e r e d  army, t h e n a t i o n  and c h a r a c t e r i s t i c s f a v o u r a b l e  s e n s e o f n a t i o n h o o d which had p l a y e d prewar d e v e l o p m e n t .  m a t e r i a l and p s y c h i c  and o c c u p a t i o n  P e r h a p s f o r e m o s t among t h e s e  and  through c o n f i s c a t i o n (see t a b l e 4  t o redevelopment.  and c u l t u r a l  s u c h an i m p o r t a n t  homogeneity and  role  i n Japan's  t h i s was a n a t i o n a l , o r r a c i a l ,  days o f M e i j i  set a national goal  and which g o a l ,  i n t u r n , both  still  pride  of equality  sanctioned  n a t i o n a l p u r p o s e much o f t h e prewar i n d u s t r i a l i z a t i o n o f  Japan.  True, t h i s implicated  same s p i r i t  i n the r i s e  o f n a t i o n a l i s m and a m b i t i o n  o f Japanese m i l i t a r i s t i c  i n t h e agony o f t h e P a c i f i c defeat, and  policies,  I t was soon t o be e v i d e n t  and, u l t i m a t e l y , however t h a t  d i d not d i m i n i s h Japanese n a t i o n a l ambition  fundamental cohesion  in  imperialism  f o r a l l t h e d i s r e p u t e i t b r o u g h t down upon t h e m i l i t a r i s t i c  their  search  War.  was s t r o n g l y  for, first,  but, r a t h e r , rechanneled  recovery  o f t h e west.  and  i tinto a non-militaristic  t o prewar s t a n d a r d s  s t a n d a r d - o f - l i v i n g , i f not i n m i l i t a r y  leaders  and, t h e n ,  power, w i t h  f o r equality  t h e advanced  countries  -  Table  26  -  4'\ Japan's World War  Two  L o s s e s of A s s e t s  Losses of Assets as a Percent of National Total B  A  101.1% 89.4 123.3 121.2 ••••:• 180.6 106.6 . 92,4 56.8 148.1 109.9 106.8 94.6 93.7 106.6 35.7 190.3  25.4% 24.6 7.5 3.5 34.3 7.0 21.9 80.6 10.8 14.8 16.8 21.6 20.6 23.9 4.5 20.0  Overall Construction Harbors & Waterways .-. Bridges ! Industrial Machines & Tools Roads & Railways '•.-Vehicles ' ••: Shipping Electricity & Gas Plants Telegraphs & Broadcasting Equipment Waterworks Personal Goods & Possessions Furniture, Household Effects Manufactured Goods Precious Metals Miscellaneous  A = direct & indirect losses as a proportion of total remaining assets at the close of hostilities. B=total remaining assets at war's end as a proportion of total assets in 1935.  Proportional Losses of Industrial Assets Others  High Rate of Loss Power Iron & Steel Nonferrous Metals Machinery • •• Chemicals Textiles  Oil Refining Pig Iron "Aluminum Vacuum Valves Sulphur Carded Wool  :  58.0% Thermal Electricity Carbon Steel 24.5 Electrolytic Copper 23.9 Machine Tools 55.7 54.1 Cement 42.4 • Paper Pulp  :  30.2% 14.4 22.1 25.0 27.0 10.4  (, S o u r c e : Yamamoto, Noboru The M o d e r n i z a t i o n  of t h e Economy and Postwar E x p a n s i o n  Tokyo, I n t e r n a t i o n a l A s s o c i a t i o n I n f o r m a t i o r i , 1973. p.27..  f o r Educational  -  (b)  Government J a p a n has  has  a long  supportive  Restoration  o f 1868,  -  Initiative been p o l i t i c a l l y  h i s t o r y of strong  traditions  27  u n i f i e d since the  latest,  one  c l o s e i n v o l v e m e n t o f government i n t h e Japan's i n d u s t r i a l i z a t i o n interaction,. was  This  a high  i s important  leadership  was  simply  The  and  initial  by  electric  and  power) and connection,  nations  of the  West was Science  isolation  Meiji  been  was  world.  to recover To  modernize the  officially  of  l e s s advanced s t a t e of Japan's  and  193Q's and  to  central power abundance  for consultation  and  bureaucratic:  28  Japan's latter  political end,  for light  plans  as e a r l y  the  industrialization.  steel,  developed  as: t h e  T h i s gap 1940*s and  were  manufactures.  between J a p a n and  recognized  economy  developemnt.  b a s i c i n d u s t r i e s (eg.  T e c h n o l o g y i n 1949.  of Japan i n the  and  i t p o s s e s s e d an  this  export trade  a  implementation  p r e s t i g e , competence, and  business  t e c h n o l o g y gap  and  has  e f f e c t i v e n e s s of  central p o l i t i c a l  t o d e v e l o p an the  the  b u r e a u c r a c y which was  a capacity  economic i n d e p e n d e n c e .  In t h i s  part the  i n the  and  and  government-business  e a r l y postwar p e r i o d ,  of l e a d e r s h i p  to r e v i t a l i z e  White P a p e r • on  the  a f u n c t i o n of  both the  leaders  goal  s o v e r e i g n i t y and formulated  prestigeous,  a l s o of a t r a d i t i o n  compromise p o s s e s s e d by leadership  degree of  and  of t h i s  i n Japan's postwar r e c o n s t r u c t i o n  (though, e s p e c i a l l y i n the o f t h e s e ) but  planning  t o n o t e , however, t h a t not  reflection  Since  o f c e n t r a l government g u i d a n c e o f t h e  r e f l e c t e d i n a competent, and  prove a f u r t h e r a s s e t It  and  tradition  Century  c e n t r a l government as w e l l as h i e r a r c h i c a l  o f such c e n t r a l i z e d government. at the  17th  first  reflected in i n part  the  28  -  (c)  -  The P e o p l e I f Japan's i n d u s t r i a l i z a t i o n  as i n t h e West, i t s s o c i a l advanced.  technically  n o t as  adaptation to i n d u s t r i a l i z a t i o n  Indeed, t h e d i s c i p l i n e s  and t h e P a c i f i c War  was  on b o t h t h e m i l i t a r y  and c i v i l i a n  population  attitudes  to  of l i t e r a c y  In terms o f o v e r a l l  Japan a l r e a d y ranked high  levels  compared t o o t h e r c o u n t r i e s .  The  and  the r e t u r n  o f p e a c e t i m e , J a p a n was  done s i n c e a s e a r l y  were p r o c e e d i n g It  i s true,  exhibits  organization  t o emphasize  of these,  distinct  o f work.  individuality,  (as  well over  40/o  studies.  T h e s e d i f f e r e n c e s a r e most remarked the s o c i a l  but, with  of school-age c h i l d r e n  of course, t h a t t h e Japanese s o c i a l  industrialization  education,  by t h e end o f t h e 1 9 4 - 0 ' s  providing  as t h e 1 9 2 0 ' s ) and,  to high-school  may  educational  o f c o u r s e not immune t o t h e d i s r u p t i o n s o f wartime  a c o m p u l s o r y , p r i m a r y e d u c a t i o n t o o v e r 99/o  30's  antagonistic  s y s t e m was  had been  well  and demands o f t h e m i l i t a r i s t i c  have s e r v e d t o f u r t h e r b r e a k down t r a d i t i o n a l industrialism.  was  advanced  adaptation  to  d i f f e r e n c e s f r o m t h e "Western upon by f o r e i g n  In c o n t r a s t  performance standards,  t e n d s t o emphasize  group o r i e n t a t i o n ,  o b s e r v e r s as r e g a r d s  t o the western tendency  emotional n e u t r a l i t y ,  and u n i v e r s a l i s t i c  model".  fundamental  equality,  t h e J a p a n e s e work e n v i r o n m e n t  e m o t i o n a l commitment,  hierarchy  29 and p a r t i c u l a r i s t i c it  performance e v a l u a t i o n s .  For a l l that,  has p r o v e d t o be an e x t r e m e l y v i a b l e form o f a d a p t a t i o n  Moreover, 1940*s.  in a l l i t s essentials Thus,  i t was  already  a  'fait  i n terms o f t h e problems o f s o c i a l  h i n d e r development  i n much o f t h e w o r l d , J a p a n was  to  industrialism.  accompli*  engineering well  however,  by t h e  which  situated  at the  -  end  o f W o r l d War  Two  the  opportunity  t o do  29  -  to c l o s e the technology so.  On  this latter  gap  w i t h t h e West - g i v e n  point - the o p p o r t u n i t i e s  t o be  a f f o r d e d J a p a n i n t h e p o s t w a r e r a - much depended upon t h e  t o be  a d o p t e d by t h e O c c u p a t i o n  3.  The  Occupation,  (a)  Occupation The  forces.  Redevelopment, and T e c h n o l o g y T r a n s f e r  Policies  occupation  authorities  (nominally A l l i e d ,  but  American) d i d not adopt a r a p a c i o u s a t t i t u d e towards Japan. policy  o b j e c t i v e s of " d e m i l i t a r i z a t i o n  as popular  as any  such  externally  Nevertheless,  the scope ofproposed  specifically,  included policies  demilitarization' further,  The  rapid  and  reforms  aimed a t  was  their  extremely  probably  broad  and, and  objectives, implied a and  economic p o l i c i e s was  democratic'  c o n c e n t r a t i o n s o f economic power.  'zaibatsu' - f i n a n c i a l  p o l i c i e s was  i d e o l o g i c a l and  economic f a b r i c  . . . erect a solid  -  democratic c a p i t a l i s m . "  The  other  fundamental " . . .  the 'nonmotivation  transforming  a  numerous competing u n i t s . . .  bulwark a g a i n s t the  systems d e s t r u c t i v e o f both  aimed a t  combines - and  aimed a t :  s m a l l number o f m o n o p o l i s t i c combines i n t o  was,  their  recovery.  of the  It  Indeed,  'economic d e m o c r a t i z a t i o n  dissolution  (to)  fact  d e m o c r a t i z a t i o n " were  of the Japanese s o c i a l  most p r o m i n e n t o f t h e s e  f o r these  in  imposed p o l i c i e s c o u l d have b e e n .  w h i c h , however l o f t y  postwar, r e n d i n g  r a t h e r than  policies  spread  f r e e e n t e r p r i s e and  of i d e o l o g i e s or  political  freedom  under  on  however, f o r ' e s s e n t i a l l y t h e same s o r t  t h a t many o f t h e more sweeping r e f o r m s  of i d e o l o g i c a l  p r o p o s e d were n e v e r ,  or  reasons  only  -  superficially  carried  out.  30  -  With t h e v i c t o r y  t h e emergence o f t h e  ' c o l d war'  economically viable,  non-communist, a l l y  earlier this,  Communists  w i t h t h e USSR, t h e v a l u e o f J a p a n as o f t h e US  took  precedence  f o r a more sweeping r e f o r m o f J a p a n e s e s o c i e t y .  t h e emphasis swung t o w a r d s t h e encouragement o f r a p i d  revival and  concerns  of the Chinese  o f J a p a n and  immediate s u p p o r t  (b)  the outbreak  an  over With  economic  i n 1950  provided  dramatic  for this.  Demonstration  and  A t many l e v e l s , l e s s e r extent,  o f t h e Korean War  and  Linkage  t h e US  Effects  presence  i n Occupied  i n p o s t - o c c u p a t i o n Japan as w e l l ) had  Japan  (and,  to a  a major impact  on  31 postwar Japanese t e c h n o l o g i c a l development. this  a s p e c t o f t h e US  the unintended e f f e c t ' TT By  or  presence,  'demonstration  which was  h i s use  military  related  o f t h e term  and  military  'demonstration  who  makes a u s e f u l  e f f e c t ' TT  t o t h e US  Spencer,  effect'  the intended  of f o r e i g n m i l i t a r y  way  Thus,  u n i t s a c t s as a s t i m u l a n t t o  the f o r e i g n  'linkage  Spencer i n t e n d s :  mere p r e s e n c e  them i f t h e y t h i n k t h e f o r e i g n  or  between  presence.  i n some g e n e r a l c o n n e c t i o n w i t h t h e m i l i t a r y .  I n d i v i d u a l s s e e how  investigated  distinction  demonstration  behaviour.  has  " . . . the  emulative  i n d i v i d u a l s do t h i n g s and  copy  i s s u p e r i o r o r a d v a n t a g e o u s i n some  3? sense  t o them . ,  n  In t h i s r e g a r d he i n US  c i t e s the adoption  o f equipment s i m i l a r t o t h a t  m i l i t a r y f a c i l i t i e s by J a p a n e s e companies as w e l l as t h e p r o c e s s  " r e v e r s e e n g i n e e r i n g " whereby a p i e c e o f equipment, i n t r o d u c e d t o country and  used  i n connection  w i t h t h e US  c o p i e d on t h e s o l e i n i t i a t i v e  military  presence,  i s t o r n down,  o f t h e would-be c o p i e r .  of  the analyzed,  Information  regarding  s u c h c o p y i n g t e n d s t o w a r d s t h e a n e c d o t a l and, a s might be e x p e c t e d ,  there i s l i t t l e  h a r d , documented, e v i d e n c e o f i t s e x t e n t .  t h i s pattern of unlicensed, least At  one  c h a r a c t e r i s t i c f o r m o f TT  a more g e n e r a l l e v e l ,  effect'  and u n i n t e n d e d , TT would  o f t h e US v i c t o r y  from i t s r e i n f o r c e m e n t  'American way  culture fact  period.  however, p e r h a p s t h e most p r o f o u n d ' d e m o n s t r a t i o n  o v e r and s u b s e q u e n t o c c u p a t i o n  o f Japan  of t h e l o n g s t a n d i n g Japanese view o f t h e  of l i f e " .  can e a s i l y  seem t o have been a t  i n the e a r l y postwar  as p e o p l e f r o m whom t o l e a r n ) l a y i n i t s d i r e c t the  Nevertheless,  The  o c c u p a t i o n on  N e v e r t h e l e s s , when one  t h a t t h e J a p a n o f t h e 1970*s r e s e m b l e s , a t t h e l e v e l  and consumers' difficult  goods,  Americans  exposure of the Japanese t o  impact o f t h e US  be e x a g g e r a t e d .  Japanese  considers the of popular culture  no o t h e r c o u n t r y so much as i t does t h e US,  t o avoid the conclusion that  p o s t w a r changes i n l i f e s t y l e s  (aside  some o f t h e main  l i e i n the d i r e c t  i tis  o r i g i n s of Japan's  e x p o s u r e t o US  lifestyles  during the Occupation period. In  the context of Spencer's a n a l y s i s ,  ' d e m o n s t r a t i o n ' ) e f f e c t s o f t h e US  the  military  'linkage'  ( a s opposed t o t h e  presence r e f e r t o a c t i v i t i e s of the  .military'intended, to induce long-run e f f e c t s i n the c i v i l i a n T h e s e c o u l d i n v o l v e TT the  activity  itself  which was  not primary but, r a t h e r ,  o r , a l t e r n a t i v e l y , TT  t e c h n o l o g y i n v o l v e d was however, s u c h TT was  intended.  effort,  and US  c o u n t r i e s i n the P a c i f i c in  military  c o n n e c t i o n w i t h t h e Korean War,  economic  assistance  area. "Special  recovery i n the f i r s t  .  to  In e i t h e r case  I n c i d e n t a l TT was  w i t h t h e need t o s u p p l y and m a i n t a i n t h e m i l i t a r y Korean War  incidental  i n which t h e t r a n s f e r o f t h e  the actual focus of the a c t i v i t y  explicitly  economy.  associated  presence i n Japan, the  programmes t o  friendly  p r o c u r e m e n t s " by t h e US,  largely  were a major f a c t o r i n J a p a n ' s  h a l f o f t h e 1950*s.  The t o t a l  value of  - 32 -  t h e s e c o n t r a c t s f o r t h e p e r i o d f r o m June, 1950,  t o June, 1955,  was  over  33 1.6  billion  US  d o l l a r s and c o v e r e d a wide r a n g e o f goods  A s i d e f r o m t h e immediate the  economic  economy a s a whole,  these " s p e c i a l  procurement"  c o n t r a c t s were a l s o  d e a l o f such " l i n k a g e e f f e c t " TT.  of  direct  included  s u p p l y and r e p a i r d e p o t ) ,  hiring  The  o p e r a t e a US  forms o r c h a n n e l s  ' l a b o u r c o n t r a c t s ' under w h i c h a J a p a n e s e  army f a c i l i t y ,  the  o f J a p a n e s e p e r s o n n e l ( b y , s a y , a US  agency a r r a n g e d f o r c o n t r a c t s w i t h J a p a n e s e companies to  services.  i m p a c t on t h e s u p p l i e r i n d u s t r i e s and i n  vehicle f o r a great s u c h TT  and  government  to supply personnel  as w e l l as t h e d i r e c t p l a c e m e n t o f  procurement  c o n t r a c t s w i t h J a p a n e s e f i r m s t o m a n u f a c t u r e i t e m s f o r t h e US Armed F o r c e s . In  each c a s e , t h e r e was  of  Japanese a c t i v i t i e s  s p e c i f i c a t i o n s were  c o n s i d e r a b l e US  instruction,  i n o r d e r t o e n a b l e and t o e n s u r e t h a t  down t o t h e p r o c u r e m e n t  of d a i l y  w i t h o u t t h e use o f n i g h t  soil.  At the l e v e l  of i n d u s t r i a l technology,  production technology i n order to  c o n t r a s t t o t h e above TT  of  m e e t i n g t h e needs o f t h e US  TT  which  had as i t s e x p l i c i t  capabilities. Programme was  military  to Japan.  aviation  suggests that  which was  the  industry  TT.  i n c i d e n t a l t o the primary purpose  presence i n the P a c i f i c ,  t h e r e was  purpose the upgrading of Japan's  The main v e h i c l e f o r t h i s l a t t e r TT  (MAP), under which  transferred  He  c o m p e t i t i v e s t r e n g t h o f t h e J a p a n e s e plywood  has i t s o r i g i n s i n t h i s e a r l y m i l i t a r y - r e l a t e d In  extended  n e c e s s i t i e s s u c h as v e g e t a b l e s p r o d u c e d  c i t e s t h e t r a n s f e r o f plywood  international  performance  were v a r i o u s and  meet t h e c o n s t r u c t i o n needs o f t h e US Armed F o r c e s . present  and m o n i t o r i n g  met.  T h e t y p e s o f t e c h n o l o g y t r a n s f e r r e d i n t h i s way  Spencer  training,  was  also  technological  the M i l i t a r y  Assistance  a v a s t amount o f m i l i t a r y - i n d u s t r i a l t e c h n o l o g y  One  o f t h e more s i g n i f i c a n t  and t h i s p r o v i d e d t h e f i r s t ,  a r e a s o f such TT  e a r l y impetus t o r e v i v a l  was of  - 33 -  the Japanese a i r c r a f t own  i n d u s t r y as w e l l as h a v i n g  among a b r o a d s p e c t r u m o f r e l a t e d (c]  R e c o v e r y t o Postwar  supplier  'linkage e f f e c t s '  industries.  of i t s  34  Levels  A s i d e from the g l o b a l  political  and m i l i t a r y  developments  discussed  above which f a v o u r e d J a p a n ' s r e d e v e l o p m e n t f a r more t h a n any mere p o l i c y o f development a i d would  have, t h e r e were.of c o u r s e d o m e s t i c , c i v i l i a n ,  measures  which c o n t r i b u t e d t o r e c o v e r y . The government's  policy  stressed  basic industries - particularly TT p l a y e d a m a j o r r o l e .  electric  and m o d e r n i z a t i o n o f  power and s t e e l .  In both c a s e s ,  Administrative procedures t o release  exchange f o r p u r p o s e s o f a c q u i r i n g  foreign  t e c h n o l o g y were s e t up upon  o f t h e F o r e i g n Exchange C o n t r o l Law (1950).  the r e v i t a l i z a t i o n  (1949) and t h e F o r e i g n  proclamation  Investment  Law  T hese r e g u l a t i o n s and t h e a t t i t u d e s b r o u g h t t o b e a r i n e n f o r c i n g  them w i l l  be d i s c u s s e d  pp. 54-55}.  i n more d e t a i l  i n chapter three  (see e s p e c i a l l y  A l m o s t a s soon as t h e s e p r o v i s i o n s were s e t up t h o s e  in the e l e c t r i c a l  equipment  field  w i t h prewar t i e s t o f o r e i g n  companies  companies  35 re-established  them.  A measure  gap i n t h i s a r e a i s p r o v i d e d hydroelectric generating  by a c o m p a r i s o n o f t h e e f f i c i e n c y r a t e s o f two  p l a n t s opened i n 1952.  t e c h n o l o g y had a 25.1% e f f i c i e n c y generating  of the s i g n i f i c a n c e of the t e c h n o l o g i c a l  rate,  while the other using  equipment a c h i e v e d 33.0% e f f i c i e n c y .  hydroelectric  dams, i t s e l f ,  agreements w i t h US  The  large-scale  p r o j e c t s may  d e m o n s t r a t i o n o f US, 37 projects.  construction  ( e g . power s h o v e l s , b e l t  construction  have had major i n c i d e n t a l or other foreign,  US  of  assistance  project  techniques  c o n v e y o r s , dumptrucks, e t c . )  many t i m e s t h e c a p a c i t y o f e x i s t i n g J a p a n e s e equipment. civilian  imparted  i n t r o d u c e d t o Japan under t e c h n i c a l  companies new,  as w e l l as equipment  The one which used d o m e s t i c  equipment  I n t h i s way,  even  o r s e c o n d a r y TT e f f e c t s  by  and t e c h n i q u e s i n c o n c r e t e  - 34  I n t h e s t e e l i n d u s t r y t h e r e was r e b u i l d the i n d u s t r y u n t i l occupation The  First  begin  some d e l a y i n i m p l e m e n t i n g e f f o r t s  the pressures  Steel  a catch-up  of the_Japanese s t e e l  process with  technology  and  was  equipment.  Oxygen-process s t e e l  l a y i n g the foundations of  and  the t h i n - p l a t e , 50)&  crucial  industry. initial  programme aimed  industries. mill  In  technology  o f t h e e a r l y 1950's was  of  began d u r i n g t h i s  and,  strip-  steel  o p e n - h e a r t h , and  steel  steel-rod  i n d u s t r y equipment was  equipment had  a l s o modern-  or i n d i r e c t l y ,  of  equipment  been u p d a t e d . ^8  p e r i o d was  -  position  about 30/a  tubing manufacturing  of the  programme e i t h e r d i r e c t l y  period  competitive  o f t h e p l a n n i n g p e r i o d , i n 1955,  t h a t a g r e a t d e a l o f t h e TT  renovation  initial  In a d d i t i o n , the l a r g e - s c a l e i n t r o d u c t i o n  General  o f t h e t h i c k p l a t e and  likely  t h e US  f o r the subsequent s t r o n g world  by a r o u n d t h e end  The  i n the area of r o l l i n g  production technology  the Japanese i n d u s t r y .  ized  removed  to  mapped o u t t h e  industry.  t h e E u r o p e a n and  as a c o n s e q u e n c e , t h e r e p r e s e n t a t i v e TT  of  ' c o l d war'  I n d u s t r y R a t i o n a l i z a t i o n P l a n o f 1951  t h i s r e g a r d , t h e b i g g e s t gap  mill  of the  plans to s e v e r e l y l i m i t Japanese c a p a c i t y i n t h i s  postwar modernization to  -  related v i a the  and  i t is  to t h i s  equipment  manufacturing  equipment i n d u s t r y . By period  1951  Japanese production  and,  by  1954,  prewar l e v e l s . at  an end.  consumption  With t h i s ,  In t h e c o u r s e  prewar l e v e l s  of output  i n strengthening  t h i s , TT  had  by n e c e s s i t y and and  modernization  only a prelude  reached  i n both  of recovery  rural  and  immediate  urban a r e a s  however, J a p a n  consumption  but  had  had  had  a l s o made major,  r o l e but was,  design - to e x i s t i n g  by and  and  said to  deemed b a s i c t o economic r e c o v e r y .  be  regained  fundamental  p l a n t . In  large, limited  i n d u s t r i e s f o r which  prewar  regained  not m e r e l y  her b a s i c i n d u s t r i a l t e c h n o l o g y  a critical  was  the l e v e l s of the  t h e p o s t w a r r e c o v e r y p e r i o d c o u l d be  and  progress  played  had  -  both  redevelopment As  t o t h e much more sweeping wave o f t e c h n o l o g y  such,  i t  transfer  was which  -  was  to follow  new  major i n d u s t r i e s ,  industrial  35 -  - t o u c h i n g on a b r o a d e r r a n g e o f e x i s t i n g  structure  industries,  and s h a p i n g t h e m a s s i v e t r a n s f o r m a t i o n which began  i n the l a t t e r  h a l f of the  establishing  of the Japanese  1950's.  - 36 -  III  STRUCTURAL TRANSFORMATION  1.  T h e Consumption  (1955-1963)  Revolution  From t h e p e r s p e c t i v e o f t h e 1970*s i t seems a s though t h e Second  World War s t a n d s a s a d i v i d e between two J a p a n e s e n a t i o n a l  t i o n s o f the purposes of technology. as  'national  to  Dupont's  I f t h e prewar view can be c h a r a c t e r i z e d  s t r e n g t h t h r o u g h t e c h n o l o g y ' , t h e p o s t w a r view i s much o l d slogan  'better l i v i n g  t h r o u g h c h e m i s t r y '.  This  view o f t h e p u r p o s e o f t e c h n o l o g y a s b e i n g a b e t t e r way o f l i f e individual possible, in  might b e s t i n part,  t h e US' n u c l e a r  change  be v i e w e d a s a s h i f t  'umbrella*.  period  i t s origins,  to t h i s  standards of l i v i n g f u n d a m e n t a l change  change.  national  and t h i s ,  in itself,  n o r gave pressing o f prewar  need n o t have i n v o l v e d any  i n v i e w p o i n t a s r e g a r d s t e c h n o l o g y and t h e r o l e o f  consumer i n t h e s o c i e t y . an end and t h e f i r s t  By 1955 however,  'postwar r e c o v e r y ' was  glimmerings o f t h e p e r s o n a l consumption  boom  t o appear.  v i e w t h a t J a p a n ' s growth  high r a t e s that  had p r e v a i l e d  r a t e would  p r o c e s s i n t h e mid-1950's,  inevitably  slow down f r o m t h e  s i n c e t h e Korean War was common.  1956 E c o n o m i c  White  time, pointed  o u t where t h e s o u r c e s o f i m p e t u s f o r f u t u r e growth  likely  implicit  development.  and some semblance  With t h e c o m p l e t i o n o f t h e p o s t w a r r e c o v e r y the  f o r the  however, i t was a  T h e n a t u r a l and most  sovereignity  postwar  security  o f postwar r e c o v e r y n e i t h e r r e q u i r e d  g o a l s were t o r e t r i e v e  began  Whatever  closer  - and one made  by t h e p o s t w a r g u a r a n t e e o f n a t i o n a l  p a r t i c u l a r expression  at  i n emphasis  o f fundamental importance t o Japan's postwar  The7initial  the  concep-  lie.  Paper a l s o r e f l e c t e d  The  t h i s view b u t , a t t h e same  I n what was t o become s o m e t h i n g  would  of a catch phrase, the  - 37 -  White P a p e r d e c l a r e d out t h a t  'The p o s t w a r e r a i s a l r e a d y o v e r  1  and went on t o p o i n t  economic growth based on r e c o v e r y f r o m t h e war was a t an end and  t h a t . s u b s e q u e n t g r o w t h would be a s i g n i f i c a n t l y particular,  different  process.  In  i t s t r e s s e d t h e f u t u r e i m p o r t a n c e f o r economic growth o f  consumers' goods and, n o t u n r e l a t e d , i n v e s t m e n t i n t e c h n o l o g i c a l modernization o f t h e Japanese i n d u s t r i a l  structure.  was t o p r o v e a p r o p h e t i c a n a l y s i s - a s i s i n d i c a t e d  In t h e event, t h i s by t a b l e 5 on page  38, showing t r e n d s i n t h e d i f f u s i o n r a t e s f o r some major  consumers  durables. The o r i g i n s o f t h i s c o n s u m p t i o n r e v o l u t i o n atmosphere The i n i t i a l  of mild  prosperity following  began m o d e s t l y enough  on c o m p l e t i o n  o b j e c t s o f consumers' a t t e n t i o n  o f postwar r e c o v e r y .  were p r i m a r i l y h o u s e h o l d  f u r n i s h i n g s b e g i n n i n g with such minor a m e n i t i e s a s f l u o r e s c e n t radios,  c h e s t s o f d r a w e r s , e l e c t r i c f a n s and sewing m a c h i n e s .  expanded t o i n c l u d e a b r o a d v a r i e t y o f consumers i t e m s new t o t h e J a p a n e s e consumer electric  rice  sets.  lighting, This  soon  durables including  many  market s u c h a s w a s h i n g  c o o k e r s , and t e l e v i s i o n  machines,  A s i d e from t h e i n t r o d u c t i o n  o f many new p r o d u c t s , t h e enormous s i z e o f t h e emerging consumer was i n i t s e l f  a s t i m u l u s t o i n d u s t r y change.  through enlarged production by t h a t most  i n the  The c o s t r e d u c t i o n s  market, achieved  s c a l e and new t e c h n o l o g i e s a r e a p t l y s u g g e s t e d  r e p r e s e n t a t i v e consumer good o f t h e p e r i o d - t e l e v i s i o n .  a price level  From  o f 180,000 yen i n 1954 ( a b o u t $500 US, a t t h e t h e n c u r r e n t  exchange r a t e ) ,  television  s e t s were r e d u c e d i n p r i c e t o 80,000 yen i n  1956 and t o 60,000 yen i n 1959.  3  e n l a r g e d t h e market f o r consumers  9  Such p r i c e t r e n d s , goods.  of course,  further  -38-  T a b l e 5. D i f f u s i o n o f Some Consumer's D u r a b l e s '(% o f surveyed households c i t i e s o f over 50,000 populatLo Item  "  •——Year  B l a c k and White T e l e v i s i o n  1958 15.9  1960 44.7  1965  1970  1974  95.0  9o;i  56.2  30.4  87.3  -  -  Stereo  -  -  20.1  36.6  50.4  T r a n s i s t o r Radio  -  16.5  55.8  76.0  79.4  43.1  45.8  64.8  72.1  79.4  Automobile  -  -  10.5  22.6  37.6  Electric  5.5  10.1  68.7  92.5  97.0  29.3  40.6  78.1  92.1  97.6  Colour  Television  Camera  Refrigerator  E l e c t r i c Washing  Machine  -  Vacuum C l e a n e r  -  7.7  48.5  75.4  91.5  O i l Heater  -  -  49.9  82.2  89.1  Room A i r C o n d i t i o n e r  -  -  2.6  8.4  15.1  34.4  77.3  88.5  94.4  -  24.2  49.1  71.1  55.0  58.5  77.3  88.2  66.3  69.5  83.9  84.5  27.6  E l e c t r i c Fan S t a i n l e s s S t e e l Kitchen Sink Western S t y l e C l o t h i n g Sewing  Bureau  Machine  -  (94.3)* 83.7  * 1973  Source:  Ando, Y o s h i o ed. K i n d a i Nihon K e i z a i s h i Yoran (A Handbook of Modern Japanese Economic H i s t o r y ) - Japanese - Takyo, Tokyo U n i v e r s i t y Shuppankai, 1975. p.187.  -  2.  The  Technology  (a)  39  Revolution  Changes i n I n d u s t r i a l The  had  b e g i n n i n g around 1955  recieved  in table As  6 on  earlier page  discussed  Structure  'consumption r e v o l u t i o n '  woven w i t h f u n d a m e n t a l changes on o f growth  -  attention  the  was,  production  i n both the  - and  n a t u r a l l y enough, i n t e r side.  'basic  i n many new  The  amazing  industries' -  industries i s  rates  which  indicated  40.  earlier,  the  s t e e l industry  undergone  expansion during  m o d e r n i z a t i o n and  expansion wasiquicker',yet d u r i n g - t h e second r a t i o n a l -  plan  increased and  period  from t h r e e t o  i n e f f i c i e n c y of  industry steel  from 1956  operation  number o f  s e c o n d t o none.  expanded i t s p r o d u c t l i n e  electric  power i n d u s t r y  based power g e n e r a t i o n .  the  pace  hot  to the  At  into a large  of  strip US  mills  i n number  same t i m e ,  v a r i e t y o f new  the  special  s i m i l a r l y expanded i t s c a p a c i t y  away f r o m h y d r o e l e c t r i c Moreover, a s h i f t  thermal generation reduced the  Developments i n the  s t e e l and  of Japanese i n d u s t r y  strong as  The  seven t o r a n k s e c o n d o n l y  began a f u n d a m e n t a l s h i f t  all  1960.  The  products.  The  fired  to  e a r l y 1950's.  considerable  m o d e r n i z a t i o n and  ization  the  had  impact  well  as  i n the  but  away,from c o a l  power i n d u s t r i e s had  consumers g o o d s .  power i n d u s t r y ,  low-cost  energy through c o n v e r s i o n to o i l - f i r i n g increasing  and  to assuring  level  had  shipbuilding  electric  1 9 7 0 ' s ! ) , combined w i t h an  thermalto o i l -  repercussions  steel industry  i n d u s t r i a l m a c h i n e r y and  in addition  towards  also  c o s t s o f power g e n e r a t i o n .  those i n the  o v e r a wide r a n g e o f  and  and,  particularly  industries  Changes i n a stable  the  supply  (at l e a s t u n t i l  of m o t o r i z a t i o n  for  of the  i n Japan  TRENDS \Product  Year 1934 1935 1940 1945 1950 1955 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974  Electric Power (million KWn) 19,799. 22,349. 30,720. 20,982. 39,123. 54,917. 62,652. 74,701. 101,292. 122,446. 154,435. 181,723. 227,032. 288,923. 336,756.  IN Coal  (1000 M.T.) 35,925. 37,762. 56,313. 29,879. 38,459. 42,423. 46,555. 49,674. 51,067. 54,399. 50,929. 51,347. 46,569. 39,694. 28,099. 20,333.  OUTPUT  OF  SOME  Heavy'... .Crude fuel o i l Steel (1000 (1000 M.T.) Kl.) 3,114. 225. 3,737. 329. 4,522. 454. 100. 898. 807. 3,483. 9,408. 4,408. 5,982. 11,106. 7,938. 12,118. 16,723. 22,138. 24,025. 27,546. 38,865. 39,799. 53,705. 47,784. 74,468. 66,893. 93,322. 101,575. 118,702. 96,900. 136,763. 117,131.  PRINCIPAL  PRODUCTS  E l e c t r i c Passenger R e f r i g e r Cars (no.) rator (lOOOno) 1  5. 31. 81. 415. 908. 2,671. 3,205. 2,565. 3,471. 2,631. 3,455 4,312.  1,479.  -  1,593. 20,261. 32,056. 50,643. 165,094. 268,784. 579,660. 877,656. 2,055,821. 3J_78,708. 4022,289. 3^31,842.  (1934-1974)  Steel Polye-. thylene Vessels completed (M.T.) (1000G/T) 145. 142. 307. 608. 227. 735. 1,759. 2,012. 1,759. 41,179. 2,182. 142,512/ 4,079. 289,385. 6,396* 556,383. 8,481. 856,623. 9,917. 1,304,770. 12,834. 1,480,225. 1,897,047. .— \  Source:  Nihon Ginko, T o k e i Kyoku (Bank of Japan, S t a t i s t i c s  Department).  K e i z a i T o k e i Nempo, Showa 49 nen (Economic S t a t i s t i c s Annual, 1974) -Japanese - Tokyo, 1975 PP. 227-232.  Viscase Rayon Fabrics (1000 m2) 419,987. 611,510. 528,135. 5,176. 331,846. 647,006. 769,823. 676,106. 770,729. 660,104. 421,970. 382,772. 399,491. 354,065. 264,405. 200,862.  Synthetic Fabrics (1000 m ) 2  -  54,187. 90,507. 136,647. 423,886. 644,511. 1,052,829. 1,443,063. 1,893,075. 2,746,149. 2,717,931. 2,621,793.  -  to produce a r a p i d  and  expansion  Among t h e newly d e v e l o p i n g i n the  chemical  began t o s h i f t petrochemical 1955,  i t s emphasis from a g r i c u l t u r a l  by v i n y l o n and,  rubber-,  and  and,  fact,  (b)  production  s u c c e s s i o n , by  most, o f t h e s e  the  nature  chemicals  to  high-pblymer  began - f o l l o w e d , i n polyacrylic,  of s y n t h e t i c f i b r e - ,  goods.  d e v e l o p m e n t s i n i n d u s t r y i m p l i e d and  t e c h n o l o g i c a l change.  The  Role  The  b a s i c d a t a on  M o r e o v e r , TT  was  a major  numbers o f a p p r o v a l s  o f TT  p e r i o d 1950-1973 i n d i c a t e t h a t , i n the  (table 7  flow  being  machinery i n d u s t r i e s . c l e a r i n the  d a t a on  i n d u s t r y and  Similarly,  country  the  of o r i g i n  dominance o f TT (table 8  on  page 4 3 ) .  its  t o the. m a j o r t r e n d s i n J a p a n e s e i n d u s t r i a l  provided,  however, by  ( s e e t a b l e 9 on  The  40  activity  t h e payments made t o a c q u i r e  US A  and  of  activity technology  44).  y e a r l y payments f o r t e c h n o l o g y  d o u b l e t h e 1954 I960.  page  o f t h e sudden s p u r t i n TT  d a t a on  major  from t h e  indication  is  TT  t o t h e v a r i o u s equipment  much more d r a m a t i c close relation  on  aggregate,  the g e n e r a l developments i n Japanese i n d u s t r y with the  is  were,  of Technology T r a n s f e r  to the chemical  f i g u r e i n 1955  Somewhat s m a l l e r , but  and still  had  as  diversification  paralleled  and  act  process.  over the  o f TT  and  of the i n d u s t r y  polyethylene,  c o n c u r r e n t l y , a wide v a r i e t y  a s s o c i a t e d with  element i n t h i s  page 42)  in rapid  nylon  resin-based finished  Many, i f not in  t h e m a j o r growth and  From a r o u n d 1955,  In 1953  products  i n that industry.  industries,  industry.  products.  polypropylene  -  i n c r e a s e i n consumption o f p e t r o l e u m  a spur to modernization  was  41  i n the  chemical  i n c r e a s e d by  impressive,  i n d u s t r y were  a f a c t o r of ten  i n c r e a s e s appeared i n  by  Table 7 Post-war Japanese Technology Importations (1950-1973) by F i e l d of Technology (number o f cases approved)  E  Y Fielf  o f Technology  Chemical  Petroleum and C o a l  i S i  .  TOTAL  R  A  Type of 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 Technology  1973  A  8  23  16  14  21  17  34  27  11  27  64  33  46  71  66  67  97  115  210  189  223  229  202  199  2009  B  24  37  41  45  60  49  86  66  59  78  91  100  100  146  156  116  122  153  109  36  94  108  93  86  2055  3  2  7  1  16  10  26  20  31  47  52  49  308  A (1.  J  -  1  14  -  -  3  5  2  2  5  8  4  M e t a l s and M e t a l Products  A  3  12  18  8  3  7  19  10  17  23  23  34  25  42  46  29  77  52  68  79  77  85  100  87  944  B  4  15  25  35  33  24  42  40  41  37  49  59  51  63  71  42  52  104  101  22  14  20  14  13  971  General Machinery  A< >  8  24  15  15  15  19  21  • 26  39  65  81  87  201  155  125  17,3  161  253  ,309  324  419  460  450  "U81  B  17  19  ?4  16  4  19  11  7  10  55  54  60  140  1,90  137  182  215  185  2,39  112  99  85  122  2225  Transportation Equipment  A  2  8  ?n  6  6  6  12  5  5  6  16  25  15  16  22  ,31.  27  33  60  58  69  78  90  108  724  16  8  4  6  22  39  32  194  E l e c t r i c a l Machinery and Products  A  83  142  79  101  T e x t i l e s and T e x t i l e - Products  A  Other  2  _  B  B  4  15  2  5 4  21  3  4  4  45  23  17  11  16  5  7  B  _  _  ' _  A  2  14  12  B  2  11  A . .  27  B  49  •  5  6  4  2  1  1  16  29  17  30  101  64  10  3  4  8  1  14  76  17  109  195  188  188  226  320  305  2389  41  31  29  62  512  5  2  8  1?,  11  17  25  27  25  31  ,37  61  8  3  7  8  23  15  18  19  14  14  29  49  66  103  105  171  232  923  90  94  107  91  875  5  6  4  7  4  24  34  43  58  58  82  81  86  5  24  16  9  16  42  56  54  72  106  104  126  129  200  245  315  357  521  501  2939  20  13  14  .12  30  41  47  46  81  107  103  57  71  93  86  54  79  87  120  113  1314  102  82  71  143  118  90  153  327  320  328  564  500  472  601  638 1061 1154 1330 1546 1916 1931 13717  133  131  113  167  136  152  225  261  281  429  573  541  486  552  657  1  7  6  9  18  101  142  87  110 252  6  _  _  188  h  3  37  TOTALS A+B  3.  ?  235  213  184  310  254  242  378  588  601  757 1137 1041  683  475  1973).  Tokyo, 1975. pp.34-37 and 42-43. . 1. No e n t r y f o r C l a s s B Petroleum and c o a l t e c h n o l o g i e s . These, i f any, may be i n c l u d e d i n "0thef c a t e g o r y . 2. Excludes p e t r o c h e m i c a l p l a n t engiieering which i s i n c l u d e d i n "Other" c a t e g o r y . Inall,  such T.T. amounted to o n l y 180 cases.  461  487  519  8146  958 1153 1295 1744 1629 1768 2007 2403 2450 21863  Source: Kagaku G i j u t s u cho (Science and Technology Agency). Gaikoku G i j u t s u Donyu N e n j i Hokoku, Showa 48 Nendo (Importation of F o r e i g n Technology Annual Report, Note:  438  Table 8. Post-war Japanese Technology Importations (1950-1973) By Country of Origin (Number of cases approved) Y Country  U.S.A.  Type of Technology A  . E  A  TOTAL  R  1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 -1973 21  74  97  71  58  44  84  61  63  92  B"  -  A CANADA  -  8  4  1  2  3  2  2  2  B UNITED KINGDOM  -  A  1  3  3  1  3  11  2  3  7  B WEST GERMANY  -  A  -  12  6  5  8  11  6  7  16  B FRANCE  -  A  2  4  5  1  4  6  4  1  7  B SWEDEN  -  A B  HOLLAND  6  -  5  1  1  1  2  2  3  V  -  A  -  1  -  -  1  2  18  -  9  B OTHER  A  L, <*>  -  6  18  11  14  15  8  25  21  14  17  200  181  203  355  274  265  329  388  602  598  745  825 1010  988  7634  136  171  203  261  212  223  215  288  309  185  181  219  234  269  5806  2  7  2  4  6  8  39  10  13  12  12  24  24  25  212  1  2  4  8  2  8  3  6  14  6  5  4  5  4  72  12  16  12  36  49  40  46  57  105  108  108  139  154  175  1091  11  7  21  36  44  39  67  50  39  33  30  38  48  35  498  45  40  46  64  60  55  66  69  150  146  189  213  228  224  1666  58  51  99  124  134  88  108  156  140  92  65  56  50  48  1269  5  10  8  25  15  21  33  29  37  62  73  88  150  193  17  12  36  49  57  . 45  56  50  53  65  72  76  73  66  727 .  8  8  6  6  5  3  5  2  11  20  16  39  43  3C  223 '  -  1  5  3  1  6  9  2  3  10  11  3  9  9  72 :  7  7  13  15  9  22  16  8  23  44  23  22  33  .31  304 j  2  3  1  11  6  4  10  16  14  7  8  6  13  14  . 48 45  38  59  82  58  67  75  120  164  164  196  274  265  1804 1  60  81  85  73  84  89' 111  77  66  59  55  74  984 •  36  B  34  783 '.:  115  638 1061 1154 1330 1546 1916 1931 13717 ,  A  27  101  142  102  82  72  143  118  90  153  327  320 328  564  500  472 601  B  49  87  110  133  131  113  167  136  152  225  261  281  429  573  541  486' 552 657  A+B  76  188  252  235  213  184  310  254  242  378  588  601  757 1137 1041  TOTALS  Source: Kagaku Gijutsucho Gaikoku Gijutsu Tonyu, op.cit. pps. 38-39 and 44-45  683  475  438  461  487  519  8146  958 1153 1295 1744 1629 1768 2007 2403 245C 21863  ;  Payments f o r T r a n s f e r r e d Technology: by F i e l d of Technology and Year 1950-1960 ( i n m i l l i o n Yen)  \.  -  Time ^s.  Y  Period  E  A  R  Type of  Totals  Technology  \.  1950  Textiles  1951  —  Paper, Pulp  -  1952  1953  1954  1955  1956  1957  1958  1959  1960  21  66  92  164  203  383  428  556  749  2  -  Printing  No.of Cases  2,663  37  7  5  1  3  5  7  8  16  29  84  4  2  2  2  2  4  4  2  3  • 3  24  2  5082 12438  37,875  148  565  1498  6,122  19  Chemical  34  345  391  903  1121  2498  3600  5982  5481  O i l Refining  14  -  108  1657  173  505  511  268  756  Rubber, Leather  -  81  217  288  287  285  488  605 '  540  772  781  4,344  19  Glass , Ceramics  -  -  7  16  50  26  62  141  161  412  497  1,372  17.  Steel  -  149.  136  166  271  . 412  578  831  930  1054  1544  6,070  55  Non-Ferrous Metals  -  9.  1  4  11  11  37  20  44  64  129  331  17  Metal Manufactures  -  1  . 1  44  60  74  78  111  128  495  11  General Machinery  -  -  63  271  607  1011  966  1187  1978  2954  3040  3873  6258  22,208  231  E l e c t r i c a l Machinery  36  281  642  1062  1278  1553  2344  3042  4840  6792  8541  30,409 <  190  T r a n s p o r t a t i o n Equip ment  _  17  33  282  473  384  830  1226  1333  1324  1930  7,831  78  -  -  • -  -  -  -  136  180  2  Construction  -  -  114  121  63  12  54  125  129  142  93  854  7  Other  -  -  5  21  2  6  28  46  27  44  64  243  7  Total  146  2291  5607  47.92  7091 10851 15705 17796 20852 34818  121,104  Nuclear Power  Source:  Note:  1155  Tsushosangyosho,  . -  44  859  KigyKyoKu (M.I.T.I..Enterprise Bureau),  Gaikoku G i j u t s u Donyu no Genjoto Mondaiten (Present C o n d i t i o n s and issues of f o r e i g n Technology Importation) 1962. pp.14-17.' C l a s s A technologies only. Based on a 1961 survey. These a r e before-tax f i g u r e s and do not correspond t o Bank of Japan f i g u r e s .  -  o t h e r growth i n d u s t r i e s o f t h e m a c h i n e r y and The but  transportation  f i g u r e s f o r the  may  reflect  the  -  period  s u c h as  steel, electrical  petroleum r e f i n i n g i n d u s t r y  uniquely of t o t a l  high l e v e l  ( o v e r 50)4  informal  t r a n s f e r of technology, as w e l l ,  and  general  equipment.  industry  o f t e c h n o l o g y , and  45  sales)  the  and  of f o r e i g n a resultant  a relatively use  of  are  surprisingly  ownership i n t h i s high capacity  for  high pre-existing  'nominal*  low  level  p r i c i n g i n formal  TT  agreements. With r e g a r d t o t h e  payments made e x p l i c i t l y  important to note t h a t , l e v e l o f TT costs  of the  transfer in  the  the  activity,  w h i l e t h e y may  they  transferred  c a n n o t be  technology-supplying  viewed as r e p r e s e n t i n g  obligations  company.  to  One  buy  explicit  payments f o r TT  (see  the  total  parts  and  raw  aggregate, to  t a b l e 10  on  Technology  hidden, c a s t s  page 4 6 ) .  be  v i e w e d as  During the  an  a d d i t i o n a l cost  latter  some  multiple  The  proportion  of  involving  year  at greater  1960*s, government  a number o f s p e c i a l government  (the  These s t u d i e s  over t h i s period.  to Glass A technologies  one  the  led to  n a t u r e o f TT  transfers  during  i n t e r e s t i n TT  r e s u l t s o f which were p u b l i s h e d .  only  i s however  1950's and  the  the  se,  of the  public  The  majority  length,  below).  W h i l e t h e r e i s no  studies, light  of t h i s data  relates  those technology  exchange o v e r a p e r i o d  d i s t i n c t i o n between c l a s s A and  unclear.  shed f u r t h e r  - which, i n essence, are  payments o f f o r e i g n  thus  per  part  and  on  o f t h e TT,  from  expenditures  o f t h e s e payments which r e p r e s e n t s a premium o v e r market p r i c e s and can  often  materials  survey i n d i c a t e s that  f o r s u c h p u r c h a s e s may-have amounted, i n t h e of the  other,  i t is  general  r e c i p i e n t companies.  invariably, involved  form o f c o n t r a c t u a l  p u r p o s e o f TT  i n d i c a t e trends i n the  technology t o the  commonly, i f not  f o r the  c l a s s B TT  is  c e r t a i n t y i n the  in  excess  discussed matter,  -46-  T a b l e 10. T.T. - r e l a t e d Machinery and Equipment Imports and T o t a l Machinery and Equipment Imports. (Technology Importing Companies o n l y )  Industry  All  Industries  Manufacturing Food P r o d u c t s Textiles Wood Paper, Pulp  1950 - 1960 ( i n m i l l i o n  (a) T.T.-related Machinery and Equip. Imports  (b) Total Machinery and Equipment. Imports  77,186.  177,219.  43.6  192.  73,984.  163,709.  45.2  183.  174.  916.  19.0  3.  2,402.  6,998.  34.3  20.  532.  532.  100.0  2.  1.1  1.  9.  793  a/b (%)  Number of Companies  149.  623.  23.9  2.  17,030.  22,456.  75.8  43.  Petroleum, C o a l P r o d u c t s  6,514.  9,316.  69.9  9.  Rubb er  2,148.  2,341.  91.8  5.  484.  644.  75.2  6.  24,858.  64,894.  38.8  13.  Non-ferrous Metals  1,386.  5,898.  23.5  10.  M e t a l Manufactures  43.  281.  15.3  2.  G e n e r a l Machinery  1,085.  6,783.  16.0  20.  Electrical  6,785.  9,430.  71.9  23.  9,577.  28,881.  33.2  17.  Machinery  701.  2,671.  26.2  4.  Other M a n u f a c t u r i n g  106.  252.  42.1  3  3,202.  13,510.  23.7.  9.  Printing,  Publishing  Chemicals  Glass,  Ceramics  Steel  Machinery  Transportation Precision  Other  Equipment  Industries  Source: Gaikoku G i j u t s u Donyu noGenjo to Mondaiteu, o p . c i t . pp.70-71.  Yen)  47  -  the f a c t  t h a t government i n t e r e s t  probably i n d i c a t e s , concern it  was  because  One  1955 lag to  of i t s impact  invariably  t h a t s u c h TT on f o r e i g n  c e n t e r e d on s u c h was  not s o l e l y  most c l a s s B  and  and  1966,  1966.  Japan.  develop-  As t a b l e 11  (on page 48)  of o r i g i n a l  indicates,  w i t h t h e West was 1960*s.  i n importance,  narrowed, and  the time of i n i t i a l  TT  t h a t t h e r e was p u t , TT  a major itself  most r e m a r k a b l e  'backlog' of t e c h n o l o g i c a l  and  'major' and  level fact  innovations available.  depends on p r i o r t e c h n o l o g i c a l i n n o v a t i o n and a c t i v i t y to highest i n those i n d u s t r i e s  i s , o r has been, h i g h .  However, even t h o u g h  a c o n s i d e r a b l e amount o f prewar t e c h n o l o g y was  t r a n s f e r r e d t o Japan  i n 1966, 'minor'  this  d a t a makes no attempt  items of technology.  chemical industry  his outline  precisely  i n the chemical i n d u s t r y over t h i s period - the  innovative a c t i v i t y  the Japanese  1950*s was  during the  s i m p l e , but i m p o r t a n t r e a s o n f o r t h e h i g h  would t h e r e f o r e e x p e c t TT  indicates that  unimportant  gap  among t h e h i g h e s t o f a l l i n d u s t r i e s .  T h i s s u g g e s t s one activity  a major f a c t o r i n  i n the chemicals i n d u s t r y -  development o f t h e l a t t e r  t h e volume o f TT  between  time-  as t h e e a r l i e r t e c h n o l o g i c a l  became r e l a t i v e l y  This trend i s clearest  where J a p a n e s e  Simply  i n both  d i f f e r e n c e s i n the  i n n o v a t i o n and  to  A t t h e same t i m e , however, t h e r e s u l t s o f t h e s t u d y t e n d t o  t h e 1950's but d e c l i n e d  and  because  TT.  t h e r e were some i n t e r - i n d u s t r y  between t h e p e r i o d  TT  special  such s t u d y compared t h e ' v i n t a g e ' o f t e c h n o l o g i e s t r a n s f e r r e d i n 1956  TT  of  technological  c o n f i r m t h a t t h e t r a n s f e r o f prewar t e c h n o l o g i e s was  of  class A  exchange r e s e r v e s b u t a l s o  g e n e r a l l y of g r e a t e r s i g n i f i c a n c e t o Japan's  ment t h a n was  Japan  in itself,  -  4  1  attempts  o f t h e major p o s t w a r  to  where table  still  a  11  being  distinguish  Watanabe's s t u d y  t o make such  we  of  distinction,  i n n o v a t i o n s i n the Japanese  chemical  -48^  T a b l e 11 Japans Technology Imports* by I n d u s t r y and by P e r i o d of I n i t i a l I n d u s t r i a l A p p l i c a t i o n of the Technology - 1956 VS. 1966 (% of T o t a l f o r i n d u s t r y )  I  N  D  U  S  T  R  Y  Electrical  Metals  Chemical  Other  1966  1956  1966  1956  1956  1966  1956  1966  1956  1966  42  18  42  11  35  6  64  24  35  14  48  16  58  82  58  89  65  94  36  76  65  86  52  84  Machinery Period of o r i g i n a l 1956 "Innovation"  1966  Total  P r i o r to o r d u r i n g 2nd World  Post-War  War  * Class A Technologies only Source: Kagaku G i j u t s u c h o ( S c i e n c e and Technology Agency). G i j u t s u Donyi Hokoku (REport on Technology I m p o r t a t i o n ) - Japanese - U n p u b l i s h e d , i n t e r n a l r e p o r t o f S c i e n c e and Technology Agency, 1966, p.31.  - 49  i n d u s t r y i s reproduced  here  -  as t a b l e 12  ( s e e page 5 0 ) .  As  the  diagram  i n d i c a t e s , t h e r e was  an enormous f l o w o f major c h e m i c a l t e c h n o l o g i e s i n  t h e l a t e 1950's, but  probably  in  chemical technology  diagram a l s o  had  indicates,  I960 most o f t h e main prewar i n n o v a t i o n s  a l r e a d y been t r a n s f e r r e d  d e v e l o p i n g i t s own  (Maruzen P e t r o l e u m  -  o f postwar c l a s s A TT.  aggregate  and  some major, and  o f new  technology  new  product  revolution  technology  There  are  The  exceptions to t h i s i n the l a r g e process and  o i l refining  even i n t h e f i r s t  far a significant  was  probably  - with the  'new  process  two  of  a TT  o f t h e s e , TT  p r o p o r t i o n of the  quite directly related  or improved item  which was  new  total.  to the  of ongoing  electrical appliances).  however, t h e c o n n e c t i o n was  p r o d u c t * a new  from  where p r o d u c t i o n  m a c h i n e r y i n d u s t r y , t h e TT  i n consumers' demand ( e g . h o u s e h o l d  equipment r e s u l t i n g related  i n d u s t r i e s TT  as t h e e l e c t r i c  I n many o t h e r i n d u s t r i e s , direct  ( on page 5 l ) shows, i n t h e  or improved " p r o d u c t - t e c h n o l o g i e s " .  chemicals,  such  in a  was  accounted  I n some i n d u s t r i e s ,  unique t e c h n o l o g i c a l  1960's  t e c h n o l o g i e s predominated but, product  progressed  by t h e e a r l y  understandable,  i n d u s t r i e s of s t e e l ,  the  already  of t e c h n o l o g i e s t r a n s f e r r e d  As t a b l e 13  f o r most i n d i v i d u a l  already primarily  As  Paraxylene).  A n o t h e r s t u d y examined t h e t y p e sampling  to Japan.  by I960 t h e J a p a n e s e i n d u s t r y had  t o t h e p a i n t where i t was innovations  by  undoubtedly of  i m p o r t a n t l y , but  less  industrial only  indirectly,  t o t h e e v o l v i n g consumer market. low  level  o f t r a n s f e r o f management t e c h n o l o g y  r e q u i r e s some comment. s m a l l number o f c a s e s management t e c h n o l o g y .  First,  i t s h o u l d be  i n d i c a t e d may T h e y may,  shown i n t a b l e  p o i n t e d out t h a t even  not r e p r e s e n t a c t u a l t r a n s f e r s  rather, reflect  management c o n t r a c t t o d i s g u i s e payments r e l a t i n g  the nominal  use  13  the of of a  to other a c t i v i t i e s  -  A COMPARISON OF JAPAN AND WORLD INITIAL INDUSTRIAL APPLICATIONS OF PETROCHEMICAL TECHNOLOGIES  T a b l e 12.  1940  42  44  46  48  1950  52  (ICI) (UOC)  1939 1937  ( E a s t e r n S t a t e Petroleum  1952,  1942 ,  , , 1953  Hoechst  IG  Farben  1936  IG  Farben  1937.  IG  Farben  1960  1942  . 66  68  1970  d  I  ?  — A p h i l l i p s - p r o c e s s polyethylene(Nihon O l e f i n ) oStyrene monomer(Mitsubishi Petrochemical) oButadiene (Nihon Petrochemical) il-JBR (Nihon Zeon) ^ Standard-process Polyethylene(Funlkawa Chemical) |0xasynthetic Alcoholl ( M i t s u b i s h i Kasei) (Para-Xylene I (Maruzen Petroleum) O SBR (Nihon S y n t h e t i c Rubber)  1 1942. U n i Royal  1950.  S-Copolymer(Mitsui Toatsu Chemical, A s a h i Dow, M i t s u b i s h i (Monsanto) oABS-Copolymer ( M i t s u i Toatsu Chemical) <iwacker-process A c e t y l a l d e h y d e ( M i t s u i P e t r o c h e m i c a l ) Hoechst 1959r Wacker l ( M i t s u i Toatsu Chemical) Montecatini 1957 Alkylbenzene(Nikon Sekiyu Senzai) Sohio 1960 « j&ohio-process A c r y l o n i t r i l (Asahi K a s e i ) i  01onitl945« UCC  64  62  P o l y s t y r e n e ( A s a h i Dow, M i t s u b i s h i Monsanto) (Maruzen Petroleum) -o IPA Acetone (Nihon Petrochemical) I - P B T X (Yuddex) ( M i t s u b i s h i Petroleum) — o E t h y l e n e ( M i t s u i Petrochemical,Sumitomo Chemical) lligh p r e s s u r e polyethylene(Sumitomo chemical) E t h y l e n e Oxide ( M i t s u i P e t r o c h e m i c a l ) ^hawiniitam dCumene-process P h e n o l ( M i t s u i Petrochemical) Chemical «JMC:process T e r e p h t h a l i c a c i d ( M i t s u i Petrochemical) 1955 . et Low-pressure p o l y e t h y l e n e ( M i t s u l P e t r o c h e m i c a l )  Phillipsl956 IG Farben 1930,. Standard o i l N.J. IG Farben 1937*.  58  56  31  (IG Farben) 1930,, ( S h e l l Chem.) 1931, (Standard O i l NJ 1920, (Courtaulds)  54  P  o  l  y  p  r  o  p  y  l  e  n  e  -JS^MIBK(Mitsui Petrochemical)  1933, Phillips  Monsanto  -|> Polybutadiene ( A s a h i K a s e i ) I JMixed gas process I v i n v l - c h l o r i d e monomer KKureha Chenicd. | Wacker-process Acetone(Kyowa Yuka)  1960  1961 UCC  — 1962  ICI U n i Royal  1965'  1963  ||Oxychlorination-process v i n y l  monomerl (Toyo  .fftormal p a r a f f i n l ( N i h a n Kogyo Kuka) •—iiEthylene-process Synthetic v i n y l acetate (Tokuyama P e t r o c h e m i c a l ) , c^EPDM (Sumitomo Chemical) \ A l e f i n Rubber (Nihon A l e f i n Rubber)  • = Date o f i n i t i a l I n d u s t r i a l application(world).Company o = Date o f i n i t i a l i n d u s t r i a l application(Japan).Company Q = Japanese developed technology Source: Watanabe, T o k u j i Nihon no Kagaku KORVO. (Japan's Chemical Tokyo, Iwanami.Shoten, 1974, pp.61-62.  Industry)-Japanese  Soda)  -51-  T a b l e 13. Type o f Technology  T r a n s f e r r e d by I n d u s t r y (Post war C l a s s A T.T.'s 1961 Survey)  N. Nature o f Technology N^Transferred  Improved Product -EquipNew ment Product Product i o n Process  Manage- Compre- Other hensive ment  N.  Industry  -  14  15  19  3  —  7  6  6  -  -  -  1  2  -  1  -  -  -  114  39  136  40  6  29  7  2  5  34  14  2  4  -  12  5  13  3  2  7  -  7  5  6  3  -  3  1  29  8  40  9  4  -  1  Metals  6  1  6  7  -  5  -  Manufactures  7  -  2  1  1  2  1  142  79  55  20  4  48  1  154  62  52  8  3  20  4  46  16  18  3  3  15  1  N u c l e a r Power  -  -  -  -  -  1  1  Construction  2  -  1  1  -  -  2  Other  7  1  3  2  -  -  -  Total  550  242  386  114  25  142  19  Textiles Paper,  Pulp  Printing Chemicals .. O i l R e f i n i n g .^Rubber, L e a t h e r Glass,  Ceramics  Steel Non-ferrous Metal  General Electric  Machinery Machinery  Transportation Equipment  Source: MITI, Gaikoku  G i j u t s u Donyu no Genjo t o Mondaiten  1962,  o p . c i t . pp.10-13  -  - 52  s u c h as o w n e r s h i p o r new  t i e s o r t h e p r i o r o r c o n c u r r e n t t r a n s f e r o f new  production - technologies.  a r e low  (and may  -  In any  event,the f a c t  that  'management e x p e r t i s e '  or  which p o s s e s s e s i t t h a t i t c a n n o t sold.  This,  i n d e e d , i s one  -  figures A great  'management t e c h n o l o g y '  i s e i t h e r c u l t u r e - s p e c i f i c o r e l s e i s s u c h an o r g a n i c and  packaged and  the  be l o w e r t h a n i n d i c a t e d ] i s n o t t o o s u r p r i s i n g .  d e a l o f what i s termed  of the f i r m  product  or cannot  inextricable  easily  be  part  commercially  of the e x p l a n a t i o n s (or j u s t i f i c a t i o n s ) 42  often  offered  with r e s p e c t to f o r e i g n  direct  of i t s i n a p p r o p r i a t e n e s s t o the Japanese pathy t o f o r e i g n  direct  investment  n o t e x p e c t much o f t h i s There,is,  sort  applicability.  By  and  p r o p e r t y and  books, j o u r n a l s ,  At t h i s ,  non-commercial,  amount o f T T . t o improve  activities  o f any  such t e c h n o l o g i e s e x i s t  and  transferred. consists,  which i s b o t h of f a i r l y  as u n p r o t e c t e d  on a n o n - c o m m e r c i a l  basis  level  a p p a r e n t l y been a c o n s i d e r a b l e  t h e r e has  1950's a l a r g e number o f o r g a n i z a t i o n s d e v e l o p e d These i n c l u d e d the  Management A s s o c i a t i o n ,  Industrial Engineering I n s t i t u t e .  t h e Japan  Japan Marketing  In a d d i t i o n ,  book K e i e i g a k u Nyumon, " I n t r o d u c t i o n t o t h e S c i e n c e o f Management" Kobunsha, 1958)  by F u j i y o s h i ,  l a t e 1950's and  so marked a g e n e r a l , p o p u l a r , i n t e r e s t  from US  t h e o r y and  universal  p e r s o n a l o b s e r v a t i o n or c o n t a c t s .  management t e c h n i q u e s i n J a p a n .  which c o n t i n u e s t o d a t e .  would  c o n f e r e n c e s and  In t h e l a t e  and Japan  given firm  are widely d i f f u s e d  P r o d u c t i v i t y C e n t e r , the Japan Institute  anti-  (a p o i n t t o be d i s c u s s e d b e l o w ) one  o f management t e c h n o l o g y t o be  large,  because  o r the Japanese  a n a l y t i c a l o r c o n t r o l methods and  s e p a r a b l e from t h e o v e r a l l  through  environment  Either  however, a l a r g e body o f management t e c h n o l o g y w h i c h  i n t h e main, o f a b s t r a c t ,  intellectual  investment.  The  the (Tokyo;  Sakamoto q u i c k l y became a b e s t - s e l l e r  i n the  i n management  m a j o r i n f l u e n c e s came ( a n d - c o n t i n u e t o come)  p r a c t i c e , and t h e i n i t i a l  tendency  was  to  'swallow i t  -  whole'.  Later  distinction and  53 -  however, i n t h e e a r l y and mid-1960's, an i n c r e a s i n g l y c l e a r  began t o be made between, on t h e one hand, t h e s u b j e c t  techniques i d e n t i f i e d  (eg. long-range planning,  organizational analysis, inventory philosophy -  separated  c o n t r o l ) and, on t h e o t h e r  Japanese o r g a n i z a t i o n a l fact,  hand, t h e  Increasingly,  p r i m a r i l y by means o t h e r  o f the l a t t e r  in'the  Japanese  a more  context  critical  of the  environment.  as j u s t discussed,  a reflection  and p r a c t i c e s .  o u t and a d a p t e d t h e f o r m e r w h i l e a d o p t i n g  a t t i t u d e towards t h e r e l e v a n c e  The  market and  - e s p e c i a l l y v i s - a - v i s p e r s o n n e l management and human r e l a t i o n s  imbedded i n t h e f o r e i g n t h e o r y  firms  areas  t h a t management t e c h n o l o g y was t r a n s f e r r e d  than f o r e i g n d i r e c t investment  o f one, p e r v a s i v e  r e g u l a t i o n s and c o n t r o l s :on T T .  aspect  i s also, i n part,  o f J a p a n ' s p o s t w a r TT - government  We t u r n  now, t h e r e f o r e ,  t o a more d e t a i l e d  e x a m i n a t i o n o f government i n v o l v e m e n t i n p o s t w a r T T .  3.  Regulation  and C o n t r o l  o f Technology  Transfer  Government i n v o l v e m e n t i n p o s t w a r TT was e v i d e n c e d by a l a r g e body o f f o r m a l while others foreign  laws and r e g u l a t i o n s .  were o f s i g n i f i c a n c e t o TT o n l y  d i r e c t investment.  manifestations  liberalization  In a d d i t i o n t o these  a t t i t u d e s which i n f l u e n c e d  r e l a t i v e importance o f these v a r i o u s  discussed  by t i m e p e r i o d s  their  formal little beyond  administration.  a t t i t u d e s and c o n c e r n s o f t h e  v a r i e d o v e r t i m e and, t h u s ,  i n section  with  i n section (a)  began i n t h e 19S0's - i t i s n e c e s s a r y t o l o o k  government and t h e b u r e a u c r a c y is  i n turn,  o f government c o n t r o l o f TT - which changed v e r y  these t o the underlying The  when i t was a s s o c i a t e d  These are discussed,  ( F o r m a l Laws and R e g u l a t i o n s ) below.  until  Some o f t h e s e r e l a t e d t o TT, p e r s e ,  (b) ( A d m i n i s t r a t i v e  this  subject  Attitudes).  - 54  (a)  F o r m a l Laws and The  Regulations  f o r m a l l a w s and  r e g u l a t i v e procedures  the postwar p e r i o d remained l i t t l e ization  measures i n t h e e a r l y  following  chapter).  foreign  changed u n t i l  I960's,(this w i l l  Commercial TT  t h e F o r e i g n E x c h a n g e C o n t r o l Law I n v e s t m e n t Law  -  was  be  exchange t r a n s a c t i o n s and  was  d i s c u s s e d i n the-  The  f o r m e r i s a g e n e r a l law r e g u l a t i n g  latter  o f l a r g e r amount o r o f l o n g e r d u r a t i o n ( i n e x c e s s the a c q u i s i t i o n  law  o f one  year)  and  termed  ' c l a s s B' TT  those  ration  and  somewhat d i f f e r e n t . being  on them and,  review  the e a r l y for  and  a TT  for  any  administwere  procedures  as  on  them.  f o r p r o p o s e d c l a s s A TT,  in figure 2  and  ( s e e page 5 5 ) .  The  In e i t h e r  circa procedures case,  ample o p p o r t u n i t y f o r • i n t e r - d e p a r t m e n t a l c o n s u l t a t i o n  compromise i n t h e  h a n d l i n g o f any  agreement o r , more p r e c i s e l y ,  control  o f TT  s p e c i a l government s u r v e y s  c l a s s B t e c h n o l o g i e s were somewhat l e s s complex.  exchange f u n d s  types  The  more d e t a i l e d r e c o r d s were  to concentrate  1960's, a r e i n d i c a t e d  however, t h e r e was and  approval  1  are  c l a s s A t e c h n o l o g i e s were v i e w e d  as a r e s u l t  as w e l l ,  s t u d i e s t h a t o c c u r r e d tended The  'class A .  p r o v i s i o n s f o r t h e s e two  o f more i m p o r t a n c e and  maintained  under the l a t t e r ,  In p a r t i c u l a r ,  for  o f a s s e t s i n J a p a n by a f o r e i g n  T e c h n o l o g y t r a n s f e r s u n d e r t h e f o r m e r law  records-keeping  t h e most  p r o v i d e s f o r payments  company o r i n d i v i d u a l . and  either  or the F o r e i g n  t o o r e s t r i c t i v e f o r a l l but  transactions.  in  liberal-  s u b j e c t to the p r o v i s i o n s of  The  1  transactions involving  advent o f  ( e s t a b l i s h e d i n 1949)  ( e s t a b l i s h e d i n 195C ).  ( m o n e t a r i l y ) t r i v i a l TT  the  b e a r i n g on TT  r e q u i r e d by t h e TT  given  application  f o r approval  of  f o r approval of the r e l e a s e of f o r e i g n agreement.  o f f o r e i g n exchange f u n d s  While formal  responsibility  l a y with the M i n i s t r y of  Finance,  F i g u r e 2. Diagram of Technology T r a n s f e r Approval Procedures (ca.1960)  A |  J Working Committee of Foreign Investment Council  .(negotiationsX-  P  (Government Proposals)  P L T  Bank of Japan  Inter-Organizational|£ Meetings  :  *  Foreign Investment C o u n c i l *  (Formal Review and Action on Proposed Government " d e c i s i o n s " )  M i n i s t e r s of Relevant Ministries  (Formal "Approval" or " C o n d i t i o n a l Approval")  C A N T  (Submission and R e c o n c i l i a t i o n of v a r i o u s view points) Bank of Japan, Foreign Division,] Foreign C a p i t a l Section  Bank of Japan (Issu N o t i f i c a t i o n of Approval)  N a t i o n a l Science and Technology Agency Development D i v i s i o n , I n t e r n a t i o n a l Section  Other Relevant Govt. Organizations  * A government advisory body Including business and academic representatives  Source: Gaikoku G i j u t s u Donyu Yoran - Japanese - (Foreign Technology Importation Handbook). Tokyo, Jukagaku Kogyo T s u s h i n s h i a , 1965, p.58  - 56 -  in  t h e case o f technology  Japan's t e c h n i c a l for  review  Trade  and I n d u s t r y  therefore, condition an  and i n d u s t r i a l  o f proposed  r e l e a s e o f funds  t r a n s f e r s because o f t h e d i r e c t development, t h e p r i m a r y  should- be made t o t h e M i n i s t r y o f F i n a n c e .  f o r approval of a TT.  Theoretically,  i n a TT b u t , i n p r a c t i c e ,  consultation  of  sufficient  any m i n i s t r y might c l a i m  t h e m i n i s t r i e s o t h e r t h a n MITI which  i n a TT a p p r o v a l were g e n e r a l l y  the F a i r  Trade  and t h e M i n i s t r y o f  The e x t e n s i v e p r o v i s i o n s f o r i n t e r - and i n t r a - m i n i s t e r i a l  and compromise and t h e f a c t 1  1960's, a p p r o v a l was on a c a s e - b y - c a s e a proposed  In p r a c t i c e ,  and, u s u a l l y ,  Commission, t h e M i n i s t r y o f F o r e s t s and A g r i c u l t u r e , itself.  of International  ( M I T l ) which d e c i d e d whether o r n o t a recommendation f o r  might have an i n v o l v e m e n t  Finance,  with  responsibility  TT a g r e e m e n t s l a y w i t h t h e M i n i s t r y  t h e a p p r o v a l o f MITI was a n e c e s s a r y  interest  connection  TT r e c e i v e d a p p r o v a l  t h e formal r e g u l a t i o n s than  that, at least  until  the early  b a s i s meant t h a t t h e e a s e w i t h  depended l e s s on t h e c o m p l e x i t y  which  or simplicity  i t d i d on i n f o r m a l c o n s i d e r a t i o n s and  a d m i n i s t r a t i v e a t t i t u d e s t o be d i s c u s s e d below. What we have d i s c u s s e d so f a r r e l a t e s t o t h e f o r m a l p r o c e d u r e s f o r c o m m e r c i a l TT n o t i n v o l v i n g In  many c a s e s ,  such  foreign  direct  however, F D I would form  investment  (FDl) i n Japan.  p a r t o f t h e proposed  TT and i n  c a s e s t h e r e g u l a t i o n s g o v e r n i n g F D I , p e r s e , had a b e a r i n g on t h e  TT  approval.  to  FDI as o f t h e l a t e  procedures,  T a b l e 14 ( s e e page 57) i n d i c a t e s t h e r e g u l a t i o n s a p p l i e d 1950's and e a r l y  t h e s e changed v e r y l i t t l e  period u n t i l  the l i b e r a l i z a t i o n  1960's.  Again,  as f o r m a l  o v e r t h e whole o f t h e p o s t w a r  measures a d o p t e d  i n t h e 1960's.  T h e r e a p p e a r t o have been, d e s p i t e f o r m a l i n v a r i a n c e i n government regulation  and c o n t r o l  and  w i t h which t h e s e f o r m a l means o f c o n t r o l were a p p l i e d . I t  intent  o f TT, major d i f f e r e n c e s over time  i n the s p i r i t  -57-  Table  14 C o n t r o l s on F o r e i g n D i r e c t Investment  ( c a . 1959-1960.)  Requiremeii t s  Investor  Category  Capital, Profit Repatriation Guarantee D e s i r e d  Foreign Foreign  Investor  Investor  National of a "Designated Country."(1)  Capital, Profit  Foreign  Approval  Approval  Prohibited  Prohibited  Open  Open  Open  Open  Approval  Registration  Approval  Registration  Approval  Registration  Prohibited  Registration  Uncontrolled Foreign Industry Yen  Repatriation  2  Foreign Yen  Guarantee n o t D e s i r e d  Foreign All  Source:  Existing Shares  Yen  Controlled( Industry  Investor:  other  Countries  New Shares  Currency  Foreign Yen  1  Tsushosangyosho, Kigyo Kyoku (MITI, E n t e r p r i s e Bureau). D a i s h i Donyu: SonoSeido to J i t t a i Procedures and S t a t u s ) .  ( I n d u c t i o n of F o r e i g n  Tokyo: Tsushosangyosho, Chosakai,  1960. p.57.  Investment:  Note: 1. "Designated C o u n t r i e s a t t h i s time were; F i n l a n d , Greece. I n d i a , H o l l a n d , Sweden, S w i t z e r l a n d , T h a i l a n d , U.S.A., Uruguay, Y u g o s l a v i a , Norway, West Germany a n d Taiwan. 2. " C o n t r o l l e d I n d u s t r i e s " i n c l u d e d ; U t i l i t i e s , T r a n s p o r t a t i o n , F i n a n c e , Ship c o n s t r u c t i o n and M i n i n g .  - 58 -  will  be u s e f u l , t h e r e f o r e , t o o u t l i n e some major, c h a r a c t e r i s t i c ,  trative  a t t i t u d e s brought t o bear i n t h e i r  suggestions  a s t o w h i c h o f them p r e d o m i n a t e d a t v a r i o u s  (b]  the multitude  into policy  i n any l a r g e  can be a t t r i b u t e d t o t h e o v e r a l l  bureaucracy  bureaucracy.  Among  five  a p p e a r t o have borne  C o n c e r n o v e r c o n t r o l and c o n s e r v a t i o n  of foreign  reserves;  2  D e s i r e t o mesh TT w i t h  3  Desire  4  C o n c e r n o v e r m a i n t e n a n c e o f i n t r a - i n d u s t r y harmony;  5  Antipathy  f o r general  discussed a higher  importantly  These a r e :  exchange  the  and i m p l e m e n t a t i o n  ( p r i m a r i l y WlITl) a t l e a s t  postwar TT. 1  At  times.  ' a d m i n i s t r a t i v e a t t i t u d e s ' i n p o s t w a r J a p a n e s e government and t h e  bureaucracy on  some .  o f a t t i t u d e s ( n o t seldom c o n t r a d i c t o r y ) t h a t  formulation  some more t h a n o t h e r s such  and o f f e r  Administrative Attitudes Of  enter  implementation  adminis-  policies ;  t e c h n o l o g i c a l development;  to foreign direct at greater length  investment, which w i l l i n chapter  four. against  b a c k g r o u n d o f a d e s i r e f o r economic growth and i n d e p e n d e n c e .  It i s  also to recognize  as r e g a r d s spirit  o f a b s t r a c t i o n , a l l o f these  be  attitudes existed  important  level  basic industrial  which o f t h e s e  and i n t e n t w i t h  that while  foreign  were d i f f e r e n c e s o v e r t i m e  a d m i n i s t r a t i v e a t t i t u d e s most c h a r a c t e r i z e d t h e  which TT was c o n t r o l l e d and r e g u l a t e d ,  were o f some i m p o r t a n c e a t a l l t i m e s , decisive  there  influence i n a given exchange r e s e r v e s  a l l o f them  and any one o f them might be o f  case of TT.  T h u s , f o r example,  were a m a t t e r o f c o n s i d e r a b l e  scarce  official  concern  -  until  at l e a s t the  m i d d l e 1960's and  t h r o u g h o u t most o f t h e Bearing  the  change i n t h e up  to the  as  follows.  postwar  administrative  liberalization  recovery. finances  on TT  period  1960's can  ( l i m i t ) the  induction  aim  of  *.  p o l i c y i n the  p r i o r to the  I n v e s t m e n t Law  self-support  policy  u s e f u l l y be  summarized  the  early period  of  shaky s t a t e o f  Korean War  makes r e f e r e n c e  seems t o  boom.  The  b o t h t o an  sound development o f t h e  . . providing  Japanese preamble  i n t e n t to  to  ' . . . contribute  J a p a n e s e economy  f o r remittances a r i s i n g  have  economic  of f o r e i g n investment t o t h a t which w i l l  and  of  (1945-1955)  i s understandable given  - especially  patterns  a t t i t u d e s which c h a r a c t e r i z e d TT  c h a r a c t e r i z e d TT  This  policy  era.  measures o f t h e  the Foreign  the  bore i m p o r t a n t l y  c o n c e r n o v e r c o n t r o l o f f o r e i g n exchange r e s e r v e s  most s t r o n g l y  to the  -  above q u a l i f i c a t i o n s i n mind, however, t h e  Postwar r e c o v e r y The  59  from f o r e i g n  1  and  invest-  43 ment and  . . . adequate p r o t e c t i o n f o r such investment.'  however, t h e in  any  emphasis was  e v e n t , was  not  l e s s on  inhibiting  government commitments t o p r o v i d e  This  i n d i c a t e d by  Y o r k where he  fact,  f o r e i g n investment -  f l o c k i n g around J a p a n a t t h i s t i m e - t h a n  limiting was  In  f o r r e p a t r i a t i o n of  Prime M i n i s t e r I k e d a i n a 1950  speech i n  which,  on profits. New  said;  Of c o u r s e , e v e r y b o d y i s welcomed i n so f a r as he does not demand a p r i o r commitment o f t h e Government f o r t r a n s f e r . I t i s however, much more a d v i s a b l e t h a t he t e l l s t h e Government b e f o r e h a n d a b o u t h i s i n v e s t m e n t and s e e s how much t h e Government g u a r a n t e e s t o t r a n s f e r out o f t h e p r o f i t . . . . T h i s c h e c k i n g system i s by no means intended to create red tape. I t i s t h e d e v i c e o f a p o o r but h o n e s t b o r r o w e r who does not want t o c h e a t c r e d i t o r s . ^4 During  t h i s period,  in fact,  many f o r e i g n e r s e s t a b l i s h e d  (usually  quite  s m a l l ) "yen-base" and  regulation  companies which were s u b j e c t e d t o much l e s s  but w h i c h l a c k e d g u a r a n t e e s  of p r o f i t  and  control  capital  repatriation. Thus, i n i n t e n t TT  - i f not i n e f f e c t  were n o t t h e t o o l f o r i n h i b i t i n g  become One  such i n v e s t m e n t  procedures that  controlling  t h e y were t o  later. consequence o f t h i s  exchange was  a tendency  technologies consistent of the time. likely  - t h e laws and  over s c a r c e r e s e r v e s o f  related  earlier  foreign  to s t r o n g l y favour the t r a n s f e r of only those with the o v e r a l l  industrial  As a p r a c t i c a l m a t t e r , t h i s meant t h a t  i f t h e TT  discussed  concern  development  plans  a p p r o v a l was  t o t h e development o f t h e b a s i c  more  industries  o r would c o n t r i b u t e t o t h e development o f e x p o r t  industries.  Period  o f s t r u c t u r a l t r a n s f o r m a t i o n (1955-1963)  In t h i s  period,  t h e changed i n d u s t r i a l  o f consumer goods i n d u s t r i e s and s t r u c t u r e than  p o l i c y favoured the  a broader modernization of the  i n the e a r l i e r period.  i n the a c t u a l  c o u r s e o f TT  more a c t i v e o v e r a b r o a d r a n g e consumer goods i n d u s t r i e s and industry"  industrial  T h u s , t h e d e s i r e t o mesh TT  i n d u s t r i a l - p o l i c y - t o o k on much l e s s r e s t r i c t i v e reflected  development  implications.  This  with was  d u r i n g t h e p e r i o d which became much  o f i n d u s t r i e s and e s p e c i a l l y i n the o f f i c i a l l y  f a v o u r e d new  so i n "basic  chemicals.  A t t h e same t i m e ,  concern over maintenance of i n t r a - i n d u s t r y  harmony  came t o be a major f a c t o r i n d e t e r m i n i n g t h e h a n d l i n g o f a p p l i c a t i o n s f o r TT.  With  o f new  freedom  t o a c q u i r e t e c h n o l o g y from  i n d u s t r i e s and  with the burgeoning  abroad  s p r e a d i n g t o a number  consumer goods market h o l d i n g  -  out  prospects  so,  government h a n d l i n g  disruptive Thus, the that the  of considerable  t o be  gain  o f TT  advantage t o t h o s e f i r m s  a p p l i c a t i o n s t o o k on competitive  of the  exclusive  l e d t o the  an  possession  consideration  important  official  arrangements or,  a new  and  doing  potentially  p o s i t i o n s of  firms.  "harmony" - t h e  concern  a d e c i s i v e a d v a n t a g e o v e r i t s c o m p e t i t o r s s o l e l y on  a more i m p o r t a n t  greatly  competitive  concern f o r maintenance of i n d u s t r y  c o u r s e , a l w a y s be it  -  p o t e n t i a l to i n f l u e n c e the  a f i r m not basis  61  o f an i n TT  i m p o r t e d t e c h n o l o g y - came p o l i c y . ^5  f a c t o r i n a TT  This  d e c i s i o n but,  encouragement o f n o n - e x c l u s i v e  i n other  cases,  to the  would n o t ,  approval  where i t  of was,  or m u l t i p l e l i c e n s i n g  o f a TT  t o one  company  i n c r e a s i n g government i n c l i n a t i o n s t o a p p r o v e t r a n s f e r o f s i m i l a r  technology to other  companies i n t h e  industry,  should  they apply  for  such  approval.  Another aspect and  o f government c o n t r o l o f TT  concern f o r the  initially  contract  negotiated  unique to the  period  provisions  between b u y e r and 1955-1963 but  exert  of f i r m s i n v o l v e d  negotiation and  yet  phases of a TT.  'informal'  and  provisions for various t h i s period lines). than  The  (see  the  this and  s p e c i f i c TT  agreements  This  c o n c e r n was  period  as t h e  as a  practical  number  and  e a r l y technology s e l e c t i o n  There i s evidence that  technologies  and  of  not  a fairly  various  and  detailed,  unpublished, set of g u i d e l i n e s regarding  contract  i n d u s t r i e s evolved  example i n v o l v i n g s u c h  during guide-  t o which t h e s e g u i d e l i n e s were ' i n d i c a t i v e * r a t h e r  'compulsory' i s u n c l e a r .  frustrations visited  monitoring  i t became l e s s f e a s i b l e t o  appendix 1 f o r a concrete  extent  official  i t i s reasonable that,  increased  governemnt i n f l u e n c e d u r i n g  of the seller.  matter, i t gained i n importance during diversity  was  by  There are  such i n f o r m a l  numerous s t o r i e s o f  g u i d e l i n e s upon f o r e i g n  the businessmen  - 62  attempting  t o n e g o t i a t e TT  -  agreements.  On  t h e o t h e r hand, J a p a n e s e b u s i n e s s -  men  f a m i l i a r w i t h t h e TT  was  n o t unheard o f f o r t h e J a p a n e s e s i d e t o a t r a n s a c t i o n  and-their  n e g o t i a t i o n process at the time r e c a l l  M o r e o v e r , i n my  one  MITI a p p e a r s  the g u i d e l i n e s q u i t e f l e x i b l y .  be t h a t ,  impact ment  t h e MITI  a better  c a s e s t u d y which e x p l i c i t l y  upon s u c h g u i d e l i n e s ( s e e A p p e n d i x l ) ,  potential  t o use  ' g u i d e l i n e s ' as a "bogeyman" i n o r d e r t o s t r i k e  f o r themselves.  that i t  I t may  t o have  touches  interpreted  i n the aggregate,  f o r government d i s a p p r o v a l o f c o n t r a c t p r o v i s i o n s had  on t h e TT  agreements a c t u a l l y n e g o t i a t e d t h a n  d i d any  bargain  the more  avert  govern-  actions. 46  Some a u t h o r s t h e TT  have a n a l y z e d such J a p a n e s e government i n t e r v e n t i o n i n  negotiation process  i n terms o f Stephen Hymer's t h e o r y o f  4R  international operations. behaviour i s i n t e r p r e t e d  By  t h i s a n a l y s i s , J a p a n e s e government  as i n t e r v e n t i o n  c o n s c i o u s l y aimed a t r e d u c i n g  the  monopoly a d v a n t a g e s o f t h e t e c h n o l o g y p o s s e s s o r s v i s - a - v i s t h e l a r g e  number  of p o t e n t i a l Japanese purchasers.  that  in  a l l but a few  a monopoly and  mid-  o r l a t e - 1 9 6 0 ' s , had  foreign  a number o f a l t e r n a t i v e US,  as b e i n g m o t i v a t e d  accounts The  at l e a s t  Such a l o n g - r a n g e  shared  or other,  as v a l i d l y  by a l o n g - r a n g e  exchange r e s e r v e s which were viewed  n o t be f u l l y  possessed  nothing  potential  and  concern  - ascribe over  as c h r o n i c a l l y  national  concern  f o r government i n t e r v e n t i o n  question of i n t r a - i n d u s t r y  c o m p e t i t i o n has  Japanese  Japan's scarce  would,  by t h e J a p a n e s e p u r c h a s i n g companies and  substantially  the  technology.  might more s i m p l y - and  t h e mid-1960*s.  seller  t h a t the Japanese purchasers, e s p e c i a l l y i n t o  s u p p l i e r s o f t h e same o r s i m i l a r  intervention  however, i t seems l i k e l y  e x c e p t i o n a l cases the f o r e i g n  like  T h u s , one  In f a c t ,  until  naturally,  likely  i n t h i s area.  ^  a l r e a d y been a l l u d e d  to  -  a number o f  times.  to  now  which we  4.  In  this  i s s u e w a r r a n t s some s e p a r a t e  C o m p e t i t i o n and  Technology  cannot r e a l l y begin a d i s c u s s i o n  in  Japan without r e f e r e n c e to  it  i s closely  a system o f  -  discussion,  turn.  Inter-firm One  fact,  63  related.  The  the  fact  Transfer of  inter-firm  J a p a n e s e system o f  competition  employment t o  that Japanese i n d u s t r y widely  'permanent employment' i s , by  now,  quite well  which  practices  known i n  the  5D West.  Under t h i s  l e a v i n g - s c h o o l and  system one  typically  remains with t h a t f i r m  Changing employers - v o l u n t a r i l y v i e w e d as  aberrant behaviour. 51  economic and centred  on  the  the  social  social  history  and  or  of  as  of  the  retirement.  - i s r a r e and  a reflection  of  upon  this,  employees' l i f e  is both  tend to  the  be  l i f e l o n g membership i n a g r o u p which combines b o t h  economic a s p e c t s o f  - particularly  i n the  Japan's i n d u s t r i a l i z a t i o n .  life  employment  been c o n d u c i v e t o  interpersonal relations  social  organization dismissed  place i n present-day Japan.  and  individual  the  cultural  Because t h i s system of  adaptation to  In  formation of  feelings  J a p a n e s e work most e f f e c t i v e l y .  highly functional  many c o r r e l a t e s i n J a p a n e s e  I t c a n n o t , however, be  of  system has  finds  p a t t e r n s of  remnant' which i s out  which the  eventual  involuntarily  Partly  aspects  until  immediately  firm.  This pattern the  enters a firm  As the  of  prior as  fact, the  a  'feudal  this  intimate  group membership  s u c h , i t can demands o f  be  to  in  seen as  a  industrialization.  permanent employment b o t h r e f l e c t s and  serves  52 to  maintain  p u r p o s e s , an or  less  a low  r a t e of  employee m o b i l i t y between f i r m s , f o r  e m p l o y e e s ' economic w e l l - b e i n g  than that  of  the  firm  he  works f o r .  and  social  Also,  s t a t u s are  because of  the  practical no  more  long-term  - 64  nature the  of the  and  employment r e l a t i o n s h i p , t h e t i m e h o r i z o n  economic a s p e c t s  countries.  of the  c o r p o r a t i o n are  T h i s i s combined w i t h  p r e s t i g e o f a company and  t o f i n a n c i n g ) t o be industry,  -  As  t o engage i n v i g o r o u s  more p a r t i c u l a r l y ,  market demand and levelled  has  as  competition  industrial  can  companies s c r a m b l e t o g a i n  a strong  f i r m s not entry  the  concentration  only f a c i l i t a t e s  i n t o new  so d o i n g not  and  can  but  they  hedge a g a i n s t  t o say v i a b i l i t y ,  of the  change.  The  increase despite  the  form  of existing complaints  partners.  in a different  low  level  t h e f u t u r e and  industries  worker  established  arise.  i n s u r e the  group and  of  seek  Only  by  well-being,  t h e employees  who  52 constitute i t . The  main a r e n a f o r t h i s  market.  In the  competition, respects  the  latter  inter-firm  1950's and  i m p o r t a n c e o f TT  a n a l o g o u s t o , and  equipment i n v e s t m e n t  competition  been t h e  e a r l y 1960's, as one increased.  i n concrete  i t i s not  has  cases  aspect  Because TT  s u r p r i s i n g to f i n d  domestic of  this  i s i n many  often inseparable  the  pattern  firms e f f o r t s to  i n d u s t r i e s as t h e y  corporate  to  'dumping'  t o f i n a n c i n g on  requires existing  growth m a r k e t s and  strong  p o s i t i o n i n e m e r g i n g new  of access  an  s t r u c t u r e , s u c h as began i n  a l s o be r e v e a l e d  or "in i n d u s t r i e s undergoing d r a s t i c mobility  cause of  a t J a p a n e s e i n d u s t r y by J a p a n ' s t r a d i n g  mid-1950's, t h i s  access  c a p a c i t y which e x c e e d s t h e the r o o t  status  within  - often  T h i s f r e q u e n t l y takes  been, a t t i m e s ,  In a p e r i o d o f change i n t h e  is a  competition  t h e i r market s h a r e  expansion i n manufacturing  social  s i z e and,  to  other  corporate  a consequence, t h e r e  immediate economic c o n s i d e r a t i o n s . competitive  than i n  a strong tendency f o r the  i t s employees ( a s w e l l as  t o i t s market s h a r e .  t h e i r s i z e and,  often longer  c l o s e l y r e l a t e d to i t s absolute  tendency f o r c o r p o r a t i o n s  of relevance  from,  o v e r a l l trends  i n TT  -  and  equipment i n v e s t m e n t  relative  importance  65  closely  -  correlated  ( s e e f i g u r e 3 on page 6 6 ) .  o f TT when compared t o t o t a l  machinery  The  and equipment  54  investment  i s , however, d i f f i c u l t  1961,  indicated that  about  22% o f t o t a l  purchases  to assess.  of TT-related  equipment i n v e s t m e n t  One s u r v e y  , done i n  equipment a c c o u n t e d f o r  f o r t h o s e f i r m s which  imported  t e c h n o l o g y b u t o n l y f o r 4.7% o f a l l i n d u s t r y equipment i n v e s t m e n t 1950-1960).  r e l a t e to the period w h i l e TT r e l a t e d  equipment i n v e s t m e n t  may have a c c o u n t e d the subsequent  TT-based  output  firms l i k e l y  Japanese  equipment i n v e s t m e n t .  T h e same s u r v e y i n d i c a t e d  was b o t h more c o s t l y  Perhaps  ( s e e page 6 7 )  shows, t r a n s f e r r e d  be i m a g i n e d  technology  technological that the  ( a g a i n , on a p e r - c a s e b a s i s ) o f TT would have been  g r e a t e r had such a s u r v e y been done, s a y , i n 1 9 5 5 . e v i d e n c e t h a t TT had an impact  c o n c r e t e , f a v o u r a b l e , impact  Finally,  there i s  n o t o n l y on l o n g e r - t e r m g o a l s o f i n c r e a s e d  market s h a r e and e n t r y t o new d o m e s t i c  page  from  technological innovations.  c o n s i d e r a b l e Japanese  development had a l r e a d y o c c u r r e d - i t can e a s i l y  on  t h e s t a r t - u p and  ( i n terms o f R & D and s t a r t - u p e x p e n s e ) and g e n e r a t e d  As t h e s u r v e y was done i n 1 9 6 3 - a f t e r  importance  research  more i n d i c a t i v e o f t h e s i g n i f i c a n c e  more s a l e s on a p e r - c a s e b a s i s t h a n d i d d o m e s t i c  implied  t h a t TT e x p e n d i t u r e s ,  s a l e s a t t r i b u t a b l e t o items of technology  As t a b l e 15  sources.  investment,  l e s s t h a n 50/o o f t h e ( s e p a r a t e )  o f a s e p a r a t e s u r v e y comparing  expense and t h e t o t a l  different  equipment  manufacturers  a c c o u n t s f o r a much l a r g e r p r o p o r t i o n o f t o t a l  expenditures of surveyed f i r m s .  R & D  equipment  that,  o f new i n d u s t r i a l equipment by t h e s e  amounted t o s l i g h t l y  o f TT a r e t h e r e s u l t s  however, t o n o t e  by i n d u s t r i a l  f o r only a small part of t o t a l  Japanese  on a v e r a g e ,  I t i s important,  (figures  m a r k e t s b u t a l s o t h a t i t had  on s h o r t e r - t e r m , p r o f i t  goals (see table  68).  Thus i t i s r e a s o n a b l e t o conclude t h a t  one o f - o r p e r h a p s  'the' -  16  Figure  65  -  3. Trends i r i Technology Imports, P r i v a t e Equipment and F o r e i g n  I. — 3..  Investment  D i r e c t Investment - (1951-1966)  .  C l a s s A Technology Imports (No. of Case's) P r i v a t e Equipment Investment ( T r i l l i o n Yen) New F o r e i g n C a p i t a l - r e l a t e d E n t e r p r i s e s (No. o f Companies)  Note: The r e f e r e n c e f o r 1 and 2 g i v e s t h e i r c o r r e l a t i o n R = 0.92  as a measure of-. ^ / \ /  \  .600  500  A 00  300  200  4-100  1951 of . No. o Trillion' Companies ases Yen Source: 1 and 2, adopted from G i j u t s u Doryu Hsksku ' ; (Report on T e c h n o l o g y I m p o r t a t i o n ) - Japanese -' U n p u b l i s h e d i n t e r n a l r e p o r t of Kagaku G i j u t s u cho, 1966. p.39 3. Tsushosangyosho, KigyoKyoku (MITI, E n t e r p r i s e B u r e a u ) . ( G a i s h i k e i Kigyo - Sono J i t t a : t o E i k y o ( F o r e i g n C a p i t a l r e l a t e d E n t e r p r i s e s : t h e i r s t a t u s and impact) Japanese . MITI, 1968, p.268.  T a b l e 15. Development Time, S a l e s , R & D  "^^Technology (Including ^ ^ ^ n e w product ^"^^technology) ^""""-^flource Item ^^--^ (b) Amount Total  R&D  Sales,1961  No. of Cases  JNo. o f Cases Amount expense No. o f Cases Average Develop- i n y e a r s ment time New t e c h n o l o g y ( i n c l u d i n g new products)by Source-All Industry( )  percent of t o t a l  Tech. Import ,Co-operative Development  per Aggre- i • per Aggrecase gate c a s e gate (53.0%) (33.7%) 5,428. 3,445. 9.0 4.5  0.2  (25.8%] 128.  Aggreper gate case (9.8%) 1,006. 3.8  .  0.5  (20.2%) 100  1,061.  128,  216.  (35.8%) 1,266.  (49.5%; 1,750;  (6.8%) 242.  819. 2.35  60.4  1.5  279 2.50  20.8  Other  Aggregate (100.0%) 10,229.  95.  1,933.  6.3  (3.8%) 19.  0.5  Total  Aggreper gate case (3.5%) 361. 3.8  262,  382,  1,194  (50.2%) Amount.(b) 249.  Expense  Start-up  Self-Developed  and S t a r t - u p expense by Source o f Technology (1957-1961) (1962 survey)  ,  .2  88.  1.3  3.3  84. 2.21  2.24  18.8  5.3  (100.0%) 496.  0.3  1,603  (7.9%) 278.  180.  per case  (100.0%) 3,536.  2.6  1,362. 2. 35  100%  a  Note:(a) These percentages f o r new technology by source a r e based on a more i n c l u s i v e sample and thus d i f f e r s l i g h t l y from any o f the f i g u r e s v a r i o u s l y i m p l i e d by the "No. o f Cases" i n d i c a t e d f o r the s a l e s , R&D. expense and s t a r t - u p expense rows. (b) In one hundred m i l l i o n s o f Yen. Source: Tsushosangyosho, Kogyo G i j u t s u i i n (MITI, I n d u s t r i a l Technology Board). G i j u t s u Doko Chosa Hokokusho (Technology Trends, r e s e a r c h r e p o r t ) Tokyo: J i g y o Kohosha, 1963, pp. 11 and 126.  -68-  T a b l e 16. E f f e c t s o f T r a n s f e r r e d Technology on R e c i p i e n t Company (1961 Survey, post-war T.T.'s  T  yp° "  f  Response  ^  ->«)  Response Item  Remarkable . C o n s i d e r a b l e Unremarkable  —-^f P°nses s  Increased  Sales  790  37.5  42.2  20.3  Increased  Profits  736  28.7  41.7  29.7  Increased  Reliability  752  50.4  36.8  13.0  745  39.9  42.2  17.9  S i g n i f i c a n c e i n gaining entry i n t o a new domestic market  734  40.9  40.9  18.2  Effect i n displacing competitive products  501  29.8  42.7  27.5  I n c r e a s e d domestic market share  648  31.0  43.2  25.8  Increased Exports  433  19.6  33.7  46.7  368  16.8  31.8  51.8  Increased o v e r a l l corporate technological l e v e l  Significance i n gaining to new E x p o r t Markets  Source:  entry  MITI, Gaikoku G i j u t s u Donyu no Genjo to Mondaiten, 1967. op.cit.,  p.74.  - 69 -  major s o u r c e s o f i n i t i a t i v e among J a p a n e s e and  evolving  f o r much o f J a p a n ' s  postwar  TT was c o m p e t i t i o n  f i r m s contending f o r a l a r g e r share o f the r a p i d l y  domestic  market.  T h e government, f o r i t s p a r t ,  growing  appears t o  55 have p l a y e d more t h e r o l e  o f a mediator  A t t h e same t i m e , f o r e i g n  p o s s e s s o r s o f t e c h n o l o g y appear  been major s o u r c e s o f i n i t i a t i v e and  t h a n o f an i n i t i a t o r  well  illustrated  n o t t o have  i n t r a n s f e r s of technology. ^  some o t h e r a s p e c t s o f what we have d i s c u s s e d i n t h i s  fairly  c o m p e t i t i o n between J a p a n e s e  This  section are  by t h e c a s e s t u d y f o r m i n g a p p e n d i x  T h i s i s s u e o f domestic  of TT.  1 of t h i s  paper.  firms continued to  a f f e c t TT b u t , i n t h e e a r l y 1960's, t h e b r o a d e r i s s u e s o f i n t e r n a t i o n a l competition  and t r a d e and demands by J a p a n ' s  liberalization subsequent  measures came t o a f f e c t  i t even more.  period of internationalization  focus of the following  chapter.  trading  partners f o r I t i s this  and l i b e r a l i z a t i o n  which i s t h e  - 70 -  IV  LIBERALIZATION AND  INTERNATIONALIZATION  1.  Expansion  R a p i d Economic Japan's  terms,  (1963-1973)  r a t e o f economic growth i n t h e 1960's r a n g e d ,  between 10% and 16/a a n n u a l l y - w i t h t h e e x c e p t i o n o f t h e two  recession  y e a r s o f 1962  (6.4/o)  and 1965  the massive period.  s t r u c t u r a l transformation that  The output  T h e s e growth  (4.6/o).  were even h i g h e r t h a n t h o s e o f t h e l a t t e r  1950's b u t were f o u n d e d had begun i n t h a t  i n quality  throughout  t h e 1960's - n o t a b l y i n t h e e l e c t r o n i c  automobile  industries.  lower-income  groups  Increasingly,  earlier  and s o p h i s t i c a t i o n  consumers goods and  i n t h e consumption  upgraded  their  purchases  1960's, b e f o r e t h e r a p i d  development was a t t r a c t i n g  the i n t e r n a t i o n a l  community.  a mixture  o f a d m i r a t i o n and c o n c e r n  T h i s was p a r t i c u l a r l y  Between 1958 and 1965 J a p a n ' s  t h e imbalance  share o f world exports i n c r e a s e d Aside  i n t h e i n c r e a s e s i n e x p o r t s and i m p o r t s t h e c o n t e n t  i m p o r t s c o n t i n u e d t o c o n s i s t m a i n l y o f raw m a t e r i a l s and  high value-added  manufactures  ( t a b l e 2 on page 2 l ) .  of sophisticated,  As might  be e x p e c t e d ,  i n c r e a s i n g ' p r o p o r t i o n o f t h e s e e x p o r t s were i n d i r e c t , c o m p e t i t i o n  the output  from  t r u e of the developed  s e m i - f i n i s h e d goods w h i l e h e r e x p o r t s were i n c r e a s i n g l y  an  make  Japan's  by 66-/d and o f w o r l d i m p o r t s by 52/a ( s e e t a b l e 17 on page 7 l ) .  of Japan's  to stereos,  p e r i o d o f growth t h a t  h e r u n e q u i v o c a l l y one o f t h e w o r l d ' s major economic powers,  from  boom  room s e t s and a u t o m o b i l e s .  Even i n t h e e a r l y  countries.  on  a s income l e v e l s r o s e , even t h e  were a b l e t o p a r t i c i p a t e  w h i l e m i d d l e - and upper-income g r o u p s living-dining  rates  o f t h e new and r e n o v a t e d i n d u s t r i e s o f t h e l a t t e r  1950's grew n o t o n l y i n q u a n t i t y b u t a l s o  rapid  i n real  of manufacturers  i n t h e developed  countries.  with  In f a c t , t h e  -71-  T a b l e 17. Trends i n Japans Share of World Trade: 1938-1972 ( i n m i l l i o n U.S. d o l l a r s , c u r r e n t p r i c e s )  IMPORTS ear 938  Japan-*-  (c.i.f.)  World  2  EXPORTS ( f . o . b.) Japan/world  Japan"*"  World  2  Japan/world  1,070.  25,400.  .042  1,109.  23,500.  .047  684.  63,500.  .011  258.  57,500.  .004  958  3,033.  114,100.  .027  2,877.  108,200.  .027  963  6,736.  162,400.  .041  5,452.  154,100.  .035  965  8,169.  197,400.  .041  8,452.  186.400.  .045  967  11,663.  226,600.  .051  10,442.  214,500.  .049  968  12,987.  251,900.  .052  12,972.  239,100.  .054  969  15,024.  285,800.  .053  15,990.  272,600.  .059  970  18,881.  327,500.  .058  19,318.  312,000.  .062  971  19,712.  364,100.  .054  24,019.  348,100.  .069  972  23,471.  427,500.  .055  28,591.  412,400.  .069  948!  Notes:  Source:  1.  B e g i n n i n g 15 May 1972 i n c l u d i n g t r a d e f o r Okinawa p r e f e c t u r e . P r i o r t o 15 May 1972, a l l f i g u r e s a d j u s t e d t o approximate t r a d e o f 1971 census a r e a .  2.  E x c l u d i n g t r a d e among: C h i n a , M o n g o l i a , Democratic People R e p u b l i c o f Korea, and Democratic R e p u b l i c of Vietnam and t r a d e between the F e d e r a l R e p u b l i c o f Germany and German Democratic Republic. Kokusai Rengo (United N a t i o n s ) , S e k a i T o k e i Nenkan - 1973 ( S t a t i s t i c a l Yearbook - 1973) Tokyo: Havashobo, 1974. pp.394-401.  -  trend  throughout the  e x p o r t s t o be countries  2.  directed  (see  table  of  her  on  increasing  home markets c f t h e s e  her  trading  domestic markets of the partners.  aware o f t h e  increasingly  regulation  into that  In  potentials  markets.  T h u s was  i n t e r n a t i o n a l r e l a t i o n s i n the between h e r up the  and  trading  set  one  1960's and who  foreign  i n v e s t m e n t and  m o s t , p r o b l e m a t i c as  well  major a l t e r n a t i v e t o problem o f f o r e i g n  of f o r e i g n  investors  the  growing  major themes o f  tug-of-war process  capable of r e s i s t i n g  investors  and the  ease  Japan's  such a pace as would  f o r e i g n goods, i t was  as b e i n g  were  reciprocal  liberalization  at  were  booming J a p a n e s e  e a r l y 1970*s; t h e  wanted t h e  trade  J a p a n e s e government  of the  p r i o r development o f a J a p a n e s e i n d u s t r y competition  firms  T h e r e were t h e r e f o r e  J a p a n , which s o u g h t t o p r o c e e d o n l y  b l a n d i s h m e n t s and two,  partners,  foreign  of the  f r u s t r a t e d by  market.  share of world  developed c o u n t r i e s  addition,  demands t h a t J a p a n p r o v i d e t o f o r e i g n goads and her  developed  Reciprocity  d o m e s t i c market and of e n t r y  Japanese  Economy  s u r p r i s i n g l y , Japan's i n c r e a s i n g  becoming i n c r e a s i n g l y  of access to  percentage of  73).  International  inroads i n t o the  concern to  f o r an  page  Pressures f o r Not  -  p r e c i s e l y at the  18  Japan i n the (a)  and  1960's was  72  products.  speeded assure  both Of  the  the  f o r m e r which was  most c l o s e l y r e l a t e d t o TT  a c q u i s i t i o n of technology v i a l i c e n s i n g .  d i r e c t i n v e s t m e n t w a r r a n t s some s e p a r a t e  - as  the the  Thus,the  discussion  here. .  (b)  Antipathy to Foreign The  one  of the  f a c t that  attitudes  Direct  antipathy  importantly  Investment  to f o r e i g n  e f f e c t i n g the  d i r e c t investment  pattern  of  p o s t w a r TT  was to  -73-  Table 18. Japan's Imports by Provenance and E x p o r t s by D e s t i n a t i o n :  1963 - 1972. (F.O.B. v a l u e i n m i l l i o n U.S. D o l l a r s ) ^Proven-. \ ance  WORLD  Developed Market Economies  %  Developing Market Economies  %  Centrally Planned Economies  %  r e a r ^  1 I  1963  5,550.  3,210.  57.8  •2,110.  38.0  235.  4.2  M  1965  6,790.  3,620.  53.3  2,730.  40.2  435.  6.4  P  1966  8,140.  4,240.  52.1  3,310.  40.6  590.  7.2  0  1967  9,890.  5,250.  53.1  3,960.  40.0  680.  6.8  R  1968  10,740.  5,770.  53.7  4,270.  39.8  690.  6.4  T  1969  12,510.  6,770.  54.1  5,060.  40.4  680.  5.4  S  1970  15,280.  8,700.  56.9  5,850.  38.3  730.  4.7  1971  15,730.  8,350.  53.0  6,540.  41.5  840.  5.3  1972  19,470.  10,410.  53.4  8,010.  41.1  1963  5,450.  2,650.  48.6  2,550.  46.8  250.  4.6  1965  8,450.  4,350.  51.5  3,620.  42.8  480.  5.7  1966  9,780.  5,060.  51.7  4,120.  42.1  600.  6.1  1967  10,440.  5,350.  51.2  4,570.  43.7  530.  5.1  1968  12,970.  6,810.  52.5  5,580.  43.0  580.  4.5  1969  15,990.  8,410.  52.6  6,810.  42.6  760.  4.7  1970  19,320.  10,540.  54.5  7,730.  40.0  1,050.  5.4  1971  24,020.  13,180.  54.8  9,690.  40.3  1,150.  4.8  1972  28,650.  16,170.  56.4 11,040.  38.5  1,450.  5.1  E X P 0 R T S  1,050  5.4  Source: K o k u s a i Rengo (United N a t i o n s ) , S e k a i T o k e i Nenkon, Showa 49 nenpan (U.N. S t a t i s t i c a l Yearbook - 1973 - Japanese e d i t i o n ) - Japanese - Tokyo, Harashobo, 1974.  pp. 402-404.  74  -  J a p a n was  -  mentioned i n c h a p t e r t h r e e .  The  reason f o r i t s importance i s ,  o f c o u r s e , t h a t f l o w s o f t e c h n o l o g y and  investment  and  equipment r e l a t e d t o t h e s e ) a r e  n e c e s s a r i l y and,  are  not  separate processes.  Rather, they are  of a s i n g l e business proposal. investment  ( F D l ) , the  this  pressures  regulations regarding  ( s e e t a b l e 3 on  f o r r e c i p r o c i t y and  took shape.  o f f o r e i g n owners d e c i d i n g ,  First,  o f permanent employment  the  employment h a v i n g once e n t e r e d profound i m p l i c a t i o n s f o r the  attendant  This  i n c e n t i v e comparable t o t h a t o f  Thirdly, foreign  and  firms  management has  major a s p e c t  p a r t i c i p a t e nor  process.  government t o manage t h e  T h u s FDI  n e i t h e r the  spectre close  in finding  system new  have  affected.  impairs  o f managing capacity  'Japanese  the  ability  the  to  companies' of  the  economy.  more d i r e c t l y r e l a t e d t o t e c h n o l o g y , i n many  instances  have a t e c h n o l o g i c a l a d v a n t a g e o v e r t h e i r J a p a n e s e  p a r t s w h i c h would e n a b l e them t o q u i c k l y dominate t h e the  owner-  g u i d a n c e between government  Foreign  to co-operate i n t h i s  rationale  r a i s e s the  difficulties  J a p a n e s e economy. an  of Japan's  Given the Japanese  Japanese c i t i z e n s thus  i n t e g r a l and  low  23).  i n t o a company) s u c h a c t i o n would  c o n s u l t a t i o n and  b u s i n e s s i n J a p a n i s an  - i n the  i n t h e i r g l o b a l i n t e r e s t , to suddenly  (and  informal  page  involve-  i t i s argued, f o r e i g n  down a f a c t o r y o r l a y o f f w o r k e r s , f o r example.  and  parcel  and  increasingly lucid  f o r e i g n management p a r t i c i p a t i o n .  Secondly, the  part  day  liberalization  f o r e i g n i n v e s t m e n t an  f o r Japanese r e l u c t a n c e implies  often  as r e g a r d s f o r e i g n d i r e c t  i s r e f l e c t e d - to t h i s  of such f o r e i g n investment  With t h e  ship  Nevertheless,  frequently  in fact,  J a p a n e s e have n e v e r welcomed s u c h f o r e i g n  ment i n t h e i r c o u n t r y and level  not  (as w e l l as of goods  i m p l i c a t i o n s of t h i s f o r the  industry.  J a p a n e s e companies and  their  counterAside  from  'life-long'  - 75 employees, t h i s  inhibits  development o f an  indigenous  Japanese c a p a c i t y  for technological innovation. The  first  extent,  the  of these  t h r e e arguments r e g a r d i n g FDI  s e c o n d as w e l l ) have some c l a i m t o t h e  Japanese circumstances" special  - deserving,  and  (and,  to a  s t a t u s of  lesser  "special  to a large extent r e c e i v i n g ,  c o n s i d e r a t i o n by J a p a n ' s t r a d i n g p a r t n e r s .  The  third  i s perhaps  57 a more u n i v e r s a l c o n c e r n reason  o f t h a t , any  Whatever t h e  investment  simply  exhibit  than  others  entirely  a higher and  the  i s h i g h and  m e n t a l i t y ' growing out i n f l u e n c e s and  level  of antipathy  the  and  for this  objective. ^  probably  but  one  i s not  likely  In the  case  manifestation  (though n o t  of the  demands t h a t she  years the  outside  necessarily inevitable) 'in-group'  demands by J a p a n ' s t r a d i n g p a r t n e r s t h a t she  h e r r e s t r i c t i o n s on  developed  'fortress  and  F o r m a l E n t r y i n t o t h e World Economic Community The  and  this  distinctions.  (c)  nation  found  o f Japan  d e v e l o p m e n t o f a c u l t u r e w h i c h p l a c e s c e n t r a l emphasis on 'out-group'  presence  t o be  o f c e n t u r i e s o f s e p a r a t i o n from major  concurrent  to  Some c o u n t r i e s  s e n s i t i v i t y to a f o r e i g n commercial  explanation  by  concern.  i n Japan i s d i s p r o p o r t i o n a t e l y h i g h .  i n the r a t i o n a l  sensitivity  - though n o t ,  the l e s s a l e g i t i m a t e matter of  r a t i o n a l e o f f e r e d however, t h e  foreign  do  o f c o u n t r i e s r e g a r d i n g FDI  abandon t h e  f o r g e new nations.  of M e i j i ,  foreign trade  (including  protectionist  t r a d e r e l a t i o n s on T h i s i s an  i n v e s t m e n t ) were, i n e f f e c t ,  stance  o f a poor,  underdeveloped  a b a s i s of e q u a l i t y with  important  the g o a l of e q u a l i t y with  most c o n s t a n t  liberalize  p o i n t f o r , from t h e the  earliest  advanced n a t i o n s  theme o f modern J a p a n e s e h i s t o r y .  the  has  been  Thus, i t should  be  - 76 a p p r e c i a t e d t h a t a t t h e same t i m e liberalization proceed  with  implied.  as t h e r e was c o n c e r n  o v e r t h e impact o f  ( a s d i s c u s s e d a b o v e ) t h e r e was a c o n c u r r e n t  i t b e c a u s e o f t h e r e c o g n i t i o n o f J a p a n ' s e q u a l i t y which i t  F o r s i m i l a r reasons,  O l y m p i c s and t h e i n t e r n a t i o n a l  J a p a n ' s r o l e a s h o s t o f t h e 1964 T o k y o a t t e n t i o n which i t a t t r a c t e d  e n t e r p r i s e , f o r many J a p a n e s e , w i t h a s e n s e o f s y m b o l i c the i n t e r n a t i o n a l  community o f advanced  Of g r e a t e r i m p o r t a n c e , year  desire to  imbued t h e  reacceptance  nations.  however, was J a p a n ' s e n t r y i n A p r i l  i n t o t h e OECD ( O r g a n i z a t i o n f o r Economic C o o p e r a t i o n  - t h e major i n t e r n a t i o n a l  into  economic body o f t h e advanced,  o f t h e same  and D e v e l o p m e n t ) industrialized  59 nations.  The importance o f t h i s step l a y not o n l y i n i t s symbolic  significance  as r e c o g n i t i o n o f J a p a n ' s advanced s t a g e  also its  i n the fact trade  3.  t h a t e n t r y f o r m a l l y committed J a p a n t o l i b e r a l i z a t i o n o f  relations.  T h e C o u r s e and Impact o f L i b e r a l i z a t i o n  (a)  The Stages  here, and  The  of trade relations  t o t h e use o f import  however, c o n c e n t r a t e  the related formal  on T e c h n o l o g y T r a n s f e r  of Liberalization  Liberalization extending  o f development b u t  activity,  had b r o a d  r e s t r i c t i o n s on f o r e i g n g o o d s .  on l i b e r a l i z a t i o n foreign direct  i n chapter  three.  We  will  as i t a f f e c t e d TT, p e r s e ,  investment.  l a w s and r e g u l a t i o n s b e a r i n g on TT up u n t i l  were d i s c u s s e d e a r l i e r ,  implications -  In essence,  liberalization  these r e g u l a t i o n s  called  f o r a 'case-by-case*  h a n d l i n g o f a l l proposed TT.  Even p r i o r t o  formal  e n t r y i n t o t h e OECD t h e r e was some a d m i n i s t r a t i v e r e l a x a t i o n o f 60  procedures.  F o r example, t h e b a s i c c r i t e r i o n  t h a t TT make a  'positive'  contribution  t o Japan's  balance-of-payments,  i n d u s t r i e s was  r e l a x e d to the requirement  adverse  i n these areas.  new,  more l i b e r a l ,  The this one  effect  first  c a t e g o r i e s o f TT  o f t h e s e we  procedure  by a c o n c e r n e d  'concerned  perhaps  f o r TT,  two  established.  'Bank o f J a p a n - A p p r o v a l .  Under  1  in principle,  was  of a s p e c i f i c  As was  mentioned  not a r e s t r i c t e d  the M i n i s t r y  s i m p l y n o t have an  p r o c e d u r e s were f o r m a l l y  i n t h e absence  the M i n i s t r y  t h a t TT  o r major  e n t r y i n t o t h e OECD however,  h e r e term  ministry.  m i n i s t r y ' was  i n c l u d e MTTI and t h e TT,  will  an a p p l i c a t i o n  month o f a p p l i c a t i o n  jection  With  public u t i l i t i e s ,  approved  objection  earlier,  o r d e f i n e d term  o f F i n a n c e and,  depending  o f A g r i c u l t u r e and F o r e s t r y  the  within or  inter-  phrase  but would  always  on t h e n a t u r e or the F a i r  of Trade  Commission. The  second  new  T h i s , t o o , was automatic system The  a p p r o v a l p r o c e d u r e we  t h a n an a p p r o v a l implementation until  liberalization June 1968.  term  a d m i n i s t e r e d by t h e Bank o f J a p a n  and t h e p r o c e d u r e  major i m p a c t  will  was  'full  but a p p r o v a l  r e p r e s e n t e d as more o f a  was  registration  procedure.  o f t h e s e two  new  a p p r o v a l procedures d i d not  t h e f o r m a l announcement o f a s p e c i f i c  measures i n 1967  In b r i e f ,  liberalization'.  and  their  the l i b e r a l i z e d  implementation  r e g u l a t i o n s f o r TT  have  set of beginning i n p r o v i d e d as  follows: 1.  TT  involving  payments o f u n d e r US  u n d e r $30,000) were involved  'fully  $50,000 ( f r o m December  liberalized'  e s t a b l i s h m e n t o f a new  - e x c e p t f o r TT  company o r a  1973, which  cross-licensing  agreement. 2.  TT was  other than t h a t moved t o a  falling  under t h e p r o v i s i o n s o f 1. o r 3.  'Bank o f J a p a n - A p p r o v a l '  basis.  (below)  - 78 -  3.  TT r e l a t e d  to the following  case-by-case energy, Even w i t h t h i s ,  review:  aviation,  o u t e r space,  computers,  however, Japan  such o v e r t c o n t r o l s o v e r i n w a r d receive  seven  pressures f o r f u l l e r  further liberalization  remained  f i e l d s remained  subject to a  firearms, explosives,  atomic  petrochemicals. t h e o n l y OECD member c o u n t r y w i t h  f l o w s o f t e c h n o l o g y and c o n t i n u e d t o  liberalization.  was s e t t l e d  As a r e s u l t ,  upon i n J u l y 1972.  a schedule f o r  T h i s schedule  provided, roughly, as f a l l o w s : 1.  TT r e l a t e d  to aviation,  firearms,  explosives,  atomic  e n e r g y and  o u t e r s p a c e were moved t o a 'Bank o f J a p a n - A p p r o v a l ' 2.  P e t r o c h e m i c a l s - r e l a t e d TT was moved t o a ' f u l l - l i b e r a l i z a t i o n ' b a s i s except  f o r TT r e l a t i n g  t o ' d e r i v a t i v e products' - manufacturing  t e c h n o l o g y which was t o be f u l l y 3.  basis.  The treatment and  liberalized  as o f J a n u a r y 1973.  o f c o m p u t e r - r e l a t e d TT was t o v a r y w i t h t h e c o n t e n t  value of the t r a n s f e r .  technology exceeding  Excepting the transfer  of software  (US) §50,000.and hardware t e c h n o l o g y  $100,000 i n v a l u e , TT was f u l l y  liberalized.  exceeding  The e x c e p t e d  c a t e g o r i e s o f c o m p u t e r - r e l a t e d TT would a l l be moved t o f u l l liberalization  a s o f J u l y , 1974.  As  a result  o f t h e s e f u r t h e r s t e p s , "pure"  TT  t o Japan  was, by and l a r g e ,  We have s u g g e s t e d  a l l 'fully  already that  liberalized'  liberalization  ment was more p r o b l e m a t i c t h a n t h a t proceeded  ( i . e . uncontaminated  a s o f 1974.  of foreign  o f TT, p e r s e .  measures were a l s o  r e g a r d i n g E D I i n new e n t e r p r i s e s  a significant  (the purchase  direct  In f a c t ,  a t a s l o w e r pace t h a n h a s TT l i b e r a l i z a t i o n s .  t h e 1967 l i b e r a l i z a t i o n  by F D I )  invest-  i t has  Nevertheless, step forward  or acquisition  of shares  -  in  79 -  e x i s t i n g f i r m s r e m a i n e d - and r e m a i n s - more c a r e f u l l y c o n t r o l l e d ) . These l i b e r a l i z a t i o n  industries;  Class  measures e s t a b l i s h e d two c a t e g o r i e s  of l i b e r a l i z e d  1, i n d u s t r i e s , where f o r e i g n p a r t i c i p a t i o n was l i m i t e d  t o 50% and C l a s s 2, i n d u s t r i e s , where 100% f o r e i g n o w n e r s h i p i s p e r m i t t e d . , Significantly,  the l a t t e r  category consisted  which J a p a n e s e i n t e r n a t i o n a l s t r e n g t h  mainly of i n d u s t r i e s i n  was a l r e a d y  high  (eg. motorcycles,  p i a n o s ) o r i n which J a p a n e s e companies were a l r e a d y  either  entrenched o r o f d e c l i n i n g i n t e r n a t i o n a l importance  (eg. ordinary  rayon, The (33,  cotton  i n a l l ) included  included  i n t h e more r e s t r i c t e d C l a s s  A g a i n , t h e s e were i n many c a s e s i n d u s t r i e s i n which J a p a n e s e highly competitive  many i n d u s t r i e s o f h i g h e s t  and t h e g r o u p d i d n o t i n c l u d e  appeal t o prospective  ( c o m p u t o r s , d r u g s , h y d r a u l i c equipment, r e t a i l  industries will  trade,  will  include  l e a t h e r by-products, r e t a i l  the  o i l industry.  restricted  expansion i n the  agriculture, forestry, fisheries,  trade  e x c e e d i n g 11 s t o r e s  In a d d i t i o n , f o r e i g n investment i n a l l cases,  enterprises  and i n c e r t a i n  t r a n s p o r t , and  to statutory l i m i t a t i o n s or p r o h i b i t i o n .  (Domestic, J a p a n e s e , t a k e o v e r b i d s and i n f o r m a l . )  utilities,  leather  i n number, and  in existing  t o government a p p r o v a l  i n d u s t r i e s - s u c h as f i n a n c e ,  communications - i s s u b j e c t  both f o r m a l  etc.).  i n d u s t r i e s was e s t a b l i s h e d and, by May 1976, a l m o s t  and  remains s u b j e c t ,  investors  be open t o 100/o f o r e i g n o w n e r s h i p i n new e n t e r p r i s e s .  Remaining e x c e p t i o n s  not  foreign  s u b s e q u e n t y e a r s however, a s c h e d u l e o f g r a d u a l  number o f l i b e r a l i z e d all  1.  a g r i c u l t u r a l c h e m i c a l s , r a d i o s , t e l e v i s i o n , and  companies were a l r e a d y  In  steel,  fibres).  industries i n i t i a l l y  watches.  strongly  are also subject  On t h i s l a t t e r  u n i q u e and many c o u n t r i e s  point,  to stringent  controls,  o f course, Japan i s  impose s i m i l a r s t a t u t o r y l i m i t s o r p r o h i b i t i o n s  - 8 0 -  on c e r t a i n  specific,  critical,  of c o n t r o l s over f o r e i g n  industries.  Moreover, J a p a n ' s  investment i n e x i s t i n g  enterprises,  not out o f t u n e w i t h t h e t i m e s as even i n t h e USA emergence  of o i l - r i c h  t h e r e has been takeovers.  Arab c o u n t r i e s l o o k i n g  increased t a l k of adopting  T h u s , J a p a n can f a i r l y  formal l i b e r a l i z a t i o n impediments  may  (b)  The Impact  ( w i t h t h e sudden  f o r investment o p p o r t u n i t i e s )  Moreover,  TT  increase  of L i b e r a l i z a t i o n  on T e c h n o l o g y T r a n s f e r  i n TT b e g i n n i n g  i n the e a r l y  c a n n o t be e n t i r e l y  measures  attributed  a f a i r l y steady  1960's and t h e pace o f  o f 1967-1968. to the  The  J a p a n ' s f u r t h e r economic e x p a n s i o n and development  affluence,  as w e l l as t h e r a p i d  i n c r e a s e i n Japan's f o r e i g n  (frpm.around 1965) a l l f a v o u r e d i n c r e a s e d TT  even p r i o r t o t h e f o r m a l l i b e r a l i z a t i o n t o demands f o r l i b e r a l i z a t i o n  measures  contributed  The f o r m a l l i b e r a l i z a t i o n measures  of TT.  More d r a m a t i c t h a n t h i s ,  measures  between  activities.  i n 1968,  however, i s t h e sudden  I t seems c l e a r t h a t t h e  informal response  t h e two t y p e s o f TT was  most  (recalling  whether  o f a l o n g e r - t e r m , more o n g o i n g n a t u r e .  shift  rate  from  class  liberalization t h a t t h e main  payments exceeded  y e a r i n d u r a t i o n o r n o t ) , t h e y a l s o e n c o u r a g e d companies agreements  Nevertheless,  increase i n the yearly  n o t o n l y e n c o u r a g e d more TT b u t t h a t  distinction  exchange  o f 1967-68 a r e , o f c o u r s e ,  causative of the concurrent o v e r a l l  agreements.  towards  t o the surge i n TT.  clearly  B t o c l a s s A TT  increases  liberalization  measures.  reserves  informal  R3  quickened with the l i b e r a l i z a t i o n  i n TT a c t i v i t y  while  t o pose few s e r i o u s o b s t a c l e s t o  As f i g u r e 4 ( s e e page S i ) shows, t h e r e was and r a p i d  of foreign  t o have c o m p l e t e d a p r o c e s s o f  and i n t e r n a t i o n a l i z a t i o n .  the flow of technology.  also, i s  some f o r m o f m o n i t o r i n g  be s a i d  remain, these are l i k e l y  maintenance  to enter  into  one  A p p r o v a l s o f T e c h n i c a l A s s i s t a n c e Agreements, 1950 - 1973  ases) I  Source: Kagaku G i j u t s u cho ( S c i e n c e and T e c h n o l o g y Agency) Gaikoku G i j u l s u Donyu D e n j i Hokoku (Annual Report on F o r e i g n Technology I m p o r t a t i o n ) - Japanese - 1975, p.5.  - 82 Ozawa, goes f u r t h e r class B  and  suggests that  t o w a r d s c l a s s A TT:  postwar t e c h n o l o g i c a l advanced t o technical  s u c h an  assistance'  . . may  progress;  extent that  assistance  A reduction  ".  from t h e  industry  the  u n l i k e l y that  at  (see  about t h e  o f TT  out  same t i m e earlier,  does not  o f t h e TT.  An  the  b e a r any item  of  assistance  'incidental the  face  point  may  page 4 2 ) .  transfer involves  form o f  substantially incidental  technical  coincided  with  in a l l industries was  class B  categories  'technical'  only the  content  r i g h t s to  p r e c i s e l y such  short-term  the  What's more, as  n e c e s s a r y r e l a t i o n s h i p t o the c l a s s A TT  i n Japan's  o f i t , however, i t  d i s t i n c t i o n between c l a s s A and  i n the  1  had  moreover, o c c u r r e d  t a b l e .7 on  a b r a n d name w h i l e c l a s s B t t o f t e n technical  On  a major t u r n i n g  measures and,  point  became l e s s dependent on  West f o r  1967-68 l i b e r a l i z a t i o n  capacity  away from  64  had u n d o u b t e d l y t a k e n p l a c e .  seems h i g h l y  pointed  signal a turning  i t s technical  West."  i n dependence on  t h i s sudden t u r n i n g  use  'incidental  consultation  or  advisory  services.  In of the  the  final  analysis,  c o n t e n t - as  significance  opposed t o t h e  c a n n o t be  established  contracts  b o t h b e f o r e and  no  the  duration  without a d e t a i l e d a f t e r the  o f t h i s change, i n t e r m s - o f TT  examination of  liberalization  s u c h s t u d y a p p e a r s t o have been c a r r i e d . o u t .  were s u c h a s t u d y done, i t would r e v e a l rapid  trend  to  c l a s s A TT  agreements and  i n v e s t m e n t a c t i v i t i e s - which were a l s o measures.  That  i s to  say,  t h e r e would, n a t u r a l l y , t e r m ) TT  be  a close the  more f o r e i g n  firms  an  upsurge i n the  probably  specific  measures.  Unfortunately,  I t seems l i k e l y  that,  c o n n e c t i o n between  increase  affected  as  agreements between t h e  agreements,  by  in foreign  the  J a p a n e s e v e n t u r e and  direct  liberalization  o p t e d f o r FDI  number o f  the  i n Japan  class A  i t s foreign  (longerparent  -  or partner.  Such l o n g e r term and more c o m p r e h e n s i v e agreements a p p e a r t o  have t a k e n t h e p l a c e these  83 -  o f many o f t h e ,  c l a s s B TT a c t i v i t i e s o f  same c o m p a n i e s .  (c)  Liberalization The  strong  and F o r e i g n  connection  phenomenon, has been d i s c u s s e d  increase  of technology market.  D i r e c t Investment  between F D I and T T , a s a g e n e r a l  earlier.  a p p e a r s t o have been p a r t i c u l a r l y rapid  earlier,  strong  In t h e Japanese case t h e connection and i m p o r t a n t .  i n F D I i n t h e 1960's can be l a r g e l y  viewed a s an exchange  ( o r t h e l e g a l r i g h t s t o use i t ) f o r a c c e s s  T h i s view i s s u p p o r t e d  In f a c t , the  by s t u d i e s p u b l i s h e d  t o t h e Japanese  by Ml I T I i n 1968'  which i n d i c a t e t h i s t o have been t h e c a s e b o t h a s r e g a r d s motivations in  f o rentry  into a joint  venture  ( s e e f i g u r e 5 on page 84) and  t h e r e s p e c t i v e c o n t r i b u t i o n s a c t u a l l y made by t h e p a r t n e r s  time of formation As  trends  o f a j o i n t - v e n t u r e ( s e e t a b l e 19 on page 8 5 ) .  p a r a l l e l e d trends  i n J a p a n e s e p r i v a t e equipment i n v e s t m e n t and  i n T T , p e r s e , though i t was i n c r e a s i n g a t a s l i g h t l y  The  liberalization  the  a n n u a l r a t e o f new j o i n t - v e n t u r e f o r m a t i o n  cases  per year  ventures  by 1970 - more t h a n a considerable  was r u n n i n g  increase i n the proportion and l i k e l y ,  I n terms o f c a p i t a l i z a t i o n ,  r e m a i n s an overwhelming dominance o f m a n u f a c t u r i n g  t a b l e 21 on page 8 7 ) .  above 200  d o u b l e t h e f i g u r e i n 1967 ( s e e t a b l e 20 )  engaged i n n a n - m a n u f a c t u r i n g a c t i v i t i e s  t o be l e s s a s s o c i a t e d w i t h T T .  foreign  faster rate.  measures o f 1967-68 gave F D I even more i m p e t u s and  1960's w i t n e s s e d  there  atthe  f i g u r e 3 (on page 66) i n d i c a t e d , F D I , i n t e r m s o f numbers o f c a s e s ,  roughly  The  the subjective  of j o i n t -  therefore, however,  concerns (see  As t a b l e 21 i n d i c a t e s , t h e a v e r a g e l e v e l o f  ownership f o r FDI i n Japan i s o n l y s l i g h t l y  o v e r 50% and t h i s  -84Figure 5 M o t i v a t i o n f o r Involvement w i t h F o r e i g n D i r e c t Investment i n Japan (  ) = No. o f p o s i t i v e responses  gjBjffi  P r o p o r t i o n g i v i n g t h i s as t h e most important  =  motivation  F o r e i g n Companies (44)  Procurement of p a r t s , raw m a t e r i a l s E x p l o i t Labour  (61)  resources  (90)  E x p l o i t t e c h n o l o g i c a l resources (1  E x p l o i t C a p i t a l resources  (326)  Growth c h a r a c t e r i s t i c s o f t h e market V a l u e as a F o o t h o l d  (160)  i n A s i a n market (50)  Absence o f Competing Companies  (45)  Other reasons  10  Response u n c l e a r  (20)  Japanese Companies (27)  Access t o C a p i t a l  (43)  Access t o raw m a t e r i a l s , p a r t s Use  of Brand name  (domestically)  Use  o f Brand name (Export markets)  (129)  ,11  ii  (35) (93)  It'  T  Exports A c q u i s i t i o n of P r o d u c t i o n  A c q u i s i t i o n of Management Technology]  (26) (24)  Other reasons  Source:  (290)  Technology  Tsushbsangyosho, G a i s h i k e i Kigyb Sono J i f f a i t o E i k y o , op. c i t . pp.  31 and 34  Table  19. J o i n t Ventures i n Japan: A comparison of the r e s p e c t i v e c o n t r i b u t i o n s of Japanese and F o r e i g n p a r t n e r s at S t a r t - u p and over time.  Inves tment Numb er of Investors  Investor  Total  Respective share of Total Investment  %  Investment  %  Cash  %  Technology  %  3.7  26,995  0.  Equipment  %  Other  co At Time of S U R V E Y (1967)  At Time of Start-  up (Various)  J A P A N E S E F 0 R E I G N J A P A N • E S E F 0 R E I G N  Actual Number  o • or Responderts  IN  2,212.  285.  Actual Number  326.  No. of Respondents  285.  Actual Number  No. of Respondents Actual Number  Np. of Respondents  1,608.  281.  327.  283.  Source: Tsuchosangyosho (MITI),  101,027,587.  100.  -  -  66,499,547.  60.3  94,360,203.  -  100.  39.7  285.  54,978,319.  270.  35,701,667.  100.  28,303,412.  -  55.8  -  -  100.  44.2  -  31,665,573.  279.  19,878,701.  • -  G a i s h i k e i Kigyo - sono J i t t a i  to Eikyo  258.  (Foreign  93.4  -  3,862,436.  7.  82.8  205,211.  0.3  -  4.  -  88.7  3,862.971.  10.8  -  8.  70.2  115,211.  0.4  3.  -  -  Capital-related  E n t e r p r i s e s : t h e i r S t a t u s and Impact) - Japanese - Tokyo, 1968. pp.272-273.  2.  -  - •  9,151,900.  31.  26,995  2.  8,309,500  31.  -  2,777,953  2.7  7.  -  13.8 2,064,117. 3.1  -  0.1  1 .29.4  -  7.  146,128.  -  1.  -  0.  -  .0  -  -86Table 20. Establishment of Joint Ventures (Number of Cases) by Main Industrial Categories: 1950 - 1971  ndust \ry p  All Industry  Other  Machinery Metals  ea\  Commerce and Chemicals Textiles Petroleum ManufactOther Trade uring  70  21  4  10  .954  6  1  1  3  .955  2  1  1  .956  5  1  2  L957  7  4  2  .958  1  .959  10  5  2  1  .960  12  4  1  6  .961  19  10  1  3  2  .962  22  12  1  8  1  .963  53  23  3  11  1  .964  77  24  5  11  2  .965  69  18  4  13  1  .966  78  18  1  19  1  .967  93  29  6  12  3  .968  106  28  1  11  2  .969  174  41  9  29  .970  209  42  5  28  4  .971  217  37  10  18  3  .0-53  otal  .950.971 of 'otal  5  9  12  5 1  1  1 1  1  971  dist) (100.0)  4  2 1  2  1  7  4  3  12  15  8  7  14  11  10  20  9  6  29  5  8  44  12  15  54  26  25  64  41  1  30  77  41  (13.8)  (35.5)  1 3  (17.1)  (4.6)  (8.3)  (1.4)  (0.5)  1,230.  31.9.  54.  189.  24.  12.  100.0  25.9  4.4  15.4  Source: Notes :  2.0  1.0  135.  11.0  (18.9)  333.  164.  27.1  13.3  Fujiwara, Ichiro Shihon Jiyukato Takokusekikigyo (Capital L i b e r a l i z a t i o n and Multinat-onal Enterprise)-Japanese-Tokyo,Nikon Keizai Shimbunsha, 1973. p.100. 1. This data i s not r e s t r i c t e d to newly established companies and includes agreements between foreign investors and existing Japanese companies. 2. Includes Yen-base companies  -87-  T a b l e 21. N a t i o n a l O r i g i n o f F o r e i g n D i r e c t Investment by amount o f Investment  """"" ~ ~ - ^ I n d u s t r y , C a p i t a l , Home " ^_%^of total Country  i n Japan  (as o f 1971)  A l l Industry Manufacturing Capitalization Capitalization % of T o t a l % of Total (100 mil.Yen) (lOOmil.Yen  U.S.A.  1,535  68.5  1,350  73.4  Europe  572  25.4  373  20.2  England  222  9.9  83  4.5  Switzerland  169  7.5  146  7.9  West Germany  50  2.2  35  1.9  France  35  1.5  33  1.8  96  4.3  75  4.1  108  4.8  108  5.9  28  1.3  10  0.5  F o r e i g n C a p i t a l , T o t a l (A)  2,243  100.0  1,841  100.0  T o t a l C a p i t a l i z a t i o n of F o r e i g n Capital-related Enterprises(B)  4,109  -  3,674  -  Other  Europe  Canada Other  54.6  A/B x 100 (%)  Source:  Tsushosangyosho,  -  50.1  KigyoKyoKu (MITI, E n t e r p r i s e Bureau).  G a i s h i k e i Kigyo no Doko (Trends i n F o r e i g n C a p i t a l - r e l a t e d E n t e r p r i s e s ) - Japanese  - Tokyo, p.29.  -  -  r e f l e c t s the fact  88  -  t h a t t h e most common f o r m o f F D I i s t h e j o i n t  ( s e e t a b l e 22 on page 8 9 ) .  T h e USA i s t h e l a r g e s t d i r e c t i n v e s t o r i n  J a p a n and a c c o u n t s f o r about 62/o o f t o t a l ( t a b l e s 2 1 and 2 2 ) .  capitalization but  not uniquely  venture  so - an OECD s t u d y  companies and 68/a o f t o t a l  T h i s US dominance o f F D I i s h i g h i n d i c a t e s an even s t r o n g e r US 65  d o m i n a t i o n o f t o t a l F D I i n Canada and t h e UK. historic, these  linguistic  I n view o f t h e  and ( i n t h e c a s e o f C a n a d a ) g e o g r a p h i c t i e s  l a t t e r two and t h e US and t h e c o r r e s p o n d i n g  l a c k o f such  strong between  ties  between t h e US and J a p a n however, t h e h i g h J a p a n e s e f i g u r e s s u g g e s t the  postwar t i e s f o r g e d  strong  impact  that  between Japan and t h e US have had p a r t i c u l a r l y  on t h e p r o p e n s i t y  f o r US FDI i n J a p a n  ( t h e same OECD  study  showed, f o r example, t h a t US F D I a c c o u n t s f o r o n l y about 44°/o o f t o t a l F D I in  the other (d)  h i g h - g r o w t h p o s t w a r economy, West Germany). Liberalization As  firms to enter companies. following  we have a l r e a d y  on l i b e r a l i z a t i o n  place, the trend  and f i r m s .  competition  and more g e n e r a l i z e d  towards l i b e r a l i z a t i o n  'rationalization'  was  from l a r g e i n t e r n a t i o n a l f i r m s i n t h e i r rationalization  numbers o f f i r m s i n v a r i o u s  increased - or  process  considerable  o f Japanese i n d u s t r i e s  might more e f f e c t i v e l y meet t h e f o r t h c o m i n g  main, t h e e n v i s i o n e d  effects  i n t h e J a p a n e s e d o m e s t i c market f r o m  As a consequence, t h e r e  and p u b l i c c o n c e r n o v e r  so t h a t t h e y  foreign  which had s i g n i f i c a n c e f o r T T .  t o increase - competition  products  l e d many J a p a n e s e  and c l o s e r r e l a t i o n s h i p s w i t h  T h e r e were a l s o , however, o t h e r  threatened  official  indicated, liberalization  i n t o longer-term  In t h e f i r s t  foreign  and D o m e s t i c F i r m s  "face-to-face"  home market.  In the  implied a reduction  i n the  i n d u s t r i e s so a s t o d e v e l o p an i n d u s t r y  Home Country o f F o r e i g n  T  Y  P  A l l Enterprises |Type o f Company and \. Home Country o f \ % of No. o f |Foreign Investor \^ Cos. Total !  1 i  T O T A L  Type o f Company ! T o t a l l y Foreign C a p i t a l J o i n t V e n t u r e Co.  O F No. o f Cos.  100.0  565.  -  -  -  N  E  % of Total 32.  -  S  S Other No. o f Cos.  % of Total  118.  11.8  -  -  163.  16.2  66.  6.6  47.2  130.  12.9  46.  4.6  46  4.6  30.  -  -  -  61.6  414.  41.2  14.  1.4  45  650.  64.6  474.  82.  8.2  24.  Europe  288.  28.6  129.  England  50.  5.  24.  2.4  France  29.  2.9  11.  1.1  West Germany  70.  6.9  36.  Switzerland  67.  6.7  Other Europe  72.  7.1  74.  7.4  Source:  I  4.5  27.2  Canada  ;  323.  -  620.  Note i  S  No. of Cos.  56.2  U.S.A.  Other  U  Commerce  % of Total  -  274.  -  B  Manufacturing  1,006  Foreign Capital-Importing Japanese Comgany_ Home Country o f F o r e i g n Company  E  Investor  2.4  12.8  -  j  135 8. i  3.0  127.  6.  0.6  -  -  13.4  71.  7.1  0.8  2.  0.2  12.6  32.  3.2  19.  1.9  7.  12.  1.2  6.  j  0.6  3.6  28.  2.8  6.  j  0.6  32.  3.2  31.  3.1  4.  26.  2.6  37.  3.7  9.  0.8  53.  5.3  8.  j  13.  0.7  :  I  0.4 0.9 1.4  " F o r e i g n C a p i t a l - i m p o r t i n g Japanese Company" i n d i c a t e s a F o r e i g n e n t i t y has purchased shares i n an e x i s t i n g Japanese company. T h i s c a t e g o r y i m p l i e s that t h e r e i s no d e f i n i t e management p a r t i c i p a t i o n by t h e F o r e i g n i n v e s t o r . Where t h e r e i s c l e a r evidence o f such p a r t i c i p a t i o n the f i r m s a r e r e c l a s s i f i e d as a j o i n t v e n t u r e . " J o i n t Venture", except as i m p l i e d i n t h e p r e c e e d i n g , i n d i c a t e s a company o r i g i n a l l y e s t a b l i s h e d i n p a r t n e r s h i p w i t h a f o r e i g n i n v e s t o r . MITI, G a i s h i k e i K i g y o so Doko, o p . c i t . pp.32-33.  -  structure  composed o f a s m a l l e r  90  -  number o f l a r g e r f i r m s .  This,  i t was  would p r o d u c e more e f f i c i e n t  i n d u s t r i e s capable of t e c h n o l o g i c a l  economies and,  run,  i n the  longer  comparable t o t h o s e o f l a r g e This of the  c o n c e r n , and  international  highly  The  amendment o f t h e  were termed  'recession  of providing  official  eventual  industry  and  f a c t that  the  may  as t h e  system.  ability  Thus i n d u s t r y  A n t i - M o n o p o l y Law  o f 1947  the  have had,  there  is  t o p e r m i t what  on  page 91) .  means  and  indications that  process  on  i n many c a s e s became l e s s and  l e s s able  t e c h n i c a l change i n t h e i r i n d u s t r y provides a rather  l a t e 1950's). various  An  e a r l y 1960's.  market f o r c e s , t h e  continuing  and  to their  extreme example  even s h a r p e r s p u r t o  i n d u s t r i e s was  provided  by  of  reduction the  T h u s , from a c o m b i n a t i o n 1960's was  marked by  i n Japanese i n d u s t r y .  sharp upturn i n the  and  industry  began t o e n f o r c e a c o n s o l i d a t i o n  degree of c o n s o l i d a t i o n  i n 1960  a useful  of  years of the  r e f l e c t e d i n the  beginning  to  rigours  i n the  encouragement and  considerable  are  ( a p p e n d i x 1.  'crowding' i n the  number o f f i r m s  official  consolid-  the  weaker f i r m s  severe recession  to  consolidation.  market s h a r e s d w i n d l e d  in  due  of Japanese i n d u s t r y  r a t i o n a l i z a t i o n c a r t e l s ' provided  keep pace w i t h e x p a n s i o n and  industry  marginal,  encouragement t o w a r d s i n t e r - f i r m c o o p e r a t i o n  market-place, i t s e l f ,  industry  i n many  were a l a r g e number o f  A s i d e from w h a t e v e r impact government encouragement o f consolidation  abilities  poor access t o f i n a n c i n g  c e n t r a l i z e d Japanese f i n a n c i a l financial  scale  firms.  1950's t h e r e  p r o d u c e r s many o f w h i c h had  a t i o n would a l s o improve t h e compete.  innovative  remedy p r o p o s e d , r e f l e c t e d t h e  boom i n d u s t r i e s o f t h e  small-scale, the  the  technological  felt,  This  number o f mergers p e r  through i n t o the  1970's ( s e e  of  a  process  year figure  6  -  91  -  Figure 6 Trends i n Annual Number o f Mergers  Source: D o s e i T o r i h i k i l i n k a i ( F a i r T r a d e  Commission).  Dokusen Hakusho, Showa 49 Neupan (Monopoly White Paper, 1974 E d i t i o n ) - Japanese 1975, p.308.  -  92  -  A n o t h e r , p o s s i b l y r e l a t e d , development o f t h e an  increasing  (see  technological  page 93)  previously  Conversely, t h i s implies amount o f ) TT  i n the  o r more o f t h e levelling the  of the  technological latter  part  existing  an  1960's was  and  i n the  'threat'  1960's, t h e  still  o f major i m p o r t a n c e , to the  1960's and "TT  innovative  and  e a r l y 1970's i s one  Japan  today".  (increasing  p o s s e s s e d by  industry In  i n the  any  With t h i s ,  e v e n t , by  i n the  the  amount  of  technological the  r o l e . o f TT,  development o f  chapter  while  and  the industry.  which began i n t h e  fallowing  and  Japan's  c a p a b i l i t i e s of Japanese  theme o f t h e  at  capabilities.  subordinate i n o f f i c i a l  r o l e o f TT  a  and,  consolidation  increase  the  one  movement t o w a r d s  were making a t t h e  i s coming t o be  ongoing, transformation  of the  s o p h i s t i c a t i o n of  sciences.  7  steadily.  O v e r a l l , t h i s meant  the  same p e r i o d .  g r o w i n g emphasis on  independent t e c h n o l o g i c a l This,  posed by  c a p a b i l i t i e s l e d t o an  of t h e i r r e s p e c t i v e  popular t h i n k i n g  proportion  fairly  average t e c h n o l o g i c a l  increasing  development e f f o r t s J a p a n e s e f i r m s 'frontiers'  figure  c a p a b i l i t i e s among J a p a n e s e f i r m s  in industry  the  As  technology, that i s ,  of technology already  1960's h e l p e d s p u r on  technological  'new'  i n t o Japan, d e c l i n e d  increasing  development o v e r t h e  of the  of  companys' c o m p e t i t o r s .  increase  reality  liberalization  imported  technological  same t i m e , an Thus, the  proportion  that  importing  have been  ' e q u a l i t y ' among J a p a n e s e f i r m s .  i n d i c a t e s , the  t e c h n o l o g y not  1960's may  late  discussing  -93-  Figure 7 Trends i n the I m p o r t a t i o n of "new" * t e c h n o l o g y as a component of T o t a l Technology Imports - by i n d u s t r y ( C l a s s A Technology  only)  1961 1965 1966  Iff  if  ft  s  •4M M  m m  m.  %  !?i III  pfe  w  I  V A'  MA All Industry  Source:  w  Chemical  III :J|-  it  I  I  -is  A  Mi  r  11  i i  im  _  Machinery] M e t a l s  A  ft  W  A  E l e c t r i c a l J Other (including textiles)  Kagaku G i j u t s u cho, G i j u t s u Donyu Hokoku, 1966. op. c i t . p.32  * "New t e c h n o l o g y " r e f e r s t o t e c h n o l o g y of a type n o t imported i n t o Japan.  previously  -  V  TECHNOLOGY TRANSFER AND  In J a p a n i n 1975 chapter s t i l l  94  -  JAPAN TODAY  t h e themes o f t h e r e c e n t p a s t o u t l i n e d  persist.  The  purpose o f t h i s  chapter,  i n the  previous  i n contrast to that  o f c h a p t e r f o u r , i s n o t t h e r e f o r e t o o u t l i n e t h e c o u r s e o f m a j o r change over time  i n t h e p a t t e r n o f TT  t o p r o v i d e a statement suggest  what may  be  themes i n t h e n e a r  and  resources crises,  and In  y e a r s have  to  this  probably  be.  the growing problems of  Japan, the energy  future.  r e c e n t d e v e l o p m e n t s o f t h e p a s t few  what t h e s e themes w i l l  In p a r t i c u l a r ,  y e a r s but, r a t h e r ,  o f t h e c u r r e n t s t a t u s o f J a p a n v i s - a - v i s TT  t h e major r e l a t e d  respect, r e l a t i v e l y served t o c l a r i f y  t o J a p a n i n t h e p a s t few  'over-industrialization' in  and  major changes i n J a p a n ' s  f o r e i g n r e l a t i o n s a r e a l l r e c e n t changes w h i c h have i m p l i c a t i o n s f o r J a p a n ,and TT ments i n t h i s  1.  and  which have s e r v e d t o c l a r i f y  area over the near  Changing C h a r a c t e r i s t i c s o f Technology  The  tendency  noted  of a given technology  seem t o have e v o l v e d around s i g n i f i c a n t particularly high.  earlier  i n t o a new,  new  T r a n s f e r t o Japan  ( s e e f i g u r e 7 an page 93)  t o more t h a n standard  i n n o v a t i o n s as t h e y  one  for multiple  J a p a n e s e company would  p a t t e r n i n w h i c h TT occur.  is  'clustered'  T h i s impression i s  s t r o n g i n i n d u s t r i e s i n which J a p a n ' s t e c h n o l o g i c a l l e v e l  T h u s , i n 1973,  168  e l e c t r o n i c s i n d u s t r y were f o r 24  develop-  medium-term f u t u r e .  The  transfers  is  and  some o f t h e l i k e l y  of the t r a n s f e r s .  In t e r m s o f t h e c o n t e n t  of the t o t a l  o f 305  ' m u l t i p l e ' - w i t h one  t r a n s f e r s to the technology  alone  Japanese accounting  ^ o f TT  agreements themselves,  t h e growth t o  a f f l u e n c e d u r i n g t h e 1960's has  c r e a t e d i n Japan the world's  largest  ( a f t e r t h e USA).  mass-consumption market  second  T h u s , t h e r e i s and  -  should  95  -  c o n t i n u e t o be a major market i n J a p a n f o r TT  sports,  leisure,  increasing  and  flow of t e x t i l e  began i n t h e l a t t e r saleability temporary  service  industries.  and  In t h i s  of f a s h i o n a b l e f o r e i g n any  brand  to the f a s h i o n ,  connection the  textile-products-related  1960's ( s e e t a b l e 8 on  Japan - r a t h e r than  related  page 43)  rapidly  technology  likely  reflects  amount o f f o r e i g n  more c l e a r l y  "technical"  t o u r i s m by J a p a n e s e .  ( s e e page 9 6 ) , t h e number o f J a p a n e s e g o i n g a b r o a d by a f a c t o r o f .more t h a n conspicuous souvenirs seeds  10 between 1968  reliance  f o r f u r t h e r TT.  o f TT  both  is  and  t o Japan, than  brand  now  and  recycling area. self  the s e v e r i t y  Japan  r e t u r n w i t h ) t h e y sew consumers goods  major and  growing  the  and  area or  i n the future i s f a r l e s s r e l a t e d  to  type  the  cachet of a  o f a more c l e a r l y  t o c o n t i n u e t o be a c t i v e .  This latter  be a f i e l d  development-technology due  technical  prominently pollution  category i s a  control,  particularly  where a c y c l e o f t e c h n o l o g y export w i l l  nature  occur i n a  import-  rapid,  t o t h e r a p i d i t y w i t h which t h e i n d u s t r y d e v e l o p e d  of the p o l l u t i o n  (see appendix  T h e s e would  i n f o r m a t i o n p r o c e s s i n g , and  techniques. I t may  f o r e s h o r t e n e d form and  T h u s , one  a r e a s where TT  i n c l u d e the areas of energy,  technology  of  name o r d e s i g n .  is likely  interesting  shows  As t h e s e h o r d e s  i t i s t o t h e f a s h i o n a b l e - to... t h e s p e c i a l  a r e , o f Bourse,  including  be  as t o u r i s t s i n c r e a s e d  1974.  'fads' i n f o r e i g n - i n s p i r e d  p r e p a r e t h e way  There  on  may  As t a b l e 23  con-  consumers r e t u r n t o J a p a n l a d e n w i t h t h e i r u s u a l mass o f  for additional  foreign  and  (and knowledge o f o t h e r s t h e y d i d n ' t  technical  the  names and c l o t h i n g d e s i g n s i n  foreign''tee)=inp]pgies.v,;;Bne..••special s o u r c e o f i m p e t u s f o r such TT the i n c r e a s i n g  which  3. f o r a c a s e  problems (and r e g u l a t i o n s ) i n c o n t e m p o r a r y s t u d y o f TT  in this  field).  -96T a b l e 23. TRENDS IN JAPANESE OVERSEAS TRAVEL  a)  Year  Yearly Totals  1950 -1974  Year  Total  Total  Year  Total  1950  8,922.  1960  76,214  1970  663,467.  1951  20,011.  1961  86,328.  1971  961,135.  1952  25,597.  1962  74,822.  1972  1,392,045.  1953  34,813.  1963  100,074.  1973  2,288,966.  1954  34,593.  1964  127,749.  1974  2,335,530.  1955  42,900.  1965  158,827.  1956  35,803.  1966  212,409.  1957  45,744.  1967  267,538  1958  49,263.  1968  343,542  1959  57,194  1969  492,880.  b) Composition ( c a t e g o r y d e f i n i t i o n s underwent minor  Year  Business  Academic  Tourist  Other  Total*  49,468. 44,164.  162,910.  122,754.  2,526. (sic.) 5,393.  152,513. 62,407.  343,067.  1971  241,540.  2,244.  638,489. 78,862.  961,135.  1974  375,171.  5,324. 1^82,415. 72 ,620.  2,335,530.  1965  66,752.  1968  * D i f f e r s from f i g u r e s difference  Source:  Unpublished d a t a r e c e i v e d Ministry  of J u s t i c e ,  June, 1975.  chai  i n a) due to  i n data c o l l e c t i o n procedures.  from the Japanese  Immigration Department,  -  2.  Growth i n C o o p e r a t i v e The  the  97 -  Ventures  technological capabilities  competitive  n e c e s s i t i e s they  possessed  by J a p a n e s e f i r m s - and  f a c e d o m e s t i c a l l y and i n t e r n a t i o n a l l y  -  i n c r e a s i n g l y mean t h a t t e c h n o l o g i c a l advance i m p l i e s advance a t t h e f r o n t i e r s of t h e i r r e s p e c t i v e sciences. invariably  unpredictable  considerable  appeal  of cooperative  Due t o t h e o f t e n m a j o r c o s t s and a l m o s t  results  i n 'hedging"one's b e t s '  agreements w i t h can t a k e  other  research.  This  licensing,  t o 'mere* i n f o r m a t i o n  Considerations  ment).  companies  effort  there i s  by e n t e r i n g i n t o some f a r m  organizations.engaged from j o i n t  in similar  development, t o c r o s s -  sharing.  can l e a d o f course  to cooperative  agreements  a part i n ,  o f J a p a n e s e computer f i r m s i n t o two g r o u p s o f  (following considerable,  Moreover, t h e r e  continuing  at this level  I n d e e d , s u c h c o n s i d e r a t i o n s have p l a y e d  example, t h e f o r m a t i o n  cooperating  and  many f o r m s ;  such as t h i s  among d o m e s t i c f i r m s . for  of research  s t r o n g , government  a r e i n d i c a t i o n s t h a t t h e 1970's w i l l  on t h e p a r t o f b o t h b u s i n e s s  e n c o u r a g e such d o m e s t i c c o o p e r a t i v e  efforts  Qzawa has a r g u e d t h a t J a p a n may, i n f a c t ,  encourage-  see a broad  and government t o  a t t e c h n o l o g i c a l d e v e l o p m e n t . ^7  p o s s e s s an a d v a n t a g e i n t h i s  area f o r , As t h e c o m p l e x i t i e s o f t h e p r o b l e m s t o be d e a l t w i t h and t h e s c a l e o f r e s e a r c h i n c r e a s e , a s y s t e m s a p p r o a c h and i n t e r d i s c i p l i n a r y teamwork are r e q u i r e d . H e r e t h e J a p a n e s e may have an a d v a n t a g e , s i n c e t h e y can m o b i l i z e t h e d e v o t e d e f f o r t s o f a g r o u p o f r e s e a r c h e r s o f d i v e r s e b a c k g r o u n d s i n r e l a t i v e harmony. A s t r o n g g r o u p o r i e n t a t i o n i s a p e c u l i a r l y Japanese c h a r a c t e r i s t i c . In f a c t , to  however, w h i l e  l i e i n the a b i l i t y  researchers  J a p a n may p o s s e s s a d v a n t a g e s t h e y  are u n l i k e l y  t o ' m o b i l i z e the devoted e f f o r t s o f a group o f  o f d i v e r s e b a c k g r o u n d s * - p r e c i s e l y because o f a ' s t r o n g  orientation*.  That  i s t o say, except i n unusual circumstances  group  (as i n  - 98 -  wartime  o r some o t h e r s i t u a t i o n  which expands  group i d e n t i f i c a t i o n  beyond  normal b o u n d s ) , t h e t e n d e n c y o f a group o f J a p a n e s e , r e s e a r c h e r s o r n o t , i s t o r e m a i n h i g h l y aware o f ' d i v e r s e b a c k g r o u n d s ' and t o r e s p o n d and behave  a s members o r r e p r e s e n t a t i v e s o f t h e i r  extent that research  primary group.  demands t h e r e p e t i t i v e f o r m a t i o n  project-oriented research  'teams',  To t h e  and d i s p e r s a l o f  t h e J a p a n e s e a r e more l i k e l y  t o possess  a d i s a d v a n t a g e t h a n an a d v a n t a g e . There i s the f u r t h e r f a c t  that  i n both t h e g e n e r a l  c a s e and ( p e r h a p s  p a r t i c u l a r l y ) i n t h e J a p a n e s e c a s e t h e r e i s a t e n d e n c y f a r f i r m s t a view all  relevant  d o m e s t i c o r g a n i z a t i o n s a s major c o m p e t i t o r s .  make f i r m s more w i l l i n g  to enter into  c o o p e r a t i v e agreements  f i r m s r a t h e r than with domestic ' r i v a l s ' . Japanj t h e r e i s a l s o the p o s s i b i l i t y  that  In f a c t , indication  anti-trust  l a w s and r e g u l a t i o n s  e a s i e r t o form w i t h f o r e i g n  c o m b i n a t i o n o f r e a s o n s , t h e r e i s a l r e a d y an  c o o p e r a t i v e agreements  with f o r e i g n  i m p o r t a n c e as r e g a r d s TT t o (and from) J a p a n . g r o w i n g number o f c r o s s - l i c e n s i n g  agreements  f i r m s a r e o f growing  This i s reflected with f o r e i g n  m a j o r i t y o f c a s e s t o d a t e however, such agreements  firms.  have been  payments by t h e J a p a n e s e s i d e - s u g g e s t i n g t h a t t h e f o r e i g n technologically  dominant  I n t h e extreme, v e n t u r e companies  including  firms.  f o r whatever that  with f o r e i g n  I n some c o u n t r i e s ,  can a c t t o make such c o o p e r a t i v e agreements than with domestic  T h i s can  such  i n such c o o p e r a t i v e  (or elsewhere).  i n F D I i n Japan w i t n e s s e d i n t h e 1960*s,  linked to firm  remains  t a k e t h e form o f j o i n t -  In t h i s regard, the increase  and e a r l y 1970's,  c o n t i n u e and t o m a i n t a i n t h e c h a r a c t e r i s t i c  In t h e  relations.  ' c o o p e r a t i v e agreements'  i n Japan  in a  i s likely to  j o i n t - v e n t u r e form.  There  - 99 will  not  likely,  however, be any  f u r t h e r major, f o r m a l ,  liberalization  69 measures i n t h e n e a r of e x i s t i n g 3.  - especially  Expansion  i n Technology  'takeovers'  Exports  the major Japanese  t h e 1970's has been and  will  development v i s - a - v i s t e c h n o l o g y  c o n t i n u e t o be t h e e x p a n s i o n  exports of technology - i n , that One  as r e g a r d s f o r e i g n  firms.  Perhaps in  future  i s , 'outward'  o f t h e major f o r m s o f s u c h  outward TT  c a s e as i n t h e g e n e r a l c a s e , f o r e i g n has grown r a p i d l y  direct  i n r e c e n t y e a r s and  in  transfer  Japanese  TT.  has  been, i n t h e  investment.  in reflection  Japanese  Japanese  FDI  o f t h i s MITI, i n 70  1971, has  began p u b l i c a t i o n  o f an  annual r e p o r t  been some amount o f J a p a n e s e  growth d i d n ' t  begin u n t i l  Not it  been i n v e s t e d  a l l o f t h i s FDI  FDI  i s i n developed  technological In f a c t , was  and  f o r 29.S/  and  35.9/a and  be  expected,  finance, the t o t a l  and  1974,  about  and  a great deal of  i n t h e more c l e a r l y  TT-related  Moreover, a c o n s i d e r a b l e p r o p o r t i o n o f p o s s e s s e s no  this  major  leads.  North America, 0  major  $10,270 m i l l i o n  w i t h TT  c o u n t r i e s o v e r which J a p a n 72  as o f 1974,  FDI  There  at that 71 preceeding four years.  equated  f i n a n c e r a t h e r than  industries.  as o f March  ( a r o u n d US  i n the immediately  can be r e a d i l y  i s i n commerce and  manufacturing  FDI  FDI.  s i n c e t h e e a r l y 1950's b u t  t h e mid-1960's and,  t h r e e - q u a r t e r s of t o t a l Japanese t i m e ) had  FDI  on J a p a n e s e  the l a r g e s t  s i n g l e geographic  which a c c o u n t e d  of the t o t a l by C e n t r a l investments  f o r 23.6/o o f t o t a l  cases of Japanese  and  South  i n North  America, America  other non-manufacturing  (the balance being l a r g e l y  area of  FDI;  Japanese  investment  f a l l o w e d by A s i a ,  17.6/a and  ll.?/o.  are p r i m a r i l y  As  23/o  might  i n commerce,  i n d u s t r i e s which a c c o u n t composed o f i n v e s t m e n t  f o r 60%  of  i n resource  -  development f i e l d s Not  surprisingly,  nations in  such  and m i n i n g ) .  t h e c o m p a r a b l e d a t a on J a p a n e s e F D I i n t h e l e s s - d e v e l o p e d imply  a higher l e v e l  and r e s o u r c e development a c c o u n t  Japanese FDI i n A s i a Central  -  as p u l p , f o r e s t r y ,  o f A s i a and t h e A m e r i c a s  manufacturing  100  and S o u t h  and f o r a s i m i l a r  America  and, t o d a t e ,  of TT.  f o r about  Investment 80/a o f t o t a l  proportion of investments i n a m a j o r i t y ownership p o s i t i o n  has  73 been t h e norm. 74 A 1971 s t u d y  o f Japanese FDI  indicates that,  m o t i v a t i o n s f o r such FDI a r e l i t t l e from  different  other countries (eg. protection  from  overall, those  Japanese  o f businessmen  o r development o f t h e l o c a l  a d v a n t a g e s o f p r o d u c t i o n i n p r o x i m i t y t o t h e market, u t i l i z a t i o n lower-cost and  labour resources).  An e x a m i n a t i o n  percentage  o f such  Japanese secondarylevel An  investment  however, t h a t  an  extremely  i s aimed a t s e c u r i n g r e s o u r c e s f o r  and t e r t i a r y - i n d u s t r i e s .  o f J a p a n e s e dependence on f o r e i g n examination  of l o c a l ,  o f FDI i n t h e e x t r a c t i v e  food-related primary-industries indicates,  high  market,  T h i s r e f l e c t s the high 75 sources of supply.  o f t h e d a t a on J a p a n e s e e x p l i c i t  r e c e i p t s f o r TT  also  indicates that Asia  i s t h e major c u s t o m e r f o r J a p a n e s e t e c h n o l o g y .  The  f i g u r e s f o r 1972  show t h a t  4B/o o f a l l c a s e s o f e x p l i c i t (24.3-/o and 22.6)d) and N o r t h countries  activities and  f o r 50/o o f a l l r e c e i p t s and  J a p a n e s e TT i n t h a t America  year;  f o l l o w e d by E u r o p e  (l4.9)d and 17.2/a).  The l e s s - d e v e l o p e d  t e n y e a r s o r so b u t t h e p a t t e r n and n a t u r e  undergo some s i g n i f i c a n t  First,  accounted  s h o u l d c o n t i n u e t o dominate i n J a p a n ' s e x p o r t t r a d e i n t e c h n o l o g y  over t h e next should  Asia  likely  h e l d by t h e J a p a n e s e s i d e  d e c l i n e as o p p o s i t i o n t o f o r e i g n  indigenous t e c h n i c a l  trade  changes.  the ownership percentage will  of that  and management  skills  i n i t s FDI  m a j o r i t y ownership  increase.  Secondly, t h e  -  importance of areas already  o t h e r than  done f o r t h e M i d - E a s t  Thirdly,  101  -  A s i a should r a p i d l y and  may  do f o r C h i n a  the range of t e c h n o l o g i e s exported  i n t o a wide r a n g e o f heavy m a n u f a c t u r i n g especially ambitious  industrialization  As be  plans f o r developing regards  to f i g u r e  the  t h e E a s t e r n USSR).  likely  expand  rapidly  This trend i s  c o u n t r i e s which have  plans r e q u i r i n g  Japan i s l i a b l e  and  industries.  evident i n the petroleum-producing  technology. their  will  i n c r e a s e ( a s i t has  launched  m a s s i v e amounts o f f o r e i g n  importantly into,  petrochemicals  f o r example,  industries.  exports  of technology  t o the  developed  nations, there  l e s s e x p l o s i v e but  s t e a d i e r and,  i n terms of Japan's t e c h n o l o g i c a l  d e v e l o p m e n t , more s i g n i f i c a n t g r o w t h .  Here t h e  e s p e c i a l l y t o J a p a n e s e FDI  l e s s severe than  - should  be  c o u n t r i e s and  t h e amount o f J a p a n e s e FDI  the  c o u n t r i e s may  developed  such FDI  will  implicitly  t h e r e c e n t p a s t but overall to the  technology  exports.  other developed  technological As t a b l e 24 already  successfully  related  technology  t h i s regard efforts  sold  is likely  l i e i n the  industries in The  amount o f  form o f i n c r e a s e d  commercial  manufacturers  sale of  i n developed  i n d i c a t e s , the Japanese chemical major i t e m s  of chemicals  a b r o a d , p r i m a r i l y t o t h e US  however, l o n g e r term s u c c e s s  to strengthen  developing  t o i n c r e a s e as compared  P e r h a p s a more l i k e l y  nations w i l l  page 102)  i n manufacturing  -  to  their ability  and  is likely  and  TT  incremental  countries.  industry  has  synthetic textiles-  Western E u r o p e . t o hinge  on  In  Japanese  f o r independent t e c h n o l o g i c a l  innovation.  4.  The  Search  TT  represent only a small p r o p o r t i o n of Japan's  advances t o e x i s t i n g  (on  i n many  well increase s i g n i f i c a n t l y .  represent  to s t i l l  o p p o s i t i o n t o FDI  should  f o r ' T e c h n o l o g i c a l Independence'  J a p a n i n t h e y e a r s s i n c e World War  Two  has  transformed  itself  -  -102-  T a b l e 24. Japan's E x p o r t s o f Major items o f Chemical and S y n t h e t i c T e x t i l e s - r e l a t e d Technology: 1950-1972.  ^^-\Time  period. 1950-1963  Area  1964-1967  1968-1972  ^ ^ ^ ^ 3.  7.  14.  13.  11.  13.  South-East A s i a  6.  5.  3.  Other  1.  3.  3.  Total  23.  26.  33.  United Western  States Europe  Source: Watanabe, T d k u j i Nihon no Kagaku Kogyo (Japan's Chemical I n d u s t r y ) - Japanese  -  Tokyo, Iwanami Shoten, 1974 (4th e d i t i o n ) , pp. 64-65.  -  1 0 3  -  with the help of a great deal of f o r e i g n technology - i n t o w o r l d ' s more e f f i c i e n t the  w o r l d ' s mast a f f l u e n t  market. of  'factories'.  As a c o n s e q u e n c e ,  sewers, p a r k s , e t c . ) . shift  emphasis  towards  capital  of l i f e  improving the q u a l i t y of l i f e capital.  appear l i k e l y  critical  improvement  and p e r v a s i v e p o l l u t i o n  s t r u c t u r e now and i n t h e f u t u r e .  their  high l e v e l  - b o t h because o f a b s o l u t e l i m i t s  processing  o f dependence  an e s p e c i a l l y  on t h e p a r t  arise  These  difficulties  on r e s o u r c e  on f o r e i g n  precarious situation  Because  s u p p l i e r s of resources t h i s  of her  creates  f o r Japan. structure  compelling  p r e s s u r e s f o r r e s t r u c t u r i n g J a p a n e s e economic  poses both domestic,  to the international  o f t h e J a p a n e s e economy t o emerging  There.-are, t h e r e f o r e ,  supplies  of resource producing nations  e n v i r o n m e n t a l p r o b l e m s and p r o b l e m s r e l a t i n g  suppliers.  problems.  structure  and m a n u f a c t u r i n g i n d u s t r i e s .  t h e e x i s t i n g Japanese i n d u s t r i a l  vulnerability  p o s s i b l e - and  t o be even g r e a t e r i n t h e f u t u r e - w i t h o r w i t h o u t J a p a n e s e  growth  expand  i n the  i n m e e t i n g t h e m a s s i v e raw m a t e r i a l s demands i m p l i e d  and b e c a u s e o f a g r o w i n g d e s i r e  Thus,  little  s t r u c t u r e which made postwar development  from d i f f i c u l t i e s  economic  i n J a p a n by i n c r e a s e d  further pressures t o revise the i n d u s t r i a l  by t h e p r e s e n t  emphasis  i n J a p a n can be a c h i e v e d w i t h o u t major a d j u s t m e n t t o t h e  t h e same t i m e c r e a t e d  Moreover,  i t e m s ( s u c h as r o a d s ,  Thus, t h e r e i s a growing consensus t h a t  on d e v e l o p i n g such s o c i a l  very i n d u s t r i a l  to  o v e r c r o w d i n g and l a g s f a r b e h i n d  i s f u r t h e r r e c o g n i z e d , however, t h a t  quality  at  mass consumer  A t t h e same t i m e , however, i t has come t o s u f f e r f r o m some  o t h e r d e v e l o p e d c o u n t r i e s i n many s o c i a l  It  i t i s now one o f  n a t i o n s and t h e s e c o n d l a r g e s t  t h e w o r l d ' s w o r s t urban and i n d u s t r i a l  should  one o f t h e  t r e n d s among r e s o u r c e  d o m e s t i c and i n t e r n a t i o n a l activities  and t h e  - 104  implied  direction  c o n s e r v i n g , and  of s t r u c t u r a l  fairly  a c c u r a t e l y and  out the d i r e c t i o n in  change i s t o w a r d s a l a w - p o l l u t i o n ,  knowledge-intensive  t h e mid-1950's, t h e J a p a n e s e  of  industrial  bureaucracy  explicitly  i n which a s o l u t i o n  available  to a s s i s t  and  identified  t h e 1950's however, t h e r e i s no  readily  -  t h e p r o b l e m s and  atomic  and  in this transformation.  o t h e r new  energy  computers, i n f o r m a t i o n systems,  i n Japan  resources  and  pollution exploitation,  circumstances,  t h i s regard, i t i s important to r e i t e r a t e t h a t Japan's  postwar  been l e s s f o u n d e d  i t has  on t h e d i s c o v e r y o f  been on t h e i n v e n t i v e and  i n n o v a t i o n s d i s c o v e r e d elsewhere.  they s t i l l 2.1%  o n l y amounted t o 1.66 /a o f GNP West Germany 2.0%  (1969),  Moreover, the v a s t m a j o r i t y of Japanese with r e l a t i v e l y  little  t h e r e f o r e , Japanese  development work and of the t o t a l  T h i s accounts, international  efforts n o t on  i n part, and  7  9  1970's b u t i n  and F r a n c e 1.9$  2.%  have been c o n c e n t r a t e d on  year).  7  1970 ' (l970.),  (1970).  o f R & D.  b a s i c r e s e a r c h (which  7  7  by companies Not  applications  accounted  balance  and  surprisingly  f o r only  8  f o r the s t a t u s of Japan's  of  expenditures  R & D i s performed  i n t h e 1972-1973 f i s c a l  receipts  early  government s u b s i d i z a t i o n  R&D  application  - compared t o USA  3  (1970),  rapid  technological  I t i s t r u e t h a t Japan's  on R & D have i n c r e a s e d o v e r t h e 1960's and  8.1%  c o u n t r i e s (eg.  levels,  countries.  i n n o v a t i o n s than  and  a r e a s , and  than i n  s u c c e s s t o d a t e has  UK  The  more c r i t i c a l  other developed  In  technology  B e c a u s e ofv J a p a n ' s  however, development i n t h e s e a r e a s i s p e r h a p s  situation  t o d a y a r e , by  s o u r c e s , ocean  etc.).  as i n  pointed  U n l i k e the  vast stock of foreign  t h e same as t h o s e i n t h e o t h e r d e v e l o p e d  control,  Again,  government seem t o have  should l i e .  t e c h n o l o g y d e v e l o p m e n t o f most c o n c e r n  large,  structure.  resource-  of  payments f o r t e c h n o l o g y which showed o n l y  -  gradual  improvement o v e r t h e 1960's ( t a b l e 25 on page 106) and  lags well 106). being  105 -  behind those o f other  There i s , t h e r e f o r e ,  developed nations  considerable  d i r e c t e d towards t h e s t r e n g t h e n i n g  technological Thus, there  c o n c e r n and e f f o r t  i n Japan  today  o f Japan's independent  a r e a t l e a s t two a s p e c t s t o t h e ' s e a r c h  f o r technological  T h e l e s s o b v i o u s b u t p r o b a b l y more  o f t h e two has t o do w i t h t h e v u l n e r a b i l i t y o f t h e p r e s e n t  industrial countries  s t r u c t u r e t o emerging t r e n d s  i n the resource-producing  - p a r t i c u l a r l y those of the less-developed  independence', i n t h i s the  ( t a b l e 26 - a l s o on page  capabilities.  independence'now underway i n J a p a n . important  still  sense, i m p l i e s  world.  'Technological  a technological transformation  of  e x i s t i n g s t r u c t u r e t o w a r d s one which i s l e s s dependant on o f f s h o r e  resource  suppliers.  transformation  will  F o r t u i t o u s l y or not, t h i s likely  serve  environmental problems c r e a t e d The  second aspect  of  this  same i m p l i e d  a l s o t o meet some p a r t  of t h e domestic  by t h e e x i s t i n g i n d u s t r i a l 'search  technological  structure.  f o r t e c h n o l o g i c a l i n d e p e n d e n c e ' has  t o do w i t h J a p a n ' s c a p a c i t y f o r i n d e p e n d e n t development o f t h e t e c h n o l o g y related  to t h i s technological transformation  of the i n d u s t r i a l  T h e r e i s no i n t e n t , h e r e , t o i m p l y t h a t J a p a n i s o r s h o u l d independence i n t e c h n o l o g i c a l development.  That  p r o p o s i t i o n f o r any c o u n t r y , i n c l u d i n g t h e US. needed t e c h n o l o g y w i l l from o t h e r  developed  u n d o u b t e d l y c o n t i n u e t o be a v a i l a b l e t h r o u g h  countries.  f o r independent t e c h n o l o g i c a l  appropriate  transfer  B u t , b e c a u s e some o f J a p a n ' s p r e s e n t  there  J a p a n i s n o t t o be f o r c e d  i n t o a passive  total  I n l a r g e measure, t h e  needs c a n n o t be met by any a v a i l a b l e  if  be s e e k i n g  i s not a s e r i o u s  future technological i s a necessity  structure.  and  technologies,  development  capacity  posture of waiting f o r  developments t o o c c u r elsewhere i n t h e developed world.  In  -106Table 25. Trends i n Japans Balance of I n t e r n a t i o n a l Technology Payment 1950-1973 Year  1950 1956  Total 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1950 1972 1973 1955 1960 1973  Item  Technolc)gy Imports paymcmts 68.9 280.5 113 ( M i l l i o r is of $) Tech. Class 525 831 320 Imports A No. of Class Cases 623 941 281 B Total  1148 1772  601  lecnnoiogy Exports Receipts ( M i l l i o n s of $)  0.7  4.3  3  Ratio of Receipts to Payments(%)  1.0  1.5  2.7  114  136  156  166  192  239  715  4355.4  328  564  500  472  601  638 1061 1154 1330 1546 1916 1931  13717  429  573  541  486  552  657  757 1137 1041 7  6.1  7  5.1  314  683  368  475  433  438  488  572  461  487  519  958 1153 1295 1744 1629 1768 2007 2403 2450  15  17  9.6 10.2  19  27  34  46  59  60  74  8.146 21.863  88  9.9 11.3 10.8 12.5 13.6 12.3 12.9 12.3  461  10.6  Source: Kagaku Gijutsucho (Science and Technology Agency). Gaikoku G ij u t s u Dony u. N e n j i Hokoku, Showa 48 Nenpan(Importation of Foreign Technolo gy An n u a l Repot t , 19 73) - Japanese - Tokyo, 1975, p.56  Table 26 I n t e r n a t i o n a l Comparison of Balance of I n t e r n a t i o n a l Technology Payments Country Item ReceYear ipts A  JAPAN Payments B  1963  7  136  0.05  1163  122  10.38  1964  15  156  0.10  1314  127  1965  17  166  0.10  1534  1966  19  192  0.10  1682  1967  27  239  0.11  1836  1968  34  314  0.11  1969  46  368  1970  59  1971  A/B  U.S.A. Rece- Payi p t s ments A • B  A/B  UNITED KINGDOM Rece- PayA/B i p t s ments A B  -  -  -  FRANCE Rece- Payi p t s ments A B  A/B  WEST GERMANY Rece- PayA/B i p t s ments A B  138.6 188.7 0.73  50.0 135.3  0.37  10.35 123.2 115.1 1.07  144.0 191.0 0.76  62.0 153.3  0.40  135  11.36 133.8 128.5 1.04  168.0 213.0 0.79  75.3 165.5  0.45  140  12.01 160.1 132.4 1.21  180.0 243.0 0.74  73.3 175.3  0.42  166  11.06 175.5 164.6 1.07  195.0 230.0 0.85  89.8 192.0  0.47  2000  186  10.75 204.5 185.0 1.11  164.5 275.2 0.60  98.5 219.5  0.45  0.13  2183  221  9.88 211.9 212.4 1.00  193.3 305.5 0.63  96.5 251.3  0.38  433  0.14  2502  225  11.12 263.5 239.3 1.10  214.4 349.9 0.61  118.6 307.1  0.39  60  488  0.12  2787  241 . 11.56 282.7 264.7 1.07  395.3 464.1 0.85  148.9 405.2  0.37  1972  74  572  0.13  3078  296  576.0 578.7 1.00  209.2 465.5  0.45  1973  88  715  0.12  3578  384  Source: Same as above, p.57.  10.40 295.7 297.6 0.99 9.32  -  -  -  -  -  -  -  j  - 107 -  addition,  t h e r e i s t h e F u r t h e r p o i n t t h a t , because Japan's t e c h n o l g o i c a l  needs e x i s t developed  at e s s e n t i a l l y  t h e same f r o n t i e r s  n a t i o n s , t h e r e i s and w i l l  f o r Japanese i n d u s t r y t o achieve least  some a r e a s  as do t h o s e  of the other  be a c o m p e t i t i v e n e c e s s i t y , a s w e l l ,  independent t e c h n o l o g i c a l advances i n a t  i f i t i s t o maintain  i t s international  competitive  abilities. T h u s , i n summary, t h e r e i s one o v e r r i d i n g t e c h n o l o g i c a l theme which seems likely  t o dominate t h e next  T h i s theme w i l l one  t e n o r twenty y e a r s  l i e i n the o r c h e s t r a t i o n of a dual process  hand, " s e l l i n g "  existing  i n d u s t r i a l technology  ( p a r t l y t o a c q u i r e , i n t h e s h o r t term, a c c e s s existing while,  o f Japanese  industrial  o f , on t h e  t o developing  s t r u c t u r e and p a r t l y a s a b u s i n e s s i n i t s own  from t h e s e  the " p o s t - i n d u s t r i a l "  nations  t o raw m a t e r i a l s f o r J a p a n ' s  on t h e o t h e r hand, s t a v i n g o f f t h e u l t i m a t e impact  competition  development.  right)  of rising  same c o u n t r i e s by c a r v i n g a n i c h e f o r J a p a n i n world  v i a i n d e p e n d e n t development o f a p p r o p r i a t e  technologies. In t h i s ,  Japan i s n o t without  among t h e w o r l d ' s l a r g e s t , educated.  Given  should,  H e r p o p u l a t i o n which i s  i s a l s o one o f t h e most l i t e r a t e  a c o n s e n s u s on a new v i s i o n  there are signs t h i s society  advantage.  again  o f J a p a n ' s f u t u r e , and  i s evolving, the b a s i c cohesiveness as i n t h e past,  a d v a n t a g e o f ' u r g e n c y ' more t h a n  o f Japanese  prove a v a l u a b l e n a t i o n a l a s s e t .  M o r e o v e r , i f some form o f k n o w l e d g e - i n t e n s i v e , does p r o v e t o b e ' t h e wave o f t h e  and h i g h l y  post-industrial society  f u t u r e , J a p a n may p o s s e s s 1  do many o t h e r p o t e n t i a l  candidates  -  possessing  l a r g e r domestic  problems.  F o r , i f n e c e s s i t y i s n o t i n e v i t a b l y t h e mother o f i n v e n t i o n ,  it  i s almost  invariably  r e s o u r c e s and/or l e s s p r e s s i n g  the i r o n i c  i t s midwife, nurse,  and p a t r o n .  pollution  - 108 -  VI  THE POSTWAR JAPANESE EXPERIENCE WITH TECHNOLOGY TRANSFER:  The that  p r e c e e d i n g s t u d y o f t h e J a p a n e s e p o s t w a r e x p e r i e n c e w i t h TT s u g g e s t s  i t was a f u n c t i o n  exactly  of a v a r i e t y of f a c t o r s .  unique t o Japan, a r e , a t l e a s t ,  others. of  We w i l l ,  therefore, f i r s t  the Japanese e x p e r i e n c e .  Some o f t h e s e ,  discuss these 'special  This will  be f a l l o w e d  of  t h e more u n i v e r s a l  questions r e l a t e d t o TT.  of areas f o r future  Special Characteristics  (a)  characteristics'  by a d i s c u s s i o n o f  i n s i g h t s o r ' l e s s o n s ' t h e J a p a n e s e c a s e may h o l d  brief discussion  i f not  l e s s u n i v e r s a l i s t i c than a r e  the  1.  CONCLUSIONS  a s r e g a r d s some  Finally,  there i s a  research.  o f t h e Japanese Case  F a v o u r a b l e Domestic Environment !• E x a m i n a t i o n o f p o s t w a r J a p a n e s e TT p o i n t s up t h e i m p o r t a n c e  of  Japan's e a r l i e r ,  prewar,  h i g h l y f a v o u r a b l e t o TT. remained a n a t i o n cohesiveness,  development  which made f o r an e n v i r o n m e n t  Despite the destruction  o f wartime,  o f c o n s i d e r a b l e c a p a c i t y and p o s s e s s e d s t i l l ,  pride,  and a m b i t i o n  since the M e i j i Restoration.  which had s p u r r e d J a p a n e s e  In fact,  of. .much o f J a p a n ' s i n d u s t r y was, i t s e l f , which t h e n a t i o n Thus,  d e s i r e and t h e c a p a c i t y t o a c q u i r e  t e c h n o l o g i e s was p r e s e n t - added  to  an i n d u s t r i a l  created  on t h e d e s t r u c t i o n  dramatic evidence of the extent  industrial  factors  development  had b o t h a d j u s t e d t o and came t a depend an i n d u s t r y .  both a s t r o n g  'refit*  the national  the hardships of a subsistence  l e v e l o f e x i s t e n c e i n t h e immediate p o s t w a r f o l l o w i n g  to  Japan  plant  t o which was t h e n e c e s s i t y  h e a v i l y damaged i n  an e n v i r o n m e n t p a r t i c u l a r l y  advanced  wartime.  favourable t o TT.  A l l of these  -  (b)  Benign The  central role  o f t h e USA  f a v o u r a b l e t o TT.  t h e US  presence  geo-political  -  I n t e r n a t i o n a l Environment  e n v i r o n m e n t was military  109  sense  The  i n Japan's postwar  importance  the Japanese alignment  to Japan.  superiority,  would seem t o have s u p p o r t e d  experienced that  output  Certainly,  t h e USSR has  may  even g r a n t i n g i t s t e c h n o l o g i c a l Japanese t e c h n o l o g i c a l develop-  that of i t s a l l i e s ,  support  d e r i v e d from  new,  imported,  of r e l a t i v e l y  early  technologies.  which have  free  support  international  to the business p o t e n t i a l s  (c)  Large The  and  foreign  l a r g e p o p u l a t i o n o f J a p a n can  in  postwar TT.  J a p a n came more and  on  direct  i t s own  This  terms;  investment.  burden.  In t h e e v e n t ,  be v i e w e d , o f c o u r s e ,  and  given i t s high  adaptation to i n d u s t r i a l i z a t i o n ,  as r e g a r d s  of l a r g e - s c a l e ,  of technology  now.  S i z e of the Domestic Market,  a blessing shaping  international  i n non-western c o u n t r i e s t h a n  Japanese a c q u i s i t i o n  a p o t e n t i a l or a c t u a l of education  Finally,  1960's seems t o have been f a r l e s s  i s t o say, v i a l i c e n s i n g r a t h e r t h a n  evolved  seems t o have  have h e l p e d Japan s e c u r e a c c e s s t o o f f s h o r e m a r k e t s f o r t h e  have f a c i l i t a t e d  that  supported  So t o o , t h e US  b u s i n e s s i n t h e 1950's and attuned  t h e US,  w i t h t h e US  broader,  p r e s s u r e s t o make t h e i r development complement and  o f t h e USSR.  t r a d e may  a s s o c i a t e d with  has been mentioned, but even i n t h e  s u p p o r t e d TT  ment more t h a n  o f TT  international  postwar TT.  In any  mass-production,  and  been  i t p l a y e d a major  role  progressed,  e n v i r o n m e n t amenable t o t h e  consumer-oriented  c o u n t r i e s , most p a r t i c u l a r l y  w h i l e many c o u n t r i e s p o s s e s s  levels  probably  F o r , as J a p a n e s e p o s t w a r development  more t o p r e s e n t an  i n the developed  case,  i t has  as  kinds  technologies i n t h e USA.  Thus,  t h e t e c h n i c a l e x p e r t i s e t o a c q u i r e many  a d v a n c e d U S - d e v e l o p e d t e c h n o l o g i e s t h e y o f t e n do  not have t h e  potential  - 110 mass market t o j u s t i f y  doing  so.  I n c o n t r a s t t o t h i s , J a p a n h a s , by now,  r e a c h e d t h e p o i n t where most s i g n i f i c a n t US c o m m e r c i a l i n n o v a t i o n can immediately  find  (d)  a place i n Japanese i n d u s t r y .  Antipathy The  to Foreign  high  level  D i r e c t Investment  o f Japanese a n t i p a t h y  i n v e s t m e n t has been much r e m a r k e d . limit Japan.  major r o l e licensing  cultural  and l i n g u i s t i c  efforts to  o f FDI i n  b a r r i e r s have a l s o  C l e a r l y , however, J a p a n e s e a n t i p a t h y  in limiting  t o F D I has p l a y e d  a  t h a t form o f TT and i n e n c o u r a g i n g t h e use o f  arrangements.  official  manifestation  of t h i s  l i m i t i n g F D I were, however, o n l y enduring  individual had  direct  As we have i n d i c a t e d , f o r e i g n i n d i f f e r e n c e t o t h e J a p a n e s e market  i n h i b i t e d FDI.  and  So t o o have been o f f i c i a l  and c o n t r o l s u c h i n v e s t m e n t and t h e a c t u a l low l e v e l  as w e l l a s r a t h e r h i g h  The  to foreign  antipathy  a reflection  i n r u l e s and r e g u l a t i o n s  o f a much more  pervasive  t o ' o u t s i d e r s ' which e x i s t s a t t h e l e v e l  and group t h r o u g h o u t J a p a n e s e s o c i e t y .  been an absence o f f o r m a l  mode, t h e r e  antipathy  and o f f i c i a l  T h u s , even i f t h e r e  c o n t r o l s on TT v i a t h e F D I  has been, and r e m a i n s , a p e r v a s i v e  and e m o t i o n a l  antipathy to  FDI  which i n h i b i t s  in]  t h e p s y c h o l o g i c a l and economic a t t i t u d e s o f t h e i n d i v i d u a l s who would  be t h e p r o s p e c t i v e has in  i t . This antipathy  of the  employees o f f o r e i g n s u b s i d i a r i e s .  been f a r g r e a t e r economic t h e o r y  formal  2.  extends t o ( o r i s , perhaps,  t h a n would be t h a t o f an a n t i p a t h y  Thus, i t s impact grounded  o r i d e o l o g i c a l . n a t i o n a l i s m and m a n i f e s t e d  Many a s p e c t s  solely  merely i n  l a w s and r e g u l a t i o n s o r i n t h e a t t i t u d e s o f a l e a d e r s h i p  " L e s s o n s " from t h e J a p a n e s e  rooted  'elite'.  Experience  o f the Japanese experience  w i t h TT - i n c l u d i n g some  - Ill  of the " s p e c i a l  characteristics"  o f some g e n e r a l i t y .  (a)  -  discussed  The f o l l o w i n g  seem p a r t i c u l a r l y  T e c h n o l o g y T r a n s f e r and N a t i o n a l C l e a r l y , J a p a n has undergone  in  above - seem t o p r o v i d e  the t h i r t y  significant.  Identity  an enormous amount o f  y e a r s s i n c e t h e end o f World War Two.  This  To  some major e x t e n t t h e s e changes a r e r e l a t e d  t e c h n o l o g i c a l development as r e g a r d s t h e major  change,  clearly  of  t o Japan's  "and t h e TT which h e l p e d t o f u e l  postwar c u l t u r a l  change  i s most  e v i d e n t i n t h e m a t e r i a l and p o p u l a r c u l t u r e and i n t h e p a t t e r n life.  insights  it.  daily postwar  Indeed,  t o a mass-consumer  society,  the l i n k with imported technology i s extremely c l o s e . W h i l e J a p a n has changed become l e s s  'Japanese'.  only s u p e r f i c i a l change,  change  however, i t has n o t i n any f u n d a m e n t a l  I n some c a s e s t h e t r a d i t i o n a l  w h i l e , where t h e r e has been more  i t has by and l a r g e been  framework.  Thus, g i f t s ,  o f young  men  o f t o d a y may  differ  providing  and e m o t i o n a l i n t e r p e r s o n a l Just  expectations  w i d e l y from those of t h e i r f a t h e r s still  seek t o - f u l f i l l  'lifetime'  security  them w i t h i n  and a d e g r e e o f  25 a close  content not found i n other developed n a t i o n s .  as e a r l i e r J a p a n e s e development  evidence that  of imported  A g a i n , w h i l e t h e a s p i r a t i o n s and  o r 30 y e a r s ago, t h e v a s t m a j o r i t y c o r p o r a t e environment  institutional  c o n t i n u e t o be g i v e n f o r t r a d i t i o n a l  persons - with the s u b s t i t u t i o n  'sake'.  undergone  substantive  adaptable to the e x i s t i n g  f o r example,  reasons to the t r a d i t i o n a l whisky f o r Japanese  ways have  sense  industrialization  p r o v i d e d t h e most d r a m a t i c  allows f o r considerable c u l t u r a l  diversity,  so t o o , t h e postwar t r a n s f o r m a t i o n t o a f f l u e n c e s u g g e s t s a t e n d e n c y t o cultural  diversity  o f t h e development  r a t h e r than c u l t u r a l process.  c o n v e r g e n c e even a t t h e  frontiers  - 112  (b)  N a t i o n a l G o a l s and T e c h n o l o g y T r a n s f e r The  technological and  Japanese  articulation  however, was  Perhaps  o f t h e postwar the f a c t  g o a l imposed from  above but was, importance  revolution  by t h e USA  In  w i t h TT  particular,  eliminated  The  o f such b r o a d  and  absence  o f such  r e l a t e d TT  but a l s o t o t h e p u b l i c  TT  investment.  at  will  thus, immediately great.  certainly  not  public  i n t h e postwar  be d i r e c t l y  support,  i s of  'selling'  those  involved i n the  large.  versus Foreign D i r e c t  p r i m a r i l y by means o f l i c e n s i n g  direct  throughout  Thus, i n the  s h o u l d be a t t a c h e d t o  p l a n s n o t o n l y t o t h o s e who  Japan  t h a t broad  a p p r o p r i a t e to those g o a l s .  support, importance  Licensing  'official'  undoubtedly  by t h e government o r b u r e a u c r a c y ,  g o a l s -, and  (c)  affluent  assurances.  c a s e would s u g g e s t , t h e r e f o r e ,  i n e n c o u r a g i n g TT  industries More  an  o f development t o t h o s e  - though  Paper  o f i m p o r t i n g t e c h n o l o g y much more t h a n  governmental  n o t mere g o a l s e t t i n g  importance  s u p p o r t f o r - and,  such a s s u r a n c e s would have r e d u c e d  - the perceived r i s k s  Japanese  not merely  d e c i s i o n s i n t h e b u s i n e s s w o r l d was  would mere ' o f f i c i a l ' ,  Economic White  i n consumption.  was  clear  example o f  r a t h e r , ,a g o a l w i d e l y a c c e p t e d  a s s u r a n c e s as t o - t h e b a s i c d i r e c t i o n concerned  of  t h a t the g o a l of a c h i e v i n g the  society typified  The  t h e 1956  that  o f d e v e l o p i n g t h e consumers goods  consumer-oriented  the n a t i o n .  by t h e p r e s e n c e  t h e most s t r i k i n g  o f s u c h g o a l s was  the importance  heralded the s t a r t  e x p e r i e n c e r e i n f o r c e s t h e view i s facilitated  national goals.  which emphasized  inportant,  postwar  development and TT  articulated  the o f f i c i a l  and  -  Investment  p e r i o d managed a major p r o c e s s o f and w i t h o u t any  large-scale  inward  foreign  I t does n o t , however, s t a n d as an u n m i t i g a t e d  testament  - 113  to the f e a s i b i l i t y  of a national  -  p o l i c y t o e n c o u r a g e TT  while  inhibiting  FDI. In t h e f i r s t not possess possessed  p l a c e , o f c o u r s e , most o f t h e l e s s - d e v e l o p e d c o u n t r i e s do  anything near the t e c h n o l o g i c a l  by J a p a n a t t h e end  of longer-term  foreign  presence  same o t h e r , more l i m i t e d , inevitable  i f TT  o f World War  form  and  industrial  Two.  F o r them, some form  -whether t h r o u g h  FDI  o r by means o f  o f management p r e s e n c e  i s to take place at  - i s probably  all.  However, even where t h e n e c e s s a r y i n d u s t r i a l  and  technological  p r e r e q u i s i t e s a r e p r e s e n t , as i n most o f t h e d e v e l o p e d rapid  internationalization  many p o t e n t i a l  s u p p l i e r s of technology  c o n s i d e r i n g t h e FDI  countries,  o f b u s i n e s s i n t h e 1960's may less willing  postwar p e r i o d t o s e t t l e f o r a simple l i c e n s i n g first  alternative  than  more s e r i o u s l y .  Finally,  and  has  been t h e c a s e i n t h e  a technology w i l l  i n f o r m a t i o n and  and  Thus the  this  sense,  o f FDI  and  employed.  participation  network o f a m u l t i n a t i o n a l  t o make TT  the c e n t r a l r o l e trade  potential  be s m a l l e r o r  In many c a s e s  may  may  be  one  firm.  s i z e of the domestic  via licensing  on page 114)  o f TT  Where  i n the worldwide p r o d u c t i o n  more f e a s i b l e .  p l a y e d by t h e J a p a n e s e t r a d i n g  ( s e e t a b l e 27  as  r e q u i r e a s u p p o r t i n g i n t e r n a t i o n a l network o f  In the Japanese case, the l a r g e in  without  resource supply i f i t i s to operate e f f i c i e n t l y .  some form  marketing  earlier  past.  t h e s e c o n d i t i o n s do n o t e x i s t , t h e o n l y f e a s i b l e f o r m involving  i n the  most g e n e r a l l y , many t e c h n o l o g i e s r e q u i r e a c c e s s t o a  l a r g e market i f t h e y a r e t o be e f f i c i e n t l y well,  the  have made  arrangement  s u p p l y o f some t e c h n o l o g i e s f o r t r a n s f e r v i a l i c e n s e may more c o n s t r a i n e d t h a n  background  market In  served,  addition,  company i n h e r  have p r o v i d e d many o f t h e  international multi-  -114T a b l e 27. Japan's Top Ten G e n e r a l Tradng Companies: Share o f E x p o r t s and Imports, Turnover as % o f G.N.P. a) Share o f E x p o r t s Year  1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1960-1969  E x p o r t s (A)  Exports v i a "Top Ten"(B)  "A  6,924 7,304 8,861 10,370 13,480 16,581 18,636 19,726 23,783 28,395 (4.16)  14,817 15,555 18,032 20,289 25,873 31,406 35,848 38,786 49,381 60,523 (4.08)*  B/A  46.7 47.0 49.1 51.1 52.1 52.8 52.0 50.9 48.2 46.9  b) Share o f E x p o r t s  V  Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1960-1969  E x p o r t s (A)  B/A  ' Exports v i a Top Ten(B)  7  10,134 13,394 12,724 16,439 18,094 19,569 23,416 28,252 30,191 35,878 (3.54)  16,776 21,632 20,239 26,089 28,515 30,301 36,068 43,423 47,844 57,618 (3.44)  60.4 61.9 62.9 63.0 62.0 64.6 64.9 65.1 63.1 62.3  c) Comparison of Turnover w i t h G.N.P. Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1960-1969  G.N.P. 162,070 198,528 216,959 255,759 295,305 326,504 381,179 447,668 527,803 625,500 (3.86)  (A)  -Turnover o f "Top Ten"(B) 39,808 50,089 52,483 67,344 79,164 86,543 106,146 117,213 133,746 167,062 (4.19)  * Figures i n brackets indicate r a t i o  B/A  % 24.6 25.2 24.2 26.3 26.8 26.5 27.8 26.2 25.3 26.7  1969/1960.  Source: A r i t a , Kyosuke Sogo Shosha (General T r a d i n g Companies)Japanese - Tokyo, Nihon K e i z a i Shimbunsha, 1970. p.21.  - 115 national  capabilities  otherwise It  have made TT  i s this latter  large,  demanded by  indigenous,  some o f t h e  imported  v i a simple  point - the  t e c h n o l o g i e s which  licensing  arrangements  implied potential  t r a d i n g companies t o d e v e l o p  special  e x p e r t i s e and  companies - which may  capabilities  h o l d t h e most g e n e r a l  inroads  (d)  of  and  possessed  lesson f o r nations  extremely  competitive  the  to Japan.  limiting  of the  environment  prime .motive f o r c e s  encouraging  W h i l e some o f t h e o r i g i n s o f t h i s  commitment t o t h e  competitive  same t i m e  seeking  domestic business  l a y i n s u c h u n i q u e , J a p a n e s e , f a c t o r s as t h e (and  by m u l t i n a t i o n a l  and T e c h n o l o g y T r a n s f e r  would a p p e a r t o have been one p o s t w a r TT  provide to industry  FDI.  Competition The  infeasible.  f o r a s m a l l number o f  t o e n c o u r a g e t e c h n o l o g i c a l development w h i l e , a t t h e the  would  competitive  l i f e t i m e employment  f i r m which i t c r e a t e s ) t h e f a c t  e n v i r o n m e n t e n c o u r a g e d TT  has  relevance  that  beyond t h e  spirit  system a  Japanese  case. It  i s t r u e , of course,  that r e s t r i c t i o n s  a v a i l a b l e t r a i n e d personnel structure  infeasible  may  o f market s i z e and  make a c o m p e t i t i v e ,  i n many n a t i o n s .  on  the  multi-firm industrial  M o r e o v e r , t h e r e i s no r e a s o n  to  b e l i e v e t h a t s t r o n g c e n t r a l government e f f o r t s t o see t h a t t e c h n o l o g i c a l development i s m a i n t a i n e d industries given  the  c a n n o t be  in a specified  and  limited  number o f  s u c c e s s f u l , even i n a m o n o p o l i s t i c  a d m i n i s t r a t i v e and..other r e s o u r c e s  necessary  crucial  environment  -  t o impose such  an  effort.  Nevertheless, ongoing  process  the Japanese case  would s u g g e s t  of t e c h n o l o g i c a l upgrading  t h a t , i f a widespread  i s desired, nothing  i s so  and  certain  -  and e f f i c i e n t  a  -  1 1 6  means t o promote  i t as t h e development  and  o f a c o m p e t i t i v e e n v i r o n m e n t - whether t h e o r i g i n s o f t h a t  maintenance competition  are  domestic or i n t e r n a t i o n a l .  (e)  T e c h n o l o g y T r a n s f e r and t h e R o l e o f Government Government and t h e b u r e a u c r a c y have p l a y e d  role  i n postwar Japanese development.  o f government  activity  was  too, that the  t o encourage t e c h n o l o g i c a l  t h e TT which t h i s i m p l i e d . which, i n f a c t ,  I t i s clear,  The  development  e x t e n t t o which t h e h i g h l e v e l  t o o k p l a c e can be viewed as a ' r e s u l t '  n o l o g y development  a very prominent  i n t e r m s o f what might be g e n e r a l i z e d  government-business r e l a t i o n s Japanese c u l t u r a l m i l i e u other s e t t i n g s .  seem t o be much more an a s p e c t  Another aspect discriminatory  for application  n o t i n a b u r e a u c r a t i c vacuum  analysis,  will  be  determine the success  policies.  o f J a p a n e s e government  and s e l e c t i v e  p o l i c y - t h e w i l l i n g n e s s t o be  i n t h e encouragements  given to industries  W h i l e t h e r e were some g e n e r a l ,  s p e c t r u m , p o l i c i e s which u n d o u b t e d l y e n c o u r a g e d t e c h n o l o g i c a l  rather,  government  w i t h t h e p e r s o n s and i n d u s t r i e s t h a t w i l l  a l s o seems t o be i n s t r u c t i v e .  and TT  Japanese  of the  They do s u g g e s t however t h e v a l u e o f h a v i n g  - and w h i c h , i n t h e f i n a l of those  from t h e J a p a n e s e  than they are a g e n e r a l "formula"  but i n c l o s e c o n s u l t a t i o n  or f a i l u r e  tech-  decisions.  i n t e r a c t i o n s which c h a r a c t e r i z e  p o l i c y - m a k i n g t a k e p l a c e so f a r as p o s s i b l e ,  affected  o f TT  p o l i c i e s i s l e s s e v i d e n t - i f o n l y because such  e x p e r i e n c e , t h e c l o s e and complex  in  and  o f government  p o l i c i e s were o n l y one o f t h e f a c t o r s which i m p i n g e d on TT Moreover,  intent  i n most, i f n o t a l l ,  broaddevelopment  o f J a p a n e s e i n d u s t r y i t i s not t h e s e b u t ,  t h e more f o c u s s e d e f f o r t s  o f postwar;  policy to give  -  special  -  consideration  and  117  -  a t t e n t i o n t o s e l e c t e d i n d u s t r i e s which seem most  characteristic. In t h i s r e s p e c t ,  the  presence of l a r g e , m u l t i - i n d u s t r y  g r o u p i n g s i n Japan may  have made such d i s c r i m i n a t o r y  Such c o r p o r a t e  groupings,  the  impact  favourable  them t h a n  i s the  Nevertheless,  to  given  the the  policies  such p o l i c i e s  of p o l i c y but,  of s e l e c t i v e p o l i c i e s ,  industrial  development p o l i c i e s , discriminatory  i n - s o - f a r as t h e y r e c e i v e  Future  not by  be  and,  mollified  co-opting  the  with the  i n so  has,  foreign brief  relative  industrial  support  and  technological  view t h a t ,  second, t h a t  firsts  potential  weakening t h e  opposition  s e l e c t i v e impact  potential opposition  i n d i c a t e d some q u e s t i o n  to p o l i c y  second, with the r e l a t i v e  The  o f t h e s e two  change.  We  that  i t  by  has  a r e a s t o be  of  such q u e s t i o n  a r e a s seem  and  deal,  s t u d y and  i m p o r t a n c e o f government p o l i c y and  and,  discussion  Two  f o r further research  sources of t e c h n o l o g i c a l  (a)  to  nations.  p e r h a p s , r a i s e d more q u e s t i o n s  d o i n g , i t has  appropriate  s t i m u l a t i n g TT  more l i a b l e  and  i n t e r e s t i n i t f o r them.  more f u n d a m e n t a l i m p o r t a n c e t h a n o t h e r s . particularly  by  adverse  Research  This research answered, but,  both the  Japanese e x p e r i e n c e urges the  e m p h a s i z i n g , o r c r e a t i n g , an  3.  p o l i c i e s more f e a s i b l e .  i n many o t h e r  necessity of focussing  are a d v i s e a b l e  should  rather,  "establishment"  are  corporate  first,  'market f o r c e s ' i n  importance of domestic conclude, t h e r e f o r e ,  and  with  issues.  R e l a t i v e I m p o r t a n c e o f Government P o l i c y and  'Market  Forces' J a p a n ' s postwar development i s r e p u t e d t o owe  much o f i t s  a  - 118  -  s u c c e s s t o the p o l i c i e s of the Japanese regards the s p e c i f i c  government and b u r e a u c r a c y .  area of t e c h n o l o g i c a l  t h e p r e s e n t s t u d y has shown a h i g h l e v e l and  involvement  i n these s p e c i f i c  tax provisions,  and  and  i n t h e postwar  implemented There  which  substantially  A multiplicity  however, t o be no  single policy  accounts f o r the high l e v e l  much o f t h e a p p a r e n t  which., c o n s t i t u t e s J a p a n e s e polices,  Alternatively,  As was  monetary, and perhaps  o f TT  even  were d e v i s e d  or set of and  policies  technological  suggested e a r l i e r ,  this  policies  making t h a n i t does t o any  of the  however, t h e answer may impact  l i e i n t h e impact  chapter.  o t h e r p o l i c i e s which  I t may fashion  concerned  a t TT  w i t h TT  o f o t h e r , more g e n e r a l and p e r v a s i v e i n d u s t r y and  might  foreign  add t h o s e government  relative  TT  and  It  seems however, t h a t  technological  o u t i n an impact  or  - may  n a t u r e and  relative  one  is likely  importance  more  or  quantitative  o f f a c t o r s b e a r i n g on J a p a n ' s  t o shed  have  development.  .econometric  t o draw some c o n c l u s i o n s as t o t h e r o l e  1.  fiscal,  - w h i l e n o t aimed p r i m a r i l y ,  o r t e c h n o l o g i c a l development  and  be f e a s i b l e t o s o r t  the l i k e l y  policies  Some such f a c t o r s a r e s u g g e s t e d i n s e c t i o n s  To t h o s e we  consciously,  o f such  had market i m p l i c a t i o n s f o r them f a r e x c e e d i n g t h o s e o f p o l i c i e s explicitly  may  and c o n s e n s u s - b u i l d i n g  i m p i n g i n g on t h e p r o p e n s i t i e s o f J a p a n e s e  of t h i s  regulations,  per se.  s u p p l i e r s t o engage i n T T . and 2 .  interest  of laws,  s u c c e s s o f c e n t r a l government  policy  h a v i n g been f a r l e s s t h a n t h e factors  well,  period.  more t o t h e o r g a n i c p r o c e s s o f c o n s u l t a t i o n  resultant  as  o f c e n t r a l government  areas.  advance e x p e r i e n c e d i n postwar J a p a n .  owe  and TT  o t h e r i n s t r u m e n t s o f p o l i c y b e a r i n g on TT  would a p p e a r ,  be because  development  As  o f government TT  more d i r e c t  light  o f t h e f a c t o r s i n postwar TT  postwar  policy. on  the  decisions  by  - 119 t h e development  o f a body  c a s e s t u d i e s appended such a  -  o f c a s e s t u d i e s o f c o n c r e t e examples  t o t h i s p a p e r a r e one r e s u l t  of a p i l o t  o f TT  (the  study f o r  project).  Whatever  a p p r o a c h i s a d a p t e d , however, i t i s o n l y by s u c h a s s e s s m e n t  t h e v a r i o u s f a c t o r s which, i n f a c t , r e l a t i v e i m p a c t t h a t we government  policy  i m p i n g e d on TT  d e c i s i o n s and  their  can e v a l u a t e t h e p u t a t i v e i m p o r t a n c e a s c r i b e d  i n Japan's postwar t e c h n o l o g i c a l  development.  to  At the  same t i m e as i t c l a r i f i e s t h e J a p a n e s e c a s e such a n a l y s i s s h o u l d s u b s t a n t i a l l y t o our u n d e r s t a n d i n g of t h e g e n e r a l  of  add  c a s e and o f t h e e x t e n t  t o which t h e J a p a n e s e e x p e r i e n c e h o l d s l e s s o n s f o r o t h e r s . (b)  The R e l a t i v e Importance Technological  o f D o m e s t i c and F o r e i g n S o u r c e s o f  Change  A s e c o n d , and more f u n d a m e n t a l , a r e a f o r r e s e a r c h not t o the i d e n t i t y but r a t h e r ,  and r e l a t i v e  As t a b l e 27 assessment changes  itself,  -  as a c a u s a t i v e f a c t o r i n  growth.  ( s e e page 120)  of t e c h n o l o g i c a l  indicates,  change  i n a set of f a c t o r inputs  o v e r t i m e w i t h changes in  i m p o r t a n c e o f f a c t o r s i m p i n g i n g on TT  t o t h e i m p o r t a n c e o f TT,  J a p a n ' s p o s t w a r economic  relates  one c o n v e n t i o n a l a p p r o a c h t o t h e  as a f a c t o r i n economic growth (eg. labour,  measures  c a p i t a l ) and compares them  i n some measure o f a g g r e g a t e o u t p u t ( e g . GNP).  Growth  o u t p u t u n a c c o u n t e d f o r by changes i n f a c t o r i n p u t s i s assumed t o r e f l e c t  •total  f a c t o r p r o d u c t i v i t y growth'  production function Such change  o r , i n o t h e r words,  due t o t e c h n o l o g i c a l  advance.  change  on  a n a l y s e s o f postwar J a p a n e s e e x p e r i e n c e i n d i c a t e t h a t has been a major,  economic g r o w t h . technological  As t h i s  The  i n the aggregate  i f not t h e p r i m a r y , s o u r c e o f J a p a n ' s  technological postwar  q u e s t i o n t h e r e f o r e a r i s e s as t o t h e o r i g i n s o f t h i s  change.  p a p e r ha-s i n d i c a t e d ,  one major s o u r c e o f t e c h n o l o g i c a l  change  -120-  T a b l e 28. Economic Growth Rates by Country and C o n t r i b u t i o n s of Component Sources (Annual Rates o f Change i n P e r c e n t ) ^ • ^ ^ C o u n t r y , x ime Growth"""""" r^JPeriod. Japan W.Germany Italy France U.S. U.K. V a r i a b l e and ^ " ^ " V Component Source \ 1955-1968 1950-1962 1950-1962 1950-1962 1950-1962 1950-1962  National Income Growth  10.1  7.26  5.96  4.92  3.32  2.29  Labour Input Contribution  1.31  1.37  .96  .45  1.12  .60  C a p i t a l Input Contribution  2.72  1.41  .70  .79  .83  .51  T o t a l Factor P r o d u c t i v i t y Growth Contribution  6.1  4.48  4.30  3.68  1.37  1.18  Source:  Kanamori, Hisao " Nihon no K e i z a i S e i c h o r i t s u wa Naze T a k a i Ka" ("Why i s Japan's Growth Rate High?") K e i z a i Bunseki No.31 (Oct. 1970) Tokyo, P l a n n i n g Agency, 1970. p.4.  Economic  -  has  121  -  p r o b a b l y been t h e i m p o r t a t i o n o f new  however, by no means proven  that  source o f postwar t e c h n o l o g i c a l logically  t e c h n o l o g i e s from  t h i s was advance.  abroad.  It i s ,  t h e major, l e t a l o n e t h e B e f o r e one  n e c e s s a r y t o examine p o t e n t i a l d o m e s t i c  can  sole,  so c o n c l u d e  sources of  i t is  technological  advance.  I n t h i s r e g a r d , t h o u g h no s y s t e m a t i c a t t e m p t this writer, new  i t seems v e r y l i k e l y  developments i n i n d u s t r i a l  t h e view t h a t i t was the primary  TT  that  such  technology  t o do so has been made by  an e x a m i n a t i o n  of the  i n p o s t w a r J a p a n would  - and n o t d o m e s t i c  inventive activity  s o u r c e o f t e c h n o l o g i c a l change.  The  thus f a r  major support  - which  was  unimpressive  improvement i n J a p a n ' s i n t e r n a t i o n a l b a l a n c e o f payments f o r t e c h n o l o g y , referred There  to e a r l i e r ,  provides i n d i r e c t  i s , however, a n o t h e r ,  technological diffusion  l e s s dramatic,  advance which may  industry.  industrial  The  inter-related  development, and  (or  t o such  'better') practices.  r a i s e d the TT  conducive  'average  does n o t a c c o u n t  To  i s the e x p l i c i t ,  t e c h n o l o g i e s from  segment o f J a p a n e s e  processes of urbanization,  improvement i n c o m m u n i c a t i o n s  diffusion  of the t e c h n o l o g i c a l  'total  change i t i s u n d o u b t e d l y  abroad  commercial  process  - particularly  has  level, growth'.  organic,  more d i f f i c u l t  t r a n s f e r o f new  be  'best'  factor productivity  p r o c e s s can be p a r t o f a s u b t l e ,  discrete,  and  p o s t w a r J a p a n would seem t o  t h e e x t e n t that' such a d i f f u s i o n  f o r Japan's postwar  process of s t r u c t u r a l  aggregate,  - the  p r a c t i c e ' t o a t e c h n o l o g i c a l l y more a d v a n c e d  Because such a d i f f u s i o n  than  this.  have been o f major i m p o r t a n c e  d i s t r i b u t i o n f l o w s t h a t have c h a r a c t e r i z e d particularly  of  source of o v e r a l l ,  of e x i s t i n g technologies to a broader  b u s i n e s s and clustered  evidence  to  assess  industrial  so, g i v e n t h e l a r g e body o f  official  -  data a v a i l a b l e  122 -  regarding the l a t t e r .  may. l i e , however, i n t h e a n a l y s i s change i n s p e c i f i c c a t e g o r i e s In  o f o v e r a l l s t r u c t u r a l and  o f b u s i n e s s and i n d u s t r y  p a r t i c u l a r , some form o f ' t o t a l f a c t o r p r o d u c t i v i t y  disaggregated t o the industry analysis  d i d not r e v e a l  productivity it  A p r o m i s i n g a p p r o a c h t o t h e problem  i n t h e postwar  l e v e l - might be v a l u a b l e .  I f s u c h an  some p o s i t i v e r e l a t i o n between t o t a l  factor technology  i n d i r e c t evidence o f the importance o f other,  domestic, sources of t e c h n o l o g i c a l  change.  period.  growth' a n a l y s i s  growth and t h e amount and q u a l i t y o f t r a n s f e r r e d  would c o n s t i t u t e  technological  -  - 123  -  NOTES 1  Kosabud, .•Richard  'The r o l e o f i n t e r n a t i o n a l t r a n s f e r o f t e c h n o l o g y i n  J a p a n ' s economic growth' 1973, 2  See,  i n Technological Forecasting  pp 395-406 (p 3 9 9 ) . Schumpeter,  J o s e p h The T h e o r y o f Economic  Harvard U n i v e r s i t y Press, 3  A s i m i l a r view i s i m p l i c i t is,  and S o c i a l Change. .5  see B u r n s , Tom  change.  (Cambridge;  1934). i n much o f K a r l Marx's w r i t i n g  however, much more e x p l i c i t l y  of t e c h n o l o g i c a l  Development.  - which  concerned with the s o c i a l  consequences  F o r some r e l e v a n t e x c e r p t s f r o m Marx on  ( e d . ) I n d u s t r i a l Man  (Harmondsworth;  Penguin,  this,  1973),  pp 35-42. 4  See, f o r example; of  s o c i o - e c o n o m i c and p o l i t i c a l  Review,  V o l L V I I I No.  F r e d e r i c k H., Development  5  1974,  5, p a r t  (Princeton,  a reanalysis'  Harbison,  ' L e r n e r ' s model o f  i n The J o u r n a l o f D e v e l o p i n g A r e a s  8,  p r o c e s s i n Tokugawa J a p a n ,  1959). B. J r . C o m p a r a t i v e P o l i t i c s :  ( B o s t o n , L i t t l e , - - B r o w n , 1966), see H o s e l i t z , B e r t F .  democracy'  pp 1184-1217;  S i g e l m a n , Lee  account of t h i s  Almond, G. A. and P o w e l l , G.  On t h i s  Economic  The A g r a r i a n O r i g i n s o f Modern J a p a n . ( S t a n f o r d ;  Stanford U n i v e r s i t y Press,  7  1 (Dec. 1968),  1970);  F o r an e x c e p t i o n a l l y l u c i d  Approach  i n The American  pp 525-536.  see S m i t h , T. C.  6  change'  'An e c o n o m e t r i c model  e t a l , Q u a n t i t a t i v e A n a l y s i s o f M o d e r n i z a t i o n and  modernization: July  Adelman, I . and M o r r i s , C.T.  i n Feinstein,  pp 22-24.  'Nationalism,  O t t o ( e d . ) Two  a Developmental  economic  Worlds  development  o f Change (Garden  and City,  - 124  New 8  Y o r k ; A n c h o r Books,  flostow,  W.  W. The  (Cambridge; Cambridge 9  1964), pp 249-267.  P e r h a p s t h e most i n f l u e n t i a l been,  On t h i s ,  example  i n t h e p o s t - W o r l d War Two  S t a g e s o f Economic Growth,  U n i v e r s i t y Press,  see f o r example;  see Second  ( K e n t , O h i o ; Kent S t a t e U n i v e r s i t y  T. The H i d d e n D i m e n s i o n  For a t h e s i s along these l i n e s ; Society  11  (Princeton  Moore, W.  (New  There i s ,  1974), pp  Giral,  own  op c i t . Achieving  (Englewood  Cliffs,  N.J.;  92-93.  forms o f i n d u s t r i a l  J o s e "Development  1966)  Van N o s t r a n d , 1 9 6 1 ) .  however, a view which a r g u e s t h e d e s i r e a b i l i t y  developing t h e i r  Press,  York; D o u b l e d a y ,  s e e , M c L e l l a n d , . D a v i d C. The  E . S o c i a l Change, Second e d i t i o n  Prentice-Hall, 12  N .J  edition  (ed.) Environmental S e t t i n g s  e s p e c . pp 131-164; Almond and P o w e l l C o m p a r a t i v e P o l i t i c s , 10  e r a has  197l).  Neghandi,." A. R.  in Organizational Functioning 1970); H a l l , Edward  -  technology.  of the  LDC  See, f o r example;  o f a p p r o p r i a t e c h e m i c a l t e c h n o l o g y : a programme  i n M e x i c o ' i n C h o i c e and A d a p t a t i o n  of Technology innPeveloping C o u n t r i e s  ( P a r i s ; ; OECD, 1974), pp 182-186 and  'Review  of discussions'  ibid.  pp 79-85. 13  It i s interesting  t o note t h a t  need n o t be i n t e r n a t i o n a l . March in  (p 25) t h a t  n o r t h e r n Canada  fixed like going  14  10, 1975  I t was  until  r e p o r t e d i n t h e V a n c o u v e r Sun  have some d i f f i c u l t y  a moose.  And  • c u l t u r a l boundaries  n a t i v e i n d i a n s w o r k i n g on highway  q u i t t i n g time because, skinning  transfers across  of  construction  i n adjusting to the idea of a  '. . . t h e y have been used t o d o i n g when you a r e s k i n n i n g  things  a moose you keep  t h e j o b i s done.'  See, f o r example;  Hahn, F . H.  and Matthews,  R. C. 0.  'The t h e o r y o f  on  - 125  economic growth:  a s u r v e y ' i n Economic J o u r n a l , V o l . 74,  Solaw,  R. M.  Review  of Economics  J.  ' T e c h n i c a l change  'Economic  March  1962,  innovation,  -  and t h e a g g r e g a t e p r o d u c t i o n  and S t a t i s t i c s ,  R u t t a n , V.  pp 596-606.  Review 15  'The  explanation  -  growth  see J o r g e n s o n ,  o f p r o d u c t i v i t y change' i n pp 249-283. approach see,  Wells,  o f E c o n o m i c s , V o l . LXXX, May  i n the 1966,  2, pp 190-207 (p 1 9 0 ) .  product l i f e - c y c l e  p r e d i c t i v e value  Vernon,  a p p r o a c h may  i t may  and t h e i r w o r l d - w i d e  18  of Economics,  ' i n t e r n a t i o n a l i n v e s t m e n t and i n t e r n a t i o n a l t r a d e  As a s e p a r a t e b u t r e l a t e d p o i n t , V e r n o n , the  on i n v e n t i o n ,  o f R e s e a r c h , G.S.B.A. H a r v a r d U n i v e r s i t y , 1 9 7 2 ) .  V e r n o n , R.  No  History,  The P r o d u c t L i f e - c y c l e and I n t e r n a t i o n a l T r a d e ( B o s t o n ;  product c y c l e ' i n Q u a r t e r l y J o u r n a l  17  v i s - a - v i s economic  F o r a d e t a i l e d d i s c u s s i o n of the product l i f e - c y c l e  Division  Schmookler,  o f Economic  i n Quarterly Journal  o f E c o n o m e t r i c S t u d i e s , V o l . 34, 1967,  L o u i s T. J r . ( e d . )  16  Z.  825-850;  F o r a d i s s e n t i n g view which m i n i m i z e s t h e  i m p o r t a n c e o f t e c h n o l o g i c a l change and G r i l i c h e s ,  in Journal  pp  function' in  pp 312-320;  'Usher and Schumpeter  and t e c h n o l o g i c a l change'  November 1959,  D. W.  V o l , 39, 1957,  sources of i n v e n t i v e a c t i v i t y * pp 1-20;  1964,  S o v e r e i g n i t y a t Bay  See, Gaps i n T e c h n o l o g y :  be l o s i n g  have as a r e s u l t  operations  himself,  has s u g g e s t e d  what d e s c r i p t i v e and  of m u l t i n a t i o n a l  and i n f o r m a t i o n  (Harmondsworth;  A n a l y t i c a l Report  corporations  networks.  P e n g u i n , 1973),  On t h i s ,  see  pp 109-236.  ( P a r i s ; 0ECD, 1970),  espec.  pp 180-236. 19  Ibid., p  198.  20  I b i d . , p 257,  21  See, US D e p t . o f Commerce, F a c t o r s A f f e c t i n g t h e I n t e r n a t i o n a l T r a n s f e r  pp 237-274 i n p a s s i m .  - 126 -  o f T e c h n o l o g y Among D e v e l o p e d Printing 22  O f f i c e , F e b r u a r y 1970),  An i n d i c a t i o n  K.  Economic Korean  p 9.  o f t h e v a r i e t y o f i s s u e s and t h e c o u n t r y t o c o u n t r y  variations i n their Kojima,  C o u n t r i e s . . ( W a s h i n g t o n ; US Government  p a r t i c u l a r s can be o b t a i n e d from t h e f o l l o w i n g :  and Wionczek, N I .  Development  S. ( e d s . ) T e c h n o l o g y T r a n s f e r i n P a c i f i c  (Tokyo; Japan Economic  Research Center,  1975);  N a t i o n a l Committee, 22nd S e s s i o n Committee f o r A s i a n and F a r  E a s t e r n A f f a i r s - I n t e r n a t i o n a l Chamber o f Commerce, T e x t s o f S p e e c h e s and R e p o r t s and I n v e s t m e n t Doc. •j^  and T r a n s f e r o f T e c h n o l o g y  No. 5 2 0 / X X I l / l . ) ( S e o u l ;  ICC-Korean  (background  paper,  N a t i o n a l Committee, 1974);  Development C e n t r e , C h o i c e r a n d A d a p t a t i o n o f T e c h n o l o g y ,  OECD,  op c i t .  and T r a n s f e r o f T e c h n o l o g y f o r S m a l l I n d u s t r i e s ( P a r i s ; OECD, 1 9 7 4 ) . ^ 23  I n t h i s r e g a r d , i t s h o u l d be n o t e d t h a t direct  same w r i t e r s s u g g e s t  i n v e s t m e n t may be t h e most e f f i c i e n t  example, C a v e s , productivity  farm o f TT.  Richard E. 'Multinational firms,  i n h o s t c o u n t r y markets',  foreign  See, f o r  c o m p e t i t i o n , and  i n Economica,  V o l . 41, No. 62,  May 1974, pp 176-193. 24  See V e r n o n ,  25  See i b i d ,  Sovereignity,  op c i t ,  pp 256-257.  f o r one o f t h e more r e c e n t and l u c i d  d i s c u s s i o n s o f t h e s e and  r e l a t e d -.issues. 26  This  i s discussed  i n K o b a y a s h i , Y o s h i a k i Showa K e i z a i s h i  h i s t o r y o f t h e Showa e r a ) - J a p a n e s e 27  The f i g u r e s  - (Tokyo; S o t t e k u s h a , 1975),  i n t h i s p a r a g r a p h -are from Yamamoto, Naboru  o f the-Economy and P o s t w a r  Expansion  (An economic pp 57 f f .  The M o d e r n i z a t i o n  (Tokyo; I n t e r n a t i o n a l  Association  f o r E d u c a t i o n a l I n f o r m a t i o n , 1973). 28  A more d e t a i l e d  discussion  o f business-government  interaction  can be  - 127  found  i n Kaplan, E. J . Japan:  ( W a s h i n g t o n ; US Department M. Y.  -  the Government-Business  o f Commerce, 1972)  '..Japan's M a n a g e r i a l System  and a l s o  Relationship i n Yoshino,  (Cambridge, Mass.; MIT  Press,  1968),  e s p e c . pp 162-195. 29  See,  f o r example;  A b e g g l e n , James  The J a p a n e s e F a c t o r y  P r e s s , 1958); Y o s h i n o , M. Y. op c i t ; B l u e -Collar.,  (Glencoe; Free  and C o l e , R o b e r t E .  (Berkeley; U n i v e r s i t y of C a l i f o r n i a ,  1971).  Japanese A  standard  J a p a n e s e - l a n g u a g e book on t h e s u b j e c t i s Hazama, H i r o s h i N i h o n T e k i ( J a p a n e s e Management) (Tokyo; N i h o n K e i z a i 30  G e n e r a l D. M a c A r t h u r , Reader  31  (New  and s t r u c t u r a l  pp  Japan  104-105.  'An e x t e r n a l m i l i t a r y  change'  1971).  q u o t e d i n L i v i n g s t o n , J . e t a l ( e d s . ) The  Y o r k ; Random House, 1973)  Spencer, D a n i e l L.  Shimbunsha,  Keiei  presence, technology t r a n s f e r  i n K y k l o s , F a s c v 3.,  1965  (Basel,  Switzerland),  pp 451-474. 32  Ibid.,  p  455.  33  See, Ando, Y.  K i n d a i Nihon K e i z a i s h i Yoran  (A Handbook o f modern  J a p a n e s e economic h i s t o r y ) - J a p a n e s e - (Tokyo; Tokyo D a i g a k u March, 1975), p 154. 34  See f o r example,  H a l l , G.  R.  and J o h n s o n , R.E.  'Transfers of United  S t a t e s a e r o s p a c e t e c h n o l o g y t o J a p a n ' ' i n V e r n o n , R. Factor 35  i n I n t e r n a t i o n a l Trade  ( e d . ) The T e c h n o l o g y  York; C o l u m b i a U n i v e r s i t y P r e s s ,  S p e c i f i c a l l y , M i t s u b i s h i Denki-Westinghouse, F u j i Denki-Siemens, Toshiba-G. E.  Following this,  generator construction 36  (New  Shuppankai,  1967),  Hitachi  t e c h n o l o g y f r o m G.  Arisawa, H i r o m i e t a l Nihon trial  i n 1953,  and  purchased thermal  E.  Sangyo H y a k u n e n s h i  - Gekan  (A l'OO y e a r  h i s t o r y o f Japan.Vol 2) - i n J a p a n e s e - (Tokyo; N i h o n K e i z a i p 42.  1970).  indusShimbunsha,  - 128  37  I t s h o u l d a l s o be mentioned  -  - though,  f o r obvious reasons i t i s d i f f i c u l t  to  document - t h a t t h e r e i s r e p u t e d t o have been a c o n s i d e r a b l e amount  of  o u t r i g h t , u n l i c e n s e d , copying of f o r e i g n technology.  example, might from  machines one  o f which  would be  a f o r e i g n s u p p l i e r with the o t h e r s being produced  manufacturer which was  r e q u i r e seven  - u s i n g t h e f o r e i g n o r i g i n a l as a model.  t h i s t o o k p l a c e i s unknown.  most t y p i c a l  o f t h e immediate postwar  provisions for releasing (i.e.  I t may  b e f o r e 1949-1950).  analogy to the s i m i l a r connection with the  be,  A project, f o r purchased  by a The  Japanese extent to  however, t h a t t h i s p a t t e r n  p e r i o d b e f o r e t h e r e were  f o r e i g n exchange t o a c q u i r e f o r e i g n  technology  T h i s i s , of course, the c i v i l i a n ,  p u b l i c works,  'copying  1  r e p o r t e d by S p e n c e r  ( n o t e 31.)  in  military.  38  A r i s a w a , H i r o m i e t al...  39  The  Nihon  Sangyo H y a k u n e n s h i - Gekan, pp c i t , pp 47-48.  m a t e r i a l i n t h i s paragraph  draws h e a v i l y on t h e d i s c u s s i o n i n  A r i s a w a , H i r o m i e t a l , . op c i t . 40  In t h i s , US (see,  was  Japan  Other data i n d i c a t e t h a t  the  t h e major s u p p l i e r o f t e c h n o l o g y t o t h e w o r l d i n t h e postwar  era  f o r example, OECD, Gaps i n T e c h n o l o g y ,  other developed of  i s not n e c e s s a r i l y u n i q u e .  foreign  c o u n t r i e s however, TT  direct  investment.  41  Japan's  technological  Mass.; MIT  P r e s s , 1974/,„p 28)  t h a t Japan  was  1974), p  alone  US  can l e a d t o an u n s u p p o r t e d c o n c l u s i o n  Nihon  technology.  no Kagaku Kogyo  i n d u s t r y ) r'dapanesjBM:•'fourth'.Bdi-tio'uv. 28.  form  ( s e e f o r example, Ozawa,  by f a r t h e major f o r e i g n u s e r o f US  r  o f d a t a on  of  c h a l l e n g e t o t h e West, 1950-1974 /Cambridge,  Watanabe,.- T o k u j i and H a y a s h i Y u j i r o Chemical  In t h e c a s e  most commonly i n t h e  Thus an e x a m i n a t i o n  r e c e i p t s f o r l i c e n s e s and r o y a l t i e s , Terumoto  was  op c i t ) .  (japan's  (.Tokyo; Iwanami  Shoten,  - 129 42  F o r t h i s r e a s o n , any s e r i o u s attempt t o measure t h e TT t e c h n o l o g i e s would  43  Qzawa, op c i t ,  have t o t a k e a c c o u n t o f f o r e i g n  c i t e s an E n g l i s h - l a n g u a g e v e r s i o n  concerning foreign  investment, the r e g u l a t i o n  ment o f t h e law c o n c e r n i n g f o r e i g n commission 44  Quoted  i n Japan  It i s interesting Diffusion  p o i n t s out t h a t FDI  Japanese r e s t r i c t i o n s  in full  suggests a d i f f e r e n t  of  as b e i n g aimed  of competition'.  development Thus,  competition  competition  action  himself,  F o r example,  47  Another p o t e n t i a l  Ozawa, op c i t ,  pp  and,  of  of this  of a  product  groups)  thus., m a i n t e n a n c e  or  interpretation  area.  54-55.  form o f government i n t e r v e n t i o n ,  i n c e n t i v e s f o r TT,  among  p o i n t s out the h i g h  i n export-oriented  at a high l e v e l  tech-  be a r g u e d l a t e r i n  ' c r e a t i v e c o m p e t i t i o n ' i s not a c o n v i n c i n g  46  He  in light  at the maintenance  However, as w i l l  (Tilton,  government m o t i v a t i o n s i n t h i s  direct  (Washington;  on F D I , government a d m i n i s t r a t i v e  degree o f i n t e r n a t i o n a l  of a  1950).  interpretation.  and e n c o u r a g i n g t e c h n o l o g i c a l  chapter, other factors  creation  i n A Guide t o  in his International  The Case o f S e m i c o n d u c t o r s  t y p e c o u l d be i n t e r p r e t e d  t e n d e d t o keep  investment  1950).  indigenous semiconductor manufacturers i n Europe.  this  enforce-  p r o v e d t o be a major f a c t o r i n d i s c o u r a g i n g  stagnation  'creative level  Law  to the  o f Finance,: Japan,  t o n o t e t h a t John E . T i l t o n  1971)  investment.  i n v e s t m e n t and f o r e i g n  (Tokyo; M i n i s t r y  Brookings I n s t i t u t e ,  nological  relating  pp 17-rlB, and r e p r i n t e d  of Technology:  direct  o f t h e law:  (Tokyo; I n d u s t r i a l Bank o f J a p a n ,  i n Ozawa, op c i t ,  Investment 45  law  o f management  a p p e a r s t o have been  many o f t h e i n c e n t i v e s p r o v i d e d f o r i n d u s t r i a l  the provision  little  used.  development  of  Of c o u r s e , and  - 130  -  m o d e r n i z a t i o n were tantamount t o a TT of the Industry  Rationalization  provisions f o r special  Law  accelerated  incentive. of 1 9 5 2 ,  With  o f up t o 5 0 / o on  depreciation  in  the postwar  assets.  p e r i o d o f an e a r l i e r ,  s i m i l a r nature f o r designated  'major  as w e l l ,  In a d d i t i o n ,  fuller  prewar, t a x exemption  economy, a t h r e e y e a r t a x - h o l i d a y system income d e r i v e d from new  were a l s o p r o v i s i o n s f o r exempting machinery direct  effect  o f e n c o u r a g i n g TT  The  equipment i n v e s t m e n t .  from  (Phd  customs d u t i e s equipment A s i d e from  p r o d u c e r s ' goods and  by m a n u f a c t u r e r s  the  they served to  t h u s had  o f such  and  the  secondary  p r o d u c e r s ' goods.  but unpublished, foreign  d i s s e r t a t i o n , WITT, I 9 6 0 ] . 1 9 6 3 and  a c c o r d i n g l y , we  will  on a r e t h e s u b j e c t o f t h e f o l l o w i n g not d w e l l , h e r e , on t h e  a t t i t u d e s c h a r a c t e r i z i n g TT the period  and  There  operations of n a t i o n a l f i r m s - A study of d i r e c t  D e v e l o p m e n t s from and,  of  national  devised f o r mining  s o u r c e on t h i s i s Hymer's o f t - c i t e d  International  49  system  made  i s d i s c u s s e d a t some l e n g t h i n A r i s a w a , H i r o m i e t a l , op c i t .  original  investment  use was  to the  e f f e c t s o f t h e s e programmes on t h e c o s t s o f TT,  This topic 48  was  intended f o r i n d u s t r i a l modernization.  e n l a r g e t h e market f o r new  a reduction  manufacturers'.  I n t h e c a s e o f goods deemed o f s p e c i a l i m p o r t a n c e  manufacturing  promulgation  f o r example, t h e r e were  equipment f o r t h e m o d e r n i z a t i o n o f i n d u s t r i e s and, i n t h e t a x r a t e on i n d u s t r i a l  the  policy  of i n t e r n a t i o n a l i z a t i o n  during that and  chapter  administrative  period.  liberalization  In b r i e f , from  however,  1 9 6 3 - 1 9 7 3  ( d i s c u s s e d i n c h a p t e r f o u r ) seems t o have w i t n e s s e d t h e emergence o f a b a s i c a n t i p a t h y t o FDI. basic antipathy, i t s e l f , postwar  period  and,  T h i s needs some q u a l i f i c a t i o n was  p r e s e n t from t h e e a r l i e s t  i t i s argued  i n chapter four,  however.  The  days o f t h e  can even be  viewed  - 131  as r e f l e c t i n g  -  a n a t i o n a l Japanese c h a r a c t e r i s t i c .  'emergence' o f t h i s a n t i p a t h y was part  on t h e p a r t o f f o r e i g n  firms.  became more a p p e a l i n g t o f o r e i g n  t h e e a r l y 1960's more and more o f them became i n t e r e s t e d investment i n Japan t h u s a r o u s i n g the u n d e r l y i n g consequence,  50  antipathy.  n o t a b l y t h e use o f a f a i r l y  51  Cole,  op c i t ,  playing  a  central  rigid  -  s e n i o r i t y s y s t e m and o f a ' c o n s e n s u a l '  See, f o r example,  c i t e s t h e example  attention  the r e f e r e n c e s i n note  o f w o r k e r s f r o m two  nearby  29.  factories  'catch' s i d e - b y - s i d e a t l u n c h hour f o r y e a r s without e v e r  becoming 52  As  p e c u l i a r i t i e s of the  J a p a n e s e employment system which have a t t r a c t e d Western  process.  firms in  1970's.  T h e r e a r e , o f c o u r s e , o t h e r and i n t e r - r e l a t e d  decision-making  Simply  in direct  J a p a n e s e a n t i p a t h y t o F D I became one o f t h e  i s s u e s o f t h e 1960's and  the  f a r l e s s a m a t t e r o f change on t h e  o f t h e J a p a n e s e t h a n i t was  p u t , as t h e J a p a n e s e market  Moreover,  a c q u a i n t e d w i t h one a n o t h e r .  T h e r e a r e some i n d i c a t i o n s t h a t the postwar p e r i o d  are f i n d i n g  a g r o w i n g number o f young some a s p e c t s o f t h i s  s e n i o r i t y ) l e s s c o m p a t i b l e t h a n i t was regards the  'permanent  people i n  system  (notably,  to e a r l i e r generations.  employment s y s t e m ' , i t s e l f ,  As  however, i t i s  i m p o r t a n t t o r e c o g n i z e t h a t - even f o r a p e r s o n whose p e r s o n a l i t y i s ill-suited  s y s t e m - t h e r e a r e p o w e r f u l economic  reasons, given  t h e J a p a n e s e b u s i n e s s e n v i r o n m e n t , f o r r e m a i n i n g i n one f i r m  f o r the  d u r a t i o n o f one's w o r k i n g l i f e .  undoubtedly  change 53  to this  over time i t w i l l  likely  Thus, w h i l e t h e s y s t e m w i l l do so o n l y  slowly.  T h i s t e n d e n c y f o r many f i r m s t o a l m o s t s i m u l t a n e o u s l y e n t e r emerging o r growth among f i n a n c i a l  i n d u s t r i e s has been  newly  s u p p o r t e d by p a r a l l e l  i n s t i t u t i o n s ~ e s p e c i a l l y the l a r g e  'city'  competition  banks.  The  - 132  .high d e b t - e q u i t y r a t i o . i n  -  J a p a n e s e companies  b o t h r e f l e c t s and m a i n t a i n s  c l o s e t i e s between banks and t h e i r c o r p o r a t e c u s t o m e r s . i n t h e l a t e 1950's and e a r l y 1960's,  t h e r e was  Particularly  considerable  inter-bank  c o m p e t i t i o n i n w h i c h e a c h bank s o u g h t t o e n s u r e t h a t t h e c l u s t e r c o r p o r a t i o n s dependent t h e newly emerging major market It  i n d u s t r i e s and, moreover,  share i n those  appears that  declined  upon i t f o r f i n a n c i n g  included that  a 'full  of  set  i t s group h e l d  1  of  a  industries.  i n recent years these bank-centered groups  have  somewhat i n i m p o r t a n c e i n p a r t b e c a u s e t h e s i z e o f some  f i r m s has come t o e x c e e d t h e c a p a c i t y o f any one f i n a n c i a l  institution  t o meet i t s needs and b e c a u s e o f t h e g r o w i n g i m p o r t a n c e o f i n t e r n a l financing. 54 . See, MITI, G a i k o k u G i j u t s u Donyu no G e n j o t o M o n d a i t e n  (Present  c o n d i t i o n s and i s s u e s o f f o r e i g n t e c h n o l o g y i m p o r t a t i o n ] - J a p a n e s e ( T o k y o ; MITI, 55  The  -  1962), pp 62-63.  c h a r a c t e r i z a t i o n o f t h e government's  r o l e v i s - a - v i s TT  ( o r , even,  v i s - a - v i s b u s i n e s s i n g e n e r a l ) as t h a t o f a m e d i a t o r i s perhaps instructive.  W h i l e MITI,  f o r example,  and power t o t a k e s t r o n g u n i l a t e r a l community it  ( t h o u g h p e r h a p s l e s s now  has n o t c h a r a c t e r i s t i c a l l y  manifestation  of  has t h e p r e s c r i b e d  action  than i n the p e r i o d  done s o .  In t h i s ,  One  one would  the business up t o t h e mid-1960's)  can view t h i s as a  the Japanese tendency t o a v o i d  and t o seek c o n s e n s u s - even on t h e p a r t agency.  affecting  direct  confrontation  of a responsible  n o t be t o t a l l y  responsibilities  wrong.  government  T h e r e i s , however,  a n o t h e r - and p e r h a p s more i m p o r t a n t - a s p e c t t o t h e 'law  key'  b e h a v i o u r o f MITI v i s - a - v i s t h e b u s i n e s s community. To  a very r e a l  e x t e n t t h e p e r v a s i v e and  profoundly  personal  - 133 i m p l i c a t i o n s of i n t e r - f i r m involved are  i s conducive  competition  to the  companies and  t o extreme f o r m s o f c o m p e t i t i v e  dangerous t o a l l those  charged nature  -  of the  i n v o l v e d and  competition  yet, again,  behaviour  party  role vis-a-vis As  of t h i s mediative  role  and  the ( n o n - d i c t a t o r i a l )  i t r e f l e c t s and  a degree o f r e s p o n s i b i l i t y towards the  regards  the  regards  subsequent d i f f i c u l t i e s  success  o f compromises a r r i v e d  r e i n f o r c e s the  contending  a t and,  organic  i n nature  problem a r e a s reach  56  i n t e r m i t t e n t and  a c r i t i c a l c o n d i t i o n conducive  A 1963  technology  had  20/o  initiative.  V/ernon, S o v e r e i g n i t y , op  special  case,  multinational  c i t . The  direction  See,  Science  (Technology  and  they conflict  had  Technology  trends:  research  59.  Japanese concern  regarding  o f t h e n a t i o n a l economy i s but  o f t h e more g e n e r a l i z e d c o n c e r n business.  w e l l before  o f J a p a n e s e f i r m s who  r e p o r t ) - J a p a n e s e - (Tokyo; J i g y o Kohosha, 1963), p  l o s s of c o n t r o l over  ongoing  r e c e i v e d a p r o p o s a l from a f o r e i g n company  ' Agency, G i j u t s u Doko C h o s a Hokokusho  See  t o be  business.  p r i o r to t h e i r t a k i n g the  57  The  t o open c o n f r o n t a t i o n and  r e p o r t i n d i c a t e d t h a t l e s s than  imported  as  d i s c r e t e with  u s u a l l y becoming a s u b j e c t o f c o n c e r n  between government and  p a r t i e s as  of whatever proximate cause.  r a t h e r than  mediator  by e x t e n s i o n ,  upshot of t h i s i s t h a t government-business r e l a t i o n s tend and  subordination.  business.  a corollary  on  to  ' m e d i a t i v e ' j work which f o r m s a l a r g e p a r t o f M I T I ' s  superior-subordinate relationship takes  highly  Thus,  - p r e f e r a b l y one  whom a l l p a r t i e s acknowledge some d e g r e e o f a l l e g i a n c e o r i s p r e c i s e l y such  which  because of the  are d i f f i c u l t to terminate.  t h e r e i s a need f o r some n i e d i a t i v e t h i r d  It  employees  o f most n a t i o n s  one, regarding  - 134 d i s c u s s e s t h i s i n op c i t ,  -  58  Vernon  59  C o n c u r r e n t l y , Japan acceded t o A r t i c l e Monetary  60  The  pp  189-223. 8 status i n the  International  Fund.  c a s e s t u d y which f o r m s a p p e n d i x 1. o f t h i s  informal relaxation  o f r e g u l a t i o n s was  paper s u g g e s t s t h a t  e v i d e n t as e a r l y  as t h e  such  late  1950's. 61  A summary o f t h e h i s t o r y  o f TT  liberalization  forms a p a r t  i n t r o d u c t i o n t o the y e a r l y Japanese-language p u b l i c a t i o n S c i e n c e and T e c h n o l o g y Agency,, (importation  62  of f o r e i g n  of the  of the  G a i k o k u Gi.jutsu Donyu Nen j i Hokoku  technology: annual r e p o r t ) - Japanese -  (Tokyo;  Ministry  of Finance, various  A brief,  b u t u s e f u l , E n g l i s h - l a n g u a g e r e f e r e n c e on t h e s e r e g u l a t i o n s  is  Setting  up i n J a p a n  years).  (Tokyo; I n s t i t u t e  of I n t e r n a t i o n a l  Investment,  1973). 63  P e r h a p s f o r e m o s t among t h e more i n t r a c t a b l e the t r u e  'internationalization'  Japanese c h a r a c t e r , n e s s , and a b i l i t y ,  itself.  informal obstacles to  o f t h e J a p a n e s e economy i s t h e  Despite the t r a d i t i o n a l  to accept f o r e i g n  'technics*  there i s the  l a c k o f any c o r r e s p o n d i n g w i l l i n g n e s s and a b i l i t y foreign  willingdistinct  t o accomodate a  presence i n t o the s t r u c t u r e o f Japanese o r g a n i z a t i o n s .  internationalization Domestically, t h i s foreign  Japanese  of Japan, i n t h i s  i s liable  The  s e n s e , has some d i s t a n c e t o go.  t o pose f a r more o f a p r o b l e m f o r  f i r m s d o i n g b u s i n e s s i n Japan t h a n i t i s f o r t h e J a p a n e s e  - despite t h e i r f e a r s to the contrary. particularly  i n the less-developed  been h e a v i e s t , t h i s  is liable  Internationally,  c o u n t r i e s where J a p a n e s e FDI  t o pose a major  management i n t h e y e a r s t o come.  however,  and  has  problem f o r J a p a n e s e  - 135  -  64  op c i t ,  65  See OECD, I n t e r i m R e p o r t o f t h e Committee (Paris;  66  on I n t e r n a t i o n a l ! E n t e r p r i s e s  OECD, 1 9 7 4 ) .  S c i e n c e and T e c h n o l o g y Agency, G a i k o k u G i j u t s u Donyu N e n j i Hokoku, op c i t ,  67  p 18.  1973,  p 13.  In f a c t ,  t h e N i h o n Kogyo Shimbun newspaper  o f August 5 t h , 1975  reported  on a t e c h n o l o g y management c o n f e r e n c e ( a t t e n d e d by r e p r e s e n t a t i v e s o f 52 major J a p a n e s e companies a t which i t was technological activities.  from a broad spectrum o f Japanese  a g r e e d t o implement  level  seem t o be a d i f f i c u l t  J a p a n ^ ' e s p e c i a l l y i n t h e more h o t l y  the i n d u s t r i e s , among f o r e i g n  p r o b a b l y depend as a whole,  feel  of  cooperative  goal t o achieve i n  c o m p e t i t i v e consumers  a great  such  goods  industries  d e a l upon t h e e x t e n t t o which  t h r e a t e n e d by t e c h n o l o g i c a l  developments  competitors.  68  Ozawa, op c i t ,  69  With t h e p o s s i b l e retail  at upgrading the  o f J a p a n e s e i n d u s t r i e s by means  T h i s would  and s u c c e s s w i l l  p l a n s aimed  industry)  p  110.  exception  t r a d e - as J a p a n e s e  o f some f i e l d s  in distribution  'rationalization'  -  especially  takes hold or concern  lessens. 70  See, f o r example,  MITI, Wagakurii K i g y o no K a i g a i J i g y o K a t s u d o , Showa  49 Nenpan ( O v e r s e a s b u s i n e s s a c t i v i t i e s e d i t i o n ) - J a p a n e s e - (Tokyo; M i n i s t r y 71  F i g u r e s a r e from i b i d . ,  72  Interestingly,  pp  o f Japan's e n t e r p r i s e s o f F i n a n c e , November  1974  1974).  75-77.  one r e c e n t s t u d y has s u g g e s t e d some t r a n s f e r o f 'management  t e c h n i q u e s ' f r o m J a p a n t o t h e USA.  See J o h n s o n , R. T. and O u c h i , W.  G.  'Made i n A m e r i c a - under J a p a n e s e management' i n H a r v a r d B u s i n e s s Review  - 136  September 73  - O c t o b e r , 1974,  -  pp 61-69.  See N i h o n K i g y o no K o k u s a i t e k i T e n k a i (The i n t e r n a t i o n a l advance  of  J a p a n e s e e n t e r p r i s e ) - J a p a n e s e - (Tokyo; M i n i s t r y o f F i n a n c e , 1973), pp  13-17.  74  Ibid,  pp 44-56.  75  Japan depends (1970) as  76  on f o r e i g n  compared  s o u r c e s f o r 83.5)4 o f i t s t o t a l  t o t h e US's  P a p e r on s c i e n c e and t e c h n o l o g y 1974)  77  needs  9.9)4 and West Germany's 45.0)4.  S c i e n c e and T e c h n o l o g y Agency^ Kagaku Gi.jutsu Kakusho,  o f F i n a n c e , 1974),  energy  Showa 49  (White  - J a p a n e s e - (Tokyo; M i n i s t r y  p 300.  S c i e n c e and T e c h n o l o g y Agency,  Kagaku Gi.jutsu Y o r a n , Showa 48  (Science  and T e c h n o l o g y Handbook 1973) - J a p a n e s e - (Tokyo; M i n i s t r y o f F i n a n c e , 1973), 78  pp 74-77.  Bureau o f S t a t i s t i c s , Ghosa Hokoku, Showa 48 i n J a p a n 1973)  79  The  Office  o f t h e Prime M i n i s t e r , Kagaku G i j u t s u  ( R e p o r t on t h e s u r v e y o f r e s e a r c h and  Kenkyu  development  - b i l i n g u a l - (Tokyo; N i h o n T o k e i K y o k a i , 1974), pp 116-117.  international  comparative f i g u r e s are l i k e l y  quite  misleading.  Payments f o r t e c h n o l o g y r e c e i v e d v i a t h e FDI form o f TT poorly, i f at a l l ,  i n t h e d a t a on e x p l i c i t  are r e f l e c t e d  payments f o r T T .  forms a h i g h p r o p o r t i o n o f t h e t o t a l TT t o t h e  Such TT  developed c o u n t r i e s of  E u r o p e and a low p r o p o r t i o n o f t h e TT t o J a p a n .  Similarly,  p r o p o r t i o n o f J a p a n e s e outward TT - which has r a p i d l y  a high  increased i n  r e c e n t y e a r s - i s i n t h e form o f FDI and i s not f u l l y r e f l e c t e d i n explicit  r e c e i p t s f o r TT.  Thus, d a t a on e x p l i c i t  f o r TT t e n d t o u n d e r s t a t e t h e  'payments'  and t o " ' u n d e r s t a t e r e c e n t improvements  payments and  o f d e v e l o p e d European  i n Japan's  'receipts*.  receipts countries  -  That  such d i s c r e p a n c i e s  137 -  can be i n t e r p r e t e d as r e f l e c t i n g  advance i s by no means a s e t t l e d of the i s s u e s i n v o l v e d and  a more r i g o r o u s  reference  question.  i s provided  critique  (see note-14).  technological  A good, b r i e f ,  i n t h e Kosobud r e f e r e n c e  can be f o u n d  i n the Jorgenson  discussion (see note l ) and G r i l i c h e s  -  138 -  TECHNOLOGY TRANSFER  CASE STUDIES  Case 1  P l a s - t e c h Company *  *  disguised  name  - 139 -  HISTORY OF SPECIFIC TT ( t e c h n o l o g y  Company  Background  I n I960, P l a s - t e c h Company and  transfer]  most d i v e r s i f i e d  o f T o k y o , J a p a n , was one o f J a p a n ' s l a r g e s t  producers of p l a s t i c s products.  The company  f o u n d e d i n t h e immediate p o s t w a r p e r i o d and had grown r a p i d l y in  the l a t t e r  h a l f o f t h e 1950's, when t h e company a c q u i r e d  as  one o f J a p a n ' s f o r e m o s t  'high g r o w t h '  Decision to enter V i n y l F l o o r T i l e Many o f t h e company's p r o d u c t s  companies.  Industry ( e g . PVC p i p e ,  a p e r i o d o f r a p i d growth.  enter the v i n y l  floor  company's e x i s t i n g technology possessed  tile  adhesives,  plastic  with  was  I n 195B, t h e company d e c i d e d t o  s i m i l a r technology.  i n v o l v e d was n o t p a r t i c u l a r l y  manufacturer in. order  panelling)  i n d u s t r y because o f i t s r a p i d growth and t h e  experience  the necessary  particularly  a reputation  f o u n d a p p l i c a t i o n i n t h e J a p a n e s e c o n s t r u c t i o n i n d u s t r y - which experiencing  was  Although the  complex and t h e company  e x p e r t i s e , i t was d e c i d e d  t o more r a p i d l y e n t e r  already  t o buy o u t an e x i s t i n g  production.  Accordingly, i n  September, 1958, t h e company p u r c h a s e d t h e equipment and t o o k on t h e personnel  of a  s m a l l p r o d u c e r , J a p a n T i l e Company.  equipment o f J a p a n T i l e was i n c o r p o r a t e d  to enter the v i n y l  tile  industry  originated. The  management  originating broad area the  and  i n t o t h e company's B u i l d i n g  M a t e r i a l s ' D i v i s i o n - where t h e i n i t i a t i v e had  The p e r s o n n e l  of this  division  had t h e p r i m a r y r e s p o n s i b i l i t y f o r  development and e x p a n s i o n p l a n s f o r t h e company w i t h i n t h e o f ' b u i l d i n g and c o n s t r u c t i o n ' .  impetus behind  a subsequent  This division  was a l s o t o be  (1959-1960) d e c i s i o n by P l a s - t e c h t o e n t e r  -  the  prefabricated  opment w i t h i n porating  had  previously  o f an  patterned,  uses of p l a s t i c s . the  'all-plastic  like  the  other  'utilitarian'  had  or  was  largely a reflection had,  non-  of  the  thus f a r , found i t s  (offices,  schools,  T h e r e was  a much s m a l l e r  p a r t l y because p r i v a t e h o u s i n g  construction.  In  a d d i t i o n , however, i t  within  t r a d i t i o n a l Japanese f l o o r i n g  'tatami'  - a t h i c k , somewhat 'ima'  dining,  bed-  and  less chilly  desireable home and, The  This  producing a  etc.)  had,  - where market  to  date,  the  was  a  than  reflection  home.  f o r Japanese P r i v a t e Housing  used i n t h e  was  years  house.  were dominant.  T h i s was  project,  u n v e i l i n g by Monsanto (U.S.A.) t h r e e  construction  Japanese s t y l e of l i v i n g  Flooring The  devel-  l e s s emphasis by government i n J a p a n ' s p o s t w a r r e c o n s t r u c t i o n  institutional  of the  p r o t o t y p e development  Vinyl floor tiling  considerations  p r i v a t e housing.  received  p r e c e e d e d by  J a p a n e s e m a n u f a c t u r e r s , was  major market i n i n s t i t u t i o n a l  in  d e c i s i o n was  This  display  1  tiling.  market t h e y were s e r v i n g .  utilitarian  This  t h e B u i l d i n g M a t e r i a l s D i v i s i o n o f a p r o t o t y p e house i n c o r -  been i n s p i r e d by  Plas-Tech,  -  housing i n d u s t r y . *  many n o v e l  itself,  140  'springy'  f o r homes i s e i t h e r b a r e wood  straw m a t t i n g .  a l l p u r p o s e room c o m b i n i n g t h e  rooms) b e c a u s e i t p r o v i d e d i n winter.  traditionally,  s i t directly  J a p a n e s e house b e i n g  bathroom, d i n i n g - k i t c h e n ,  on  the  T a t a m i was  functions  a softer surface  T h e s e c h a r a c t e r i s t i c s were  because t h e J a p a n e s e c u s t o m a r i l y  typical  a toilet,  (an  material  do  not  entryway, and  living,  t h a n wood  and  particularly  wear s h o e s i n s i d e  f l o o r o r on  constructed  of  typically  at the 'ima'.  thin  the  cushions.  time c o n s i s t e d Some o f t h e  of larger  * The d i v i s i o n c o u l d be s a i d t o have been q u i t e a g g r e s s i v e l y e x p a n s i o n - m i n d e d a t t h i s t i m e ( i n common w i t h much o f J a p a n e s e i n d u s t r y ) . The h o u s i n g s u b s i d i a r y . , . P l a s t e c h Homes, had became one o f J a p a n ' s l a r g e s t p r o d u c e r s o f p r e f a b r i c a t e d h o u s i n g by t h e 1 9 7 0 ' . s  /  -  houses might a l s o i n c l u d e western l i v i n g - r o o m , Vinyl t i l e  i n t h a t i t would be used f o r e n t e r t a i n i n g  In those r e l a t i v e l y  seemed t o be a t r e n d  room w i t h s o f a s , vinyl  of preference  f o r t h i s t o be d e c o r a t e d a s a  due t o i t s image o f 'western  both the q u a n t i t y  f o r the  few houses i n c o r p o r a t i n g  c h a i r s , e t c . and i n .these c a s e s ,  floor tiling  As  an 'osetsuma' - which might be compared t o t h e  had become t h e m a t e r i a l  dining-kitchen. there  141 -  there  guests.  e n t r y w a y and an osetsuma  'western-style  was some demand f o r  modernity'.  and q u a l i t y o f p r i v a t e h o u s i n g was g e n e r a l l y  t o be i n a d e q u a t e , i t was f e l t  within the construction-related  deemed  industries  t h a t J a p a n ' s r a p i d l y i n c r e a s i n g p r o s p e r i t y would soon l e a d - n o t o n l y rapid  increase  i n t h e amount o f p r i v a t e h o u s i n g c o n s t r u c t i o n  a qualitative shift playing  away from t h e u t i l i t a r i a n ,  an i n c r e a s i n g l y i m p o r t a n t  Some o f t h e v i n y l  tile  increased  This number  manufacturers  ( i n c l u d i n g T o y o L i n o l e u m - one  unsuitable This  felt  t h a t t h i s would l e a d t o a  was based n o t o n l y  tile.  on an a n t i c i p a t e d i n c r e a s e  o f h o u s i n g s t a r t s b u t a l s o on an e x p e c t e d i n c r e a s e  of western-style  'osetsuma' - where t h e t r a d i t i o n a l t a t a m i  b o t h i n t e r m s o f s t y l e and a b i l i t y  was p a r t o f a more g e n e r a l  - but a l s o t o  w i t h f a s h i o n a b i l i t y and s t y l e  p r i v a t e h o u s i n g market f o r v i n y l  expectation  to a  role.  o f t h e l a r g e s t companies i n t h e i n d u s t r y ) greatly  1  expectation  i n the  i n the popularity f l o o r i n g was  t o s u p p o r t heavy f u r n i t u r e .  that there  would be i n c r e a s e d  emphasis t h r o u g h o u t t h e house on s t y l e - i n c l u d i n g e n t r y w a y s and d i n i n g kitchens,  where v i n y l  Decision^  Acquire  The  tile  was a l r e a d y -  i n common u s e .  Technology  manager o f t h e B u i l d i n g M a t e r i a l s D i v i s i o n , Mr Y, was a member o f  the Board o f D i r e c t o r s  ( a s were a l l o t h e r  division  managers).  In t h i s  -  dual capacity, building  In it  view  abroad  to survey developments i n the  During these t r i p s  and l u x u r i o u s a p p e a r a n c e  being produced  -  he made o c c a s i o n a l t r i p s  materials industry.  popularity  142  he had been s t r u c k by t h e  of the multi-colour,  patterned  i n E u r o p e and t h e U.S.A.  of the expected  would be wise t o seek  changes i n t h e J a p a n e s e  h o u s i n g market, Mr Y  a q u i c k c o m p e t i t i v e advantage  The  i n advance o f t h e soon e x p e c t e d s h i f t  i n market  patterned  demand.  'Make' o r 'Buy* D e c i s i o n The  company f e l t  industry.  i t had been a l i t t l e l a t e i n e n t e r i n g  As a r e s u l t ,  the v i n y l  i t was e a g e r t o 'make up f o r l o s t t i m e . decision  t o 'buy-out*  an e x i s t i n g  f a c t u r e r and was a l s o a f a c t o r i n t h e d e c i s i o n t o p u r c h a s e ( o v e r an e s t i m a t e d p e r i o d produce In  patterned  addition,  substantial producing  Another process.  t h a t t h e market f o r v i n y l  tile  ( t o an emphasis on p r i v a t e h o u s i n g ) and r e s u l t  a more s t y l i s h  f o r those manufacturers  or luxurious product.  develop  f a c t o r was t h e u n c e r t a i n t y a s s o c i a t e d In p a r t i c u l a r ,  t h e r e was c o n c e r n t h a t successful,  v a l u e o f h a v i n g been p r o d u c e d  by i m p o r t e d  in a  t h a t time  was  development.  w i t h t h e development  even i f t h e development  the product, i t s e l f ,  i n t h e market a s would be t i l e s  would  capable of  This implied  and t h e r e f o r e f a v o u r e d TT r a t h e r t h a n  p r o j e c t was t e c h n i c a l l y successful  r a t h e r than  tile.  c o m p e t i t i v e advantage  the essence  manu-  o f two o r t h r e e y e a r s ) t h e i r own t e c h n o l o g y t o  t h e company f e l t  change v e r y soon  tile  This  1  a t t i t u d e accounts f o r the e a r l i e r  of  felt  o v e r t h e company's  many c o m p e t i t o r s by q c q u i r i n g t h e n e c e s s a r y t e c h n o l o g y t o produce tile  tiling  might  with the s t a t u s or  n o t be a s 'prestige'-  t e c h n o l o g y and d e s i g n s .  A c c o r d i n g l y , Mr Y recommended t o t h e b o a r d t h a t t h e company attempt t o  - 143 -  acquire foreign was  t e c h n o l o g y t o produce  and Assessment o f  R o l e o f t h e T r a d i n g Company On  this  recommendation  Technology  ('shosha ) 1  the b a s i s of c a t a l o g u e i n f o r m a t i o n from  decided to l i m i t  the s e r i o u s i n v e s t i g a t i o n  a trading  company i t was  of a v a i l a b l e technology to  two  companies - J o h n s - M a n v i l l e Company and E a g l e F l o o r P r o d u c t s Company  n e i t h e r o f which were known t o be i n t e r e s t e d The  responsibility  was  g i v e n t o Mr Mr M,  l i k e Mr  business t r i p abroad  f o r making t h e d e t a i l e d  Y's  assistant  Y b e f o r e him,  abroad.  - f o r one  manager, Mr was  at the time, called  barrier.  had  overseas  Mr M had  had  little  experience  exchange c o n t r o l s l i m i t e d abroad.  a  the  In a d d i t i o n , P l a s - t e c h ,  s u b s i d i a r i e s o r s a l e s o u t l e t s whose s t a f f A more f u n d a m e n t a l  studied English he  problem  a t s c h o o l and had  almost  no  was  had  the  language  a working  facility  could  knowledge  at a l l with  language.  Plas-tech s capacities far 1  c o n d u c t i n g b u s i n e s s abroad  c o n t r a s t t o the v a r i o u s Japanese t r a d i n g companies t y p i c a l l y both r e l a t i v e l y t h e i r r e g i o n and One  assessment  f a c e d w i t h c o n s i d e r a b l e p r o b l e m s on  of w r i t t e n E n g l i s h w i t h i n h i s f i e l d , t h e spoken  technology.  and  L i k e most J a p a n e s e b u s i n e s s m e n , he  upon f o r a s s i s t a n c e . While  investigations  t h i n g , government f o r e i g n  no  i n s e l l i n g .their  -  M.  p o s s i b i l i t i e s f o r frequent business t r i p s  be  and  approved.  Investigation  US  patterned t i l e  had  o f f i c e s throughout  the world  'shosha'.  staffed  These  w i t h men  who  were  k n o w l e d g e a b l e r e g a r d i n g b u s i n e s s and .business p r a c t i c e s i n capable  of conducting b u s i n e s s i n E n g l i s h .  of the f u n c t i o n s of these overseas  t o e x p e d i t e and  companies, o r  were i n s h a r p  assist  staff  of the shosha  i n the b u s i n e s s a c t i v i t i e s abroad  was,  in fact,  o f businessmen,  such  - 144 -  as Mr M - who r e p r e s e n t e d c l i e n t shosha's variety  Japanese domestic o f such  shosha  (or potential  marketing  c l i e n t ) companies f o r t h e  and o t h e r s e r v i c e s .  t o market many o f i t s e x i s t i n g , /  P l a s - t e c h used  a  p r o d u c t s and e x p e c t e d t o  c o n t i n u e t o do s o . Accordingly, two  trips  cution,  one o f t h e s e s h o s h a  t o t h e U.S.A. ( i n I960) t h e s h o s h a  interpretation,  that t h i s  was c o n t a c t e d and d u r i n g and p r i o r t o Mr M's  shosha  and o t h e r s e r v i c e s .  would, by r e a s o n  intro-  The 'unspoken a s s u m p t i o n '  was  o f having provided these s e r v i c e s ,  the i n s i d e t r a c k f o r p r o v i d i n g domestic t h e new t i l e .  provided the necessary  s e r v i c e s t o P l a s - t e c h i n marketing  A l l of the costs a s s o c i a t e d with t h i s  were, however, borne by t h e s h o s h a l e a d t o an o n g o i n g  without  r o l e f o r a shosha  have  assistance to Plas-tech  any g u a r a n t e e  that  the venture  would  o r , i f i t d i d , t h a t t h e y would g e t t h e  business.  Assessment o f t h e T e c h n o l o g i e s Having  assembled  the necessary  d a t a and samples d u r i n g h i s two t r i p s  t o t h e U.S.A., Mr M had t h e n t o a s s e s s t h e r e l a t i v e The  main p o i n t s he f e l t  merits of the technologies.  he had t o e v a l u a t e were:  1  The appearance o f t h e f i n a l  product;  2  The p r o d u c t i o n p r o c e s s c h a r a c t e r i s t i c s  3  The c h a r a c t e r i s t i c s  of the patented  and f e a s i b i l i t y ;  ( a s opposed t o t h e  non-patented) technology i n v o l v e d ; 4  Relationship to existing  P o i n t s 1 and 2 were d i r e c t l y That  related  Japanese  technology.  t o usual business considerations.  i s , t o t h e m a r k e t a b i l i t y o f t h e p r o d u c t and t o t h e f e a s i b i l i t y and  economics existing  of the production process involved - e s p e c i a l l y v i s - a - v i s P l a s - t e c h ' s production process.  - 145  P o i n t s 3 and  4,  however, were  p o l i c y with r e g a r d t o TT.  -  more c l o s e l y r e l a t e d  Purchase  r e l e a s e o f f o r e i g n exchange f u n d s  of f o r e i g n  t o J a p a n e s e government  technology  w h i c h were f e l t  r e q u i r e d the  t o be i n s h o r t  supply.  W i t h o u t t h e recommendation o f MITI ( M i n i s t r y o f I n t e r n a t i o n a l T r a d e I n d u s t r y ) i t was  a foregone  r e l e a s e of f o r e i g n In  conclusion that the necessary  exchange would not be  t h i s r e g a r d , t h e amount  and  f a c t o r i n determining addition,  a p p r o v a l was  ( a s opposed  'package' seemed t o be  more l i k e l y  t o be f o r t h c o m i n g  i n J a p a n and  a  to  significant  proposal.  In  i f the technology  would make a s i g n i f i c a n t  was  contribution  J a p a n e s e economic g r o w t h . Considered  on  granted.  M I T I ' s a t t i t u d e t o w a r d s any g i v e n TT  d i s s i m i l a r to that e x i s t i n g to  approval f o r  q u a l i t y of the patented  n o n - p a t e n t e d ) p o r t i o n o f t h e t o t a l TT  and  p o i n t s 1,  in this 2,  and  4.  Eagle F l o o r Products technology  was  F l o o r Products Finally,  light,  technology  was  more l i k e l y  to receive  J o h n s - M a n v i l l e - w h i l e not r u l i n g  competitors  patented  differ  was  - w h i l e none o f t h e  the necessary  prepared  out TT  support  not  prepared  to  possible, this  p r o d u c t i o n of p a t t e r n e d t i l i n g  effectively ruled  out a TT  from  Eagle  from  t o d i s c u s s immediate  - was  MITI.  TT  whereas  proceed over  as r a p i d l y  Johns-Manville  the  Johns-Manville from  In view o f P l a s - t e c h ' s i n t e n t - t o g a i n an a d v a n t a g e by moving i n t o  significantly  however, a p o r t i o n o f  T h i s i m p l i e d t h a t a p r o p o s a l f o r a TT  Eagle F l o o r Products  immediately.  t e c h n o l o g i e s d i d not  With r e g a r d t o p o i n t 3,  patented. was  t h e two  and  as  it  was  d e c i d e d t o open c o n t r a c t n e g o t i a t i o n s w i t h E a g l e F l o o r P r o d u c t s .  Contract Negotiations N e g o t i a t i o n s were c o n d u c t e d later  initially  stages r e g a r d i n g the r o y a l t y ,  by l e t t e r  by t e l e p h o n e  v i a the  directly  shosha, and, from  i n the  P l a s - t e c h . The  -  major s t i c k i n g  point  i n the  E a g l e F l o o r P r o d u c t s was s a l e s up  to a s p e c i f i e d  volume and  first  place, there  as low  a r a t e as p o s s i b l e . p a i d not  only  of a c q u i r i n g the nificance the  n e g o t i a t i o n s was  determined to get  In t h e  t o be  was,  this  the  t e c h n o l o g y but  a l s o as  ( a s opposed, say,  costs  obstacle  posed by E a g l e ' s  T h i s o b s t a c l e took the  T h e s e g u i d e l i n e s v a r i e d d e p e n d i n g on while  t h e y had  upper l i m i t production  selling  official  i n the  of cases.  may  field  In t h e 1  of technology i n v o l v e d  which had  during  negotiations  negotiations the P l a s - t e c h Plas-tech  had  with  no  to opportunities  -  considerably  t h a t i t was  contract  sought by  not  r o y a l t y and  Eagle  (see  s t r a t e g y but  page  interested in the  negotiations  143).  i t i s i n t e r e s t i n g that  p r i o r i n t e r e s t i n t h e J a p a n e s e market, h i n t e d  broadly  serious  p o t e n t i a l Japanese customers f o r t h e i r technology i f  negotiations  to Eagle  3}o -  and  products  t h a t t h e y were i n a p o s i t i o n t o p r o c e e d w i t h  other  clearly  effective  case of p l a s t i c s  g u i d e l i n e was  asserted  have been m e r e l y a b a r g a i n i n g  Eagle,  more  Eagle.  convincingly  the  plant  r o y a l t y however.  0  i t s t e c h n o l o g y f o r l e s s t h a n a '5}b r u n n i n g  produced, e s s e n t i a l l y , It  a 5f  sig-  acquiring  _and: new  a n o t h e r , and  costs  ' g u i d e l i n e s ' f o r r o y a l t y payments.  the  'unofficial  5/o demanded by  event, Eagle  T h e r e was  of  pay  royalty  absolute  s t a t u s - were g e n e r a l l y viewed as an  majority  technology t h i s  l e s s than the In the  no  negotiations.  of the  profitability  o f equipment  i n s i s t e n c e on  form o f MITI  greatest  paid.  yearly  normal d e s i r e t o  'negotiable'  the  ultimate  to the  to the  company v i e w e d t h e  or  having  the  obstacle  the  most f l e x i b l e  o f r o y a l t y t o be  r o y a l t y o f 5}d on  a running  In t h i s r e s p e c t ,  as b e i n g  level  Plas-tech's  c o n s t r u c t i o n which were a l s o e n v i s i o n e d ) . crucial  the  posed an  of course,  i n terms o f i t s impact on  technology  -  145  d i d n ' t go  well.  may  have had  the  i n the  Japanese  market.  Thus, the  incidental effect  i n i t i a l approach of  'sensitizing'  by Eagle  -  MIT I A p p r o v a l o f t h e The  contract  was  recommendation and Foreign facts  147  -  Contract s u b m i t t e d t o MITI f o r c o n s i d e r a t i o n  the  subsequent approval  Exchange C o n t r o l  Law.  for release  and  received  MITI  of funds under  T h i s MITI recommendation was  the  despite  the  and  that: 1  The  r o y a l t y p r o v i s i o n s e x c e e d e d t h e MITI g u i d e l i n e s  2  the  technology, i t s e l f ,  (a)  not  very  (i.e.  d i s s i m i l a r t o e x i s t i n g Japanese technology  the  as t h e  d i f f e r e n c e s were o n l y  goal  patterned (b)  not  was  was  important  t o produce p a t t e r n e d  in-so-far  r a t h e r than  non-  tile);  o f any  major, d i r e c t , r e l e v a n c e  to Japan's o v e r a l l  economic g r o w t h . In the in  veiw o f P l a s - t e c h ,  s p i t e of the 1  there  were t h r e e  major r e a s o n s f o r  approval  above a d v e r s e f a c t o r s . The  government was,  development o f t h e implied  Plas-tech  the  Japanese p e t r o - c h e m i c a l  industry.  products manufacturers.  c a s e had  there  been no  of  plastics  It is felt  that these s o r t s of c o n s i d e r a t i o n s  a t t i t u d e t o w a r d s TT  the  the This  downstream u s e r s  p r o d u c t s - which g r o u p i n c l u d e d  plastic-based  lenient  a matter of p o l i c y , encouraging  s i m i l a r encouragement o f the  petrochemical and  as  by  l e d t o a more  g u i d e l i n e s t h a n would have been backward  'linkage' to a  priority  industry. 2  E a g l e F l o o r P r o d u c t s had assertions that terms.  been c o n v i n c i n g l y  i t would not  It i s felt  s e t t l e f a r any  by P l a s - t e c h  vigorous less  in i t s  favourable  t h a t MITI r e c o g n i z e d ,  therefore,  -  OUTLINE OF TT  148  -  CONTRACT PROVISIONS  Date of c o n t r a c t : F e b r u a r y 18, 1961, t o be e f f e c t i v e from t h e d a t e o f a p p r o v a l o f t h e c o n t r a c t u n d e r t h e F o r e i g n Exchange C o n t r o l Law ( i n t h e e v e n t , September 1961). Duration: Ten y e a r s from e f f e c t i v e  date.  A c q u i r e d by P l a s - t e c h : The r i g h t t o p r o d u c e and s e l l ( w i t h i n J a p a n and S o u t h and E a s t PVC f l o o r t i l e u s i n g t e c h n o l o g y d e v e l o p e d by E a g l e F l o o r P r o d u c t s i n more d e t a i l i n t h e a c t u a l c o n t r a c t ) . Compensation t o E a g l e F l o o r P r o d u c t s : 1 L i c e n s e Fee: $50,000 (US) p a y a b l e i n each o f t e n from t h e e f f e c t i v e d a t e . 2  Royalty:  as  per  the  Gross Sales  per  year  From NIL  following  5/o  360,000,000. t o  ¥2,160,000,000.  3)o  from ¥2,160,000,000. t o  ¥5,760,000,000.  2$  f r o m ¥ 5 , 7 6 0 , 0 0 0 , 0 0 0 . and  above  years  schedule: Royalty  to ¥  Asia) (specified  successive  360,000,000.  from ¥  5,  Rate *  Ifo  Miscellaneous T h e r e were v a r i o u s o t h e r s u p p l e m e n t a r y p r o v i s i o n s r e l a t i n g t o t h e r i g h t s and o b l i g a t i o n s o f t h e two companies. Among t h e s e were p r o v i s i o n s r e q u i r i n g Eagle to supply advisors to P l a s - t e c h - should P l a s - t e c h r e q u i r e such a s s i s t a n c e d u r i n g c o n s t r u c t i o n and s t a r t - u p . This provision also s p e c i f i e d t h e per diem c o s t o f s u c h s e r v i d e s - . t o be p a i d by P l a s - t e c h .  *  The r o y a l t y on t h e i n i t i a l ¥ 3 6 0 , 0 0 0 , 0 0 0 o f s a l e s each y e a r t o be a p p l i e d i n r e d u c t i o n o f t h e L i c e n s e f e e f o r t h a t y e a r . At t h e t h e n c u r r e n t r a t e o f exchange (¥360 p e r $1 (US)) t h i s would, at t h e maximum, e x a c t l y e q u a l t h e L i c e n s e f e e o f $50,000.  - 149 that in  disapproval  of the proposal  a return to the bargaining  end  t o the negotiations.  would n o t l i k e l y  result  t a b l e b u t , r a t h e r , b r i n g an  T h i s may have tempered any MITI  i n c l i n a t i o n s t o h o l d t o t h e 3yd r o y a l t y g u i d e l i n e . 3  Plas-tech,  i t s e l f , had a r e c o r d  c a p a b l e management. this  record  o f r a p i d growth and  The P l a s - t e c h management  of success  felt  that  somewhat r e d u c e d t h e i n c l i n a t i o n  o f MITI t o impose g u i d a n c e on t h e company  both i n t h e  p a r t i c u l a r c a s e and i n g e n e r a l .  The  Process of Transfer Shortly  the  a f t e r approval,  by Mr M,  a group o f t h r e e t e c h n i c i a n s , ( h e a d e d  a s s i s t a n t manager o f t h e B u i l d i n g M a t e r i a l s D i v i s i o n ) went t o E a g l e  P r o d u c t s i n t h e US f o r a p e r i o d o f about one month.  During  this  Floor  period  they  m a s t e r e d t h e b a s i c p r i n c i p l e s o f t h e t e c h n o l o g y and i t s u s e and, a s w e l l , acquired The  the necessary plant layout,  English-language  their ability ability while  ability  of these three  control  t o read  were p r o b l e m s o f communication  data.  t e c h n i c i a n s was q u i t e low b u t  t o u n d e r s t a n d what was s a i d t o them was g r e a t e r  t o speak and t h e i r a b i l i t y  there  f o r m u l a e , and p r o c e s s  E n g l i s h was g r e a t e r there  than  their  still.  Thus,  were no i n s u r m o u n t a b l e  difficulties. M e a n w h i l e , i n J a p a n , P l a s - t e c h was e s t a b l i s h i n g a s e p a r a t e , subsidiary, existing  Odaira  100j4-owned  P l a s - t e c h Company t o t a k e o v e r a l l o f t h e company's  and f u t u r e t i l e  production.  h a l f was t o be u s e d f o r t h e new t i l e  A p a r c e l o f l a n d was p u r c h a s e d o f which p l a n t and h a l f earmarked f o r f u t u r e ex-  pansion .  The the  d e c i s i o n t o e s t a b l i s h a new p l a n t and s u b s i d i a r y company was due t o  overcrowded c o n d i t i o n s o f the e x i s t i n g d i v i s i o n a l  f a c i l i t i e s and t h e  - 150 -  desirability necessary  o f a s e p a r a t e o p e r a t i n g u n i t - g i v e n t h a t i t would now  to provide data r e : output,  prices,  be  e t c . t o an o u t s i d e company,  Eagle F l o o r Products. The c o n t r a c t w i t h E a g l e p r o v i d e d f o r them t o a s s i s t P l a s - t e c h i n a c q u i r i n g any n e c e s s a r y  equipment  not r e a d i l y  available  i n Japan.  In the event,  no"  s u c h a s s i s t a n c e was r e q u i r e d . E a g l e was experienced Plas-tech  a l s o t o p r o v i d e c o n s u l t a n t s e r v i c e s i n the event P l a s - t e c h difficulties  experienced  a p p r o v a l o f t h e TT  no  with plant c o n s t r u c t i o n or s t a r t - u p . major d i f f i c u l t i e s  and a l i t t l e  p r o d u c t i o n o f p a t t e r n e d t i l e s was  In  fact,  o v e r one y e a r  begun.  after  Description Existing The  151 -  of the Technologies  ( p r i o r t o TT}  existing  Technology  production process technology  i s outlined  i n the following  diagram: Raw M a t e r i a l s  Processing F  Product  (Machinery)  0 PVC r e s i n Stabilizer Pigment F i l l e r (eg. asbestos)  R M ,. U L A ^  v  .n n v(til > Blender—> Roller-*  e  1  (Post-TT) The  in  that  ^  new t e c h n o l o g y  _  ,  "~--y  „  >  was d i f f e r e n t  from  i t i n t r o d u c e d a new s t a g e i n t o  and b i n d more t h a n  c o u l d be combined  the e a r l i e r  Raw M a t e r i a l s  one s h e e t  the t i l e  into  a single  i n the following technology  diagram  indicated  by  T h e need  pattern required controls.  The  with the s i g n i f i c a n t asterisks:  Processing F  primarily  i n a predeter-  cutter.  raw m a t e r i a l f o r m u l a t i o n s and p r o c e s s  i s indicated  d i f f e r e n c e s from  technology  t h e p r o d u c t i o n whereby two ( o r  coloured sheets of t i l e  however, d i f f e r e n t new t e c h n o l o g y  Techniques  the existing  mined p a t t e r n p r i o r t o b e i n g i n t r o d u c e d i n t o manipulate  3  -  Technology  more) d i f f e r e n t l y  to  tile)  1  P r o c e s s C o n t r o l D a t a and  New  sheet).- , 7 ^ (vinyl ^Cutteri»  Product  (Machinery)  0 (unchanged)  R M  (tile  L A E *  sheet)  (vinyl ern1 -»Cutter -» ^maker* — sheet) P  a  t  t  v  -4 B l e n d e r - * R o l l e r • (tile  P r o c e s s C o n t r o l D a t a and  Techniques  J  tile)  -  Floor Tile  152  -  Industry  Background The tile the  immediate a n t e c e d e n t o f t h e  i n d u s t r y which a r o s e , post-war c o n s t r u c t i o n  The  initially, o f US  development o f v i n y l  had As  tile  began i n J a p a n .  previous  experience  a result,  contractors  they i n the  had  as  The  and  Taj'ima Oyo  i n d u s t r y was  tile  technology  initial  the  asphalt  demand c r e a t e d  by  bases i n Japan. i n t h e US  a r o u n d 1952-1953 and  i n 1956  reached  p a r t i c i p a n t s i n the  r e l a t i o n s h i p s with  industry.  The  roofing materials  Kako Company) o r i n l i n o l e u m  strongest  of  industry a l l  the  industry.  larger  p a r t i c i p a n t companies  (eg. F u j i m u r i  flooring  the  production  s u p p l i e r s to the Japanese c o n s t r u c t i o n  construction  a background i n a s p h a l t  tile  i n response to the  long-established  had  floor  military  floor  s t a g e o f economic p r o d u c t i o n vinyl  vinyl  Kogyo Company,  (eg. Toyo  Linoleum  Company). The  i n d u s t r y grew r a p i d l y and  variety sized  of backgrounds but  the  t i m e o f t h e TT  L i n o l e u m and  In  T a j i m a Oyo or f o u r )  Plas-tech  in this  was  extremely small  estimates.  the  number o f f i r m s  t e r m s o f market s h a r e ;  number ( t h r e e  *  with  p r i m a r i l y , medium and  a  small-  Structure  a p p r o x i m a t e l y 60.  held  many o f them b e i n g ,  entrants  r u b b e r goods m a n u f a c t u r e r s .  Industry At  soon a t t r a c t e d many new  Kako) h e l d  and  group.  the  industry  two  had  The  holding  remaining  grown  largest firms  about 25}&-30}o each f o l l o w e d  o f medium-sized f i r m s latter  i n the  by  5}d-10/o market  firms  t e n t a t i v e market s h a r e s o f 2yd,  i n the l°/d, o r  to  (Toyo a  small shares.*  industry less.  - 153  R e s e a r c h and  -  Development  The m a j o r i t y  of firms  i n the industry  engaged  Some o f t h e medium and l a r g e - s i z e d f i r m s , underway.  T h e s e were, t y p i c a l l y ,  by, f o r example, lation.  The  reducing  aimed a t ' r e f i n i n g '  t e c h n o l o g y was  seem s u s c e p t i b l e t o major i n n o v a t i v e firms i n  the industry  was  activities.  however, had R & D  s h r i n k a g e and l i f t i n g  basic production  i n no R & D  projects  the e x i s t i n g  of the t i l e s  after  well-established  improvements.  not R & D or production  product  and  instaldidn't  The major c o n c e r n o f but, r a t h e r ,  sales  and  marketing.  Markets--;';aWd M a r k e t i n g System  Markets As m e n t i o n e d e a r l i e r tile  was  between  t h e major d i s t i n c t i o n  'institutional'  i n t h e market f o r v i n y l  floor  and p r i v a t e h o u s i n g a p p l i c a t i o n s o f t h e  product. Institutional  Market  Institutional  customers i n c l u d e d  and t h e l i k e . durability, construction in  The a p p e a l o f v i n y l  ease o f upkeep, was  offices, tile  factories,  hospitals  i n these a p p l i c a t i o n s l a y i n i t s  and n e a t a p p e a r a n c e .  e n c o u r a g e d b o t h by government  t h e J a p a n e s e economy.  schools,  Such  policy  institutional and by t h e r a p i d  I t c o n s t i t u t e d about 50/0 o f t h e t o t a l  growth  construction  market a t t h e t i m e . P r i v a t e Housing P r i v a t e housing c o n s t r u c t i o n planning In  but, nevertheless,  contrast  had been r e c e i v i n g low p r i o r i t y  a c c o u n t e d f o r t h e r e m a i n i n g 50$  t o t h e a p p r o x i m a t e l y 50:50 s p l i t  of  i n government construction.  of the construction  market  - 154 -  between t h e s e two t y p e s o f c o n s t r u c t i o n  however,  was t h e dominant c u s t o m e r f o r f l o o r t i l i n g for  relatively  f e e l i n g i n Japan t h a t  inadequate - both i n q u a n t i t y  prosperity  with p r i v a t e  housing  market  accounting  few s a l e s .  T h e r e was, however, a g e n e r a l highly  the i n s t i t u t i o n a l  was p u t t i n g  the prospect  and i n q u a l i t y .  p r i v a t e housing In a d d i t i o n ,  of, .new ( o r b e t t e r )  was  rising  home o w n e r s h i p  within  r e a c h o f an i n c r e a s i n g l y l a r g e number o f p e o p l e . As  a r e s u l t , i t was g e n e r a l l y  private  and q u a l i t y o f p r i v a t e  t h e companies i n t h e v i n y l t i l e  increase  i n demand f o r t i l e  the  industry  the  trends i n private  also f e l t  •from"-utilitarian The  that,  sectors  increase i n  this indicated  housing s e c t o r .  from a q u a n t i t a t i v e  a rapid Some f i r m s i n  increase  i n demand,  and t o w a r d s more d e c o r a t i v e  supplied  or 'luxurious'  t o t h e i n s t i t u t i o n a l . and p r i v a t e  tile.  housing  The d i s t i n c t i o n between  sectors  t h e two  was more s i g n i f i c a n t i n t e r m s o f t h e d i s t r i b u t i o n c h a n n e l s  Marketing  time.  with a r a p i d  h o u s i n g would a l s o l e a d t o a q u a l i t a t i v e change -.away  tiling  actual t i l e  from t h e p r i v a t e aside  emphasis on  housing.  industry  a t t h i s t i m e was e s s e n t i a l l y t h e same.  The  the developing  h o u s i n g would soon r e a c h boom p r o p o r t i o n s  both the q u a n t i t y To  expected that  used.  System  marketing  systems f o r f l o o r i n g m a t e r i a l s  had been h i g h l y  T h e r e were two major d i s t r i b u t i o n ' r o u t e s '  as i n d i c a t e d  stable  i n the following  diagram:  lanufacturer  \  >  (route l ) -(route  2)  Trading Comoanv  >  >  Secondary Wholesaler  over  Builder  - 155 -  One  major r o u t e  This route  was from t h e m a n u f a c t u r e r v i a i n t e r m e d i a r i e s t o t h e b u i l d e r .  was t h e n o r m a l one f o r s a l e s t o s m a l l e r  c o n t r a c t o r s and p r i v a t e  home c o n s t r u c t i o n . The route  other  was from m a n u f a c t u r e r d i r e c t l y  construction  (offices,  f i r m s which had l o n g  materials  to contractors  which had been d o i n g entrenched  factories,  of supplying  so i n one form o r a n o t h e r f o r about 45 y e a r s ) h e l d 2, based on s t r o n g  t i e s with  up o v e r many y e a r s  of supplying,  based and, l a t e r ,  PVC-based f l o o r i n g  materials.  business  had c r e a t e d  volume and_:direct  confidence  to the f i e l d ,  severe d i f f i c u l t i e s  the smaller,  was l e s s a s a s m a l l  i n the  their  amount i n v o l v e d  high  general  typically  contractors.  had f a r  In addition, reputations  i n e s t a b l i s h i n g such d i r e c t r e l a t i o n s .  a l s o used by t h e l a r g e makers as t h e i r r o u t e t o Here, t h e i r c o m p e t i t i v e  advantage  d i f f e r e n c e i n p r i c e d i d n o t make a major i n c r e m e n t i n  minor - b o t h i n a b s o l u t e  often  q u a l i t y while  such a s P l a s - t e c h ,  low-volume c u s t o m e r s .  contractors' return  reputation  or rubber-  on a l o w e r - v o l u m e / h i g h e r - c o s t b a s i s w i t h o u t e s t a b l i s h e d  Route 1 was, o f c o u r s e ,  the  asphalt  t o l o w e r d e l i v e r e d c o s t s and p r i c e s .  weaker ( o r no) e x i s t i n g r e l a t i o n s w i t h  they faced  first,  the larger  T h e i r many y e a r s  i n t h e i r product  sales contributed  newer e n t r a n t s  operating  flooring,  ( e g . T o y o L i n o l e u m and T a j i m a Oyo K a k o - b o t h o f  built  supply  This  etc.).  been i n t h e b u s i n e s s  p o s i t i o n s i n route  contractors  The  to the builder.  was common f o r volume s a l e s t o major b u i l d i n g c o n t r a c t o r s engaged i n  large-scale The  major r o u t e  because t h e amount i n v o l v e d and, o f t e n ,  in relative  ( i n , s a y , a house) was  t e r m s - compared t o t h e  i n a large-scale construction project.  o f one o f t h e i n t e r m e d i a r y  o f more i m p o r t a n c e t o t h e f i n a l  manufacturer, i n t h i s  sales  channel.  In a d d i t i o n , the  companies i n v o l v e d i n . d i s t r i b u t i o n customer t h a n was t h a t  was  of the o r i g i n a l  -  Plas-tech  was n o t t o t a l l y  156 -  without connections  with  the large  general  c o n t r a c t o r s b e c a u s e o f i t s p o s i t i o n a s one o f J a p a n ' s major p r o d u c e r s o f plastic  pipe.  T h e s e r e l a t i o n s were r e l a t i v e l y  weak, however, f o r two  major r e a s o n s : 1  The company was r e l a t i v e l y existed  2  had been o f s h o r t  young and, t h e r e f o r e , t h e r e l a t i o n s w h i c h duration;  T h e r e l a t i o n s which e x i s t e d were n o t d i r e c t but  r a t h e r t o o k t h e form o f o c c a s i o n a l  propagandists' actual  f o r new p l a s t i c  pipe  contacts  by r e a s o n o f i.ts.pipe p r o d u c t i o n contractors'  and  i s a reflection  F o r other  a reliable  t o want d i r e c t  supply  materials. general  of the fact  contractors  that the  r e l a t i o n s with the  when t h e p r o d u c t a f f e c t e d t h e a p p e a r a n c e o f t h e  products;  provided  t h a t t h e y met t h e r e q u i r e d  was a v a i l a b l e , t h e r e  dealings  The  contractor-suppliers  r e l a t i o n s with  i n t e r e s t i n t h e p r o d u c t and i n d i r e c t  m a n u f a c t u r e r was h i g h e s t building.  as ' t e c h n i c a l a d v i s o r s -  d a y - t o - d a y s a l e s were h a n d l e d v i a plumbing  r a t h e r remote n a t u r e o f P l a s - t e c h ' s  relations  p r o d u c t s and a p p l i c a t i o n s .  who h a n d l e d a l l t y p e s o f p i p i n g and plumbing The  supplier-customer  with  standards  was no t e n d e n c y f o r c o n t r a c t o r s  the manufacturers.  - 157 -  TECHNOLOGY TRANSFER  CASE STUDIES  Case 2  Sharp  Corporation  - 158 -  Company B a c k g r o u n d Sharp C o r p o r a t i o n  i s the present  Company whose f o u n d e r ,  name o f t h e f o r m e r Hayakawa E l e c t r i c  T. Hayakawa, i n v e n t e d a m e c h a n i c a l  marketed a s t h e ' E v e r - S h a r p P e n c i l ' i n 1915. electronics field  t h e 'Sharp' p r o d u c t  i n 1929 was r e g i s t e r e d came t o i d e n t i f y was  name.  t h e company, i t s e l f ,  The product  and i n J a n u a r y  (l95l).  household  brand  1970 t h e company's name  i n i n t r o d u c i n g new  l i n e - i n c l u d i n g Japan's f i r s t  e l e c t r o n i c s and a p p l i a n c e s and was b e g i n n i n g  graph, e l e c t r i c  scalpel,  a broad  range o f  t o expand i n t o t h e  e l e c t r o n i c s goods ( e g .  solar battery,  technology  r a d i o (1925) and t e l e v i s i o n  By t h e l a t e 1950's t h e company was p r o d u c i n g  development o f o t h e r , more s p e c i a l i z e d  name e v e n t u a l l y  t o Sharp C o r p o r a t i o n .  company had a l o n g h i s t o r y o f ' f i r s t s *  i n t o i t s product  A s he expanded i n t o t h e  name was u s e d f o r o t h e r p r o d u c t s and  f o r m a l l y changed f r o m Hayakawa E l e c t r i c The  set  a s a brand  p e n c i l which he  electrocardio-  etc.).  D e c i s i o n t o e n t e r t h e Desk-top C a l c u l a t o r F i e l d I n 1960, t h e company d e c i d e d present  t o e n t e r t h e computer f i e l d  and p o t e n t i a l growth and t h e s u i t a b i l i t y  technological capabilities to this f i e l d . industry and in  was a p r i o r i t y  guided fact,  because o f i t s  o f t h e company's  Development o f t h e computer  o f government and t h e i n d u s t r y was b e i n g  by MITI ( M i n i s t r y o f I n t e r n a t i o n a l T r a d e and I n d u s t r y ) .  necessary  existing  monitored I t was,  f o r t h e company t o o b t a i n a p p r o v a l from MITI f o r i t s  entry into the f i e l d .  A s t h e r e were many companies s e e k i n g  i n d u s t r y , M I T I was c o n c e r n e d  about  'overcrowding*  t o enter the  i n t h e i n d u s t r y and d i d  not a p p r o v e o f S h a r p ' s e n t r y i n t o t h e f i e l d . In l i e u  o f e n t r y . i n t o t h e computer i n d u s t r y t h e r e f o r e , t h e company began  t h i n k i n g i n t e r m s o f u s i n g and d e v e l o p i n g related  areas.  One such  a r e a was b i l l i n g  t h e i r technology machines (which  i n somewhat had been t h e  -  object  o f some e a r l i e r  attempt t o e n t e r  159 -  a t t e n t i o n by t h e company c o n c u r r e n t l y  t h e computer f i e l d ) .  with  their  A n o t h e r a r e a which seemed t o be  p r o m i s i n g was d e s k - t o p c a l c u l a t o r s ( h e r e i n a f t e r r e f e r r e d t o a s 'DTC'). d a t e , DTC had been m e c h a n i c a l l y d r i v e n b u t t h e company f e l t  that the application  o f e l e c t r o n i c s t e c h n o l o g y d e v e l o p e d i n and f o r t h e computer f i e l d produce a h i g h l y  competitive  machine which was q u i e t e r  To  and more  would  trouble-free  than e x i s t i n g machines. I n 1961, t h e r e f o r e ,  the.company d e c i d e d t o b e g i n development o f an a l l -  e l e c t r o n i c DTC and i n 1964 t h e company i n t r o d u c e d solid-state in  ( ' t r a n s i s t o r i z e d ' ) DTC - t h e S h a r p  1966, by t h e f i r s t I C ( i n t e g r a t e d  the  first  a p p l i c a t i o n o f MOS  the world's  'Compet'.  first  This  was  followed,  c i r c u i t ) - a p p l i e d DTC and, i n 1967, by  ( m e t a l - o x i d e s e m i - c o n d u c t o r ) - IC t e c h n o l o g y t o  DTC.  Decision  t o move t o L S I ( l a r g e - s c a l e i n t e g r a t i o n )  technology  A r o u n d 1967, L S I t e c h n o l o g y was b e g i n n i n g t o be a p p l i e d field.  W h i l e L S I t e c h n o l o g y had n o t y e t been a p p l i e d  (excluding  cost reduction,  application  abject  •fairly  further miniaturization,  there  i n electronic calculators -  and i n c r e a s e d  reliability.by  of this,  Japanese domestic L S I production  c a p a b i l i t y was  o f much government a t t e n t i o n a t t h e t i m e .  substantial' subsidies  t e c h n o l o g y and t h e i n d u s t r y of t e c h n o l o g i c a l As  fields  of LSI technology.  In r e f l e c t i o n the  t o other  t h e US s p a c e and d e f e n c e programmes), i t seemed c l e a r t h a t  was enormous p o t e n t i a l i n o t h e r f i e l d s - n o t a b l y for  t o t h e computer  M I T I was  providing  t o m a n u f a c t u r e r s f o r t h e development o f L S I  was engaged i n a major e f f o r t  capability attained  t o reach the l e v e l s  i n t h e USA.  one o f t h e a s p e c t s o f t h i s e f f o r t ,  there  was a c o o p e r a t i v e  research  - 160  -  development programme aimed a t d e v e l o p i n g L S I t e c h n o l o g y f o r a p p l i c a t i o n i n DTC.  The  and DTC  programme b r o u g h t  manufacturers.  exchange and  feedback  o f an i n d e p e n d e n t , Sharp's  The  and,  in this  no more so t h a n for special i n DTC,  r e s e a r c h group.  included the establishment i n A p r i l  team a s s i g n e d t h e t a s k o f d e v e l o p i n g a l o g i c  given the  i n DTC.  The  L S I d e s i g n was  ' s t a t e - o f - t h e - a r t ' a t t h e t i m e was  (though  due  completed quite  As a s e m i - c o n d u c t o r  1967 design  in early  complex -  though  produced  device f o r application  f a r more complex t h a n a n y t h i n g t h u s f a r u s e d .  D e c i s i o n t o use MOS-LSI r a t h e r t h a n B i - p o l a r  LSI  b o t h o f t h e s e t y p e s o f L S I were b e i n g used  t h e b i - p o l a r t y p e was  circuitry  d i f f e r e n t f r o m ) some o f t h o s e a l r e a d y b e i n g  computer a p p l i c a t i o n s .  however, i t was  While  manufacturers  c o o p e r a t i o n t o o k t h e form o f i n f o r m a t i o n  jointly-staffed  f o r an L S I s u i t a b l e f o r use 1968  semi-conductor  among t h e p a r t i c i p a n t s r a t h e r t h a n t h e e s t a b l i s h m e n t  participation  of a p r o j e c t  t o g e t h e r both Japanese  by f a r t h e most common  t o i t s h i g h e r 'speed' MOS-LSI t e c h n o l o g y was,  and  i n t h e computer  was  likely  field  t o remain  so  of operation. moreover, a t an e a r l i e r  s t a g e o f development  and  t h e r e were many o u t s t a n d i n g q u e s t i o n s r e g a r d i n g i t s u l t i m a t e f e a s i b i l i t y .  MOS  semi-conductors,  i n any DTC  event,  a t t h e t i m e , s u f f e r e d from  inherently  applications,  h i g h e r degree  proposed  applications.  L S I w i t h t h e aim  i s of l e s s importance  In a d d i t i o n ,  of m i n i a t u r i z a t i o n  a t t r a c t i v e f o r DTC  and  are,  'slower' i n o p e r a t i o n than b i - p o l a r t y p e s .  however, speed  o f computer a p p l i c a t i o n s .  poor r e l i a b i l i t y  and  case  t h e MOS-type's p o t e n t i a l f o r a  lower  Sharp  than i n the  In  cost  had,  p r o d u c t i o n was  therefore,  particularly  designed i t s  o f u s i n g MOS-LSI t e c h n o l o g y i n mind.  - 161 Sharp's design.  d e s i g n f o r a D T C - a p p l i c a t i o n s L S I was, however, j u s t t h a t - a  The o v e r a l l  cooperative research project  s e n s e b u t , i n terms  had g e n e r a t e d some advance  in  a technical  in  d e v l e o p i n g a means o f e c o n o m i c a l l y p r o d u c i n g t h e d e s i r e d L S I f o r a p p l i c a t i o n  in  DTC.  D e c i s i o n t o move i n t o  i t s DTC b u t a l s o a c q u i r i n g t h i s were r e l a t e d  began t o c o n s i d e r n o t s i m p l y u s i n g "  manufacturing c a p a b i l i t y  n o t so much t o t h e i n a b i l i t y  f o rLSI.  t h e i m p l i c a t i o n s t h e advent  o f L S I t e c h n o l o g y might  r e l e v a n c e and v a l u e o f S h a r p ' s e x i s t i n g Sharp  first  - initially,  technological  hold  the  I C ' s . These  f o r the  d e s i g n e d by S h a r p .  was c o n t a i n e d i n  and t h e r e f o r e , i n some c a s e s , t h e IC were  from t h e m a n u f a c t u r e r s w h i l e i n o t h e r c a s e s IC c o n t a i n i n g were p u r c h a s e d a s f r e e l y  available  custom-ordered standardized  parts.  R e l i a n c e on o u t s i d e s u p p l i e r s f o r semi-- c o n d u c t o r s d e v i c e s (even in  some c a s e s c u s t o m - o r d e r e d )  production.  also  characterized  success i n the f i e l d  had been l a r g e l y a f u n c t i o n o f i t s p r o d u c t d e s i g n , l o g i c The advent  circuitryy  o f L S I t e c h n o l o g y , however,  appeared t o hold grave i m p l i c a t i o n s f o r t h e r e l e v a n c e o f t h e s e c a p a b i l i t i e s to future success i n the industry.  though  t h e company's DTC  T h e company's c o n s i d e r a b l e c o m m e r c i a l  e x p e r t i s e , and p r o d u c t i o n t e c h n i q u e s .  sets  were p u r c h a s e d a s p a r t s  t h e c a s e o f I C ' s , o f c o u r s e , some o f t h e c i r c u i t r y  circuitry  perception  used s e m i - c o n d u c t o r d e v i c e s i n i t s r a d i o and t e l e v i s i o n  t r a n s i s t o r s and, l a t e r ,  IC, i t s e l f ,  The reasons  expertise.  f r o m s e m i - c o n d u c t o r m a n u f a c t u r e r s and used i n c i r c u i t r y In  LSI i n  o f p r e s e n t Japanese  m a n u f a c t u r e r s t o meet S h a r p ' s needs a s t h e y were t o a g r o w i n g of  succeeded  production o f semi-conductor devices  About t h i s same t i m e , Sharp  for  o f p r o d u c t i o n t e c h n o l o g y had n o t  company  - 162 -  T h a t i s t o say, IC  there  is still  with  t r a n s i s t o r s and,  a major p o r t i o n o f t h e t o t a l  m a n u f a c t u r i n g i n p u t s h e l d by t h e DTC of LSI  technology,  i n t o the this,  the  of those - ho  final  product  would be  companies p r o d u c i n g  advances i n t h e i r  of LSI  but  in  i t s products.  •chip', i t s e l f .  to maintain  M o r e o v e r , t h e DTC  technology  f r o m an  not  an  t h a t , not  no  an L S I  be design  outside  source.  The  t o produce L S I  f o r the  and  production  c o n t r o l of  DTC the  capability  technology  Rockwell  of  semi-conductor  c l e a r t h a t i t would have t o a c q u i r e t h e  ability  f o r DTC  hands  o n l y would i t have t o move t o  background i n the f i e l d  semi-conductor manufacturers but,  produce LSI  With  manufacturers  i m p l i c a t i o n s of LSI  i t s capacity f o r innovation  company had  simply  i n the  p r o d u c e r s f o r s u b s e q u e n t t e c h n o l o g i c a l and  D e c i s i o n t o approach North-American  the  would l a r g e l y be  inputs  field.  m a n u f a c t u r i n g i t was  by  i n the LSI  t h a t i t would a l s o have t o a c q u i r e  order  As  of the t o t a l  production  the LSI's.  company d e c i d e d  in  The  proportion  a consequence of t h i s a n a l y s i s of the  i n d u s t r y , the use  and  and  With t h e i n t r o d u c t i o n  h o l d i n g t h e r e l e v a n t t e c h n o l o g i c a l e x p e r t i s e - would  dependant upon t h e L S I  As  contained  with  technological expertise  manufacturers.  however, a f a r g r e a t e r  determinant design  longer  t o a somewhat l e s s e r d e g r e e ,  necessary  company's g o a l i n t h i s r e s p e c t  s u c h as t h o s e  already  r a t h e r , the technology  a p p l i c a t i o n s u c h as i t s l o g i c  circuitry  being  was  produced  required experts  to had  designed. Quite  a s i d e from the  manufacturers to help was  already  l i k e l y r e l u c t a n c e of e x i s t i n g Japanese  e s t a b l i s h S h a r p as a c o m p e t i t o r  c l e a r from t h e  result  of the  semi-conductor  in their field, i t  j o i n t research  project that  -  domestic  manufacturers  t h e o t h e r hand, Sharp was  American - R o c k w e l l 'Rockwell  MOS-LSI t e c h n o l o g y  had  had  a l r e a d y aware o f t h e news t h a t  decided  regular trip  i n the l a t t e r  with Rockwell  t o t h e USA  At t h i s time,  and  possessed required  Rockwell  had  combine a v i s i t  yet to f i n d  in. the  ilities  any  o f MOS-LSI  felt  that Rockwell  h i g h e r volume and of existing  a result,  production  f o r LSI.  while  In e f f e c t ,  then, one  concrete  lower  'maisks'  developed what Sharp  of the  t o a mass-produced  was  first  product. because  c o s t s o f p r o d u c t i o n were beyond t h e  t h e i r proposed LSI  the  Rockwell  of the complicated  work w i t h them t o d e v e l o p  production techniques.  studying  development was  result  his  technology  major a p p l i c a t i o n s o u t s i d e  As  a p p l i c a t i o n s o f MOS-LSI t e c h n o l o g y  p r o p o s a l and  on  USA.  T h i s i m p l i e d c o n s i d e r a b l e development o f p r o d u c t i o n t e c h n i q u e s required  him  preliminary discussions  . n e i t h e r i t n o r o t h e r companies had  production techniques  was  along with  and  a l e a d e r i n the f i e l d  s p a c e programmes i n t h e USA.  t o produce LSI,  proposing civilian  was  a strong c a p a b i l i t y  large-scale  circuitry  t o have a S h a r p  Rockwell  but MOS-LSI, t h e m s e l v e s , military  and  p a r t o f 196S  LSI  of  A p o l l o Space programme.  with h i s t o u r of Sharp r e p r e s e n t a t i v e s i n the  Negotiations with  North  i m p r e s s i v e r e s u l t s i n t h e development  r e p r e s e n t a t i v e take the Sharp-designed next  particular  (nowadays and h e r e i n a f t e r ,  t o meet t h e needs o f t h e USA  i t was  the  acquire.  C o r p o r a t i o n o f t h e USA  Corporation*)  Accordingly,  -  were some d i s t a n c e away f r o m d e v e l o p i n g  c a p a b i l i t y which Sharp wanted t o On  163  the  capab-  A f t e r c o n s i d e r i n g Sharp's design, Rockwell  f e a s i b l e given f u r t h e r j o i n t  advised that i t  development work.  As  a  c o n t r a c t n e g o t i a t i o n s were begun.  Sharp e v a l u a t e d t h e p r o p o s e d t e c h n o l o g y  development and  acquisition project  -  in  164 -  terms o f a f i v e year time-frame.  the  p r o p o s e d p r o j e c t and t h e v a l u e  t e r m s o f i t s DTC p r o d u c t i o n product 1  lines.  assessed  of acquiring LSI technology  and w i t h o u t  The r e s u l t i n g  An i n i t i a l  I n a d d i t i o n , t h e company  solely in  any r e f e r e n c e t o i t s many  agreement p r o v i d e d f o r ;  development p e r i o d , f o l l o w e d by p r o d u c t i o n  by R o c k w e l l o f  t h e L S I f o r use i n DTC a s s e m b l y by S h a r p , and, f i n a l l y , t r a n s f e r of the LSI production The i) ii)  stages  three-stage  process t o Sharp.  o f TT e n v i s i o n e d a t t h i s e a r l y s t a g e  fundamental design technology specificJ  were:  applied  f o r MOS-LSI ( a b s t r a c t r a t h e r  technique);  t r a n s f e r o f t h e new t e c h n o l o g i e s r e s u l t i n g development  Each stage  from t h e i n i t i a l  period.  had a s e t , n e g o t i a t e d ,  but t h e r e was f l e x i b i l i t y in  a  T e c h n i q u e s f o r assembly o f LS I ;  than iii)  other  f e e - f o r - s e r v i c e a s s o c i a t e d with i t  as t o what p a r t s o f e a c h s t a g e S h a r p would,  t h e event,.,, choose t o a c q u i r e u n d e r t h e t e r m s o f t h e c o n t r a c t f r o m  Rockwell.  2  S h a r p was t o send, a t i t s expense, l o g i c to  3  assist  i n t h e development programme  R o c k w e l l was t o p r o v i d e  experts  t o Rockwell  f o r the LSI.  ( f o r a f e e ) a l l necessary  a s s i s t a n c e and  advice  to  S h a r p d u r i n g t h e p e r i o d o f u l t i m a t e p l a n t c o n s t r u c t i o n and s t a r t - u p  in  Japan.  Approval  o f t h e ...contract had t o be o b t a i n e d  major p r o b l e m s though i t i n v o l v e d about two with  circuitry  other r e l a t e d  a question as a r e s u l t ,  t o t h r e e ; months  (concurrent  a c t i v i t i e s ) o f d i s c u s s i o n s and n e g o t i a t i o n s .  regarding they  f r o m MITI and t h i s posed no  were  level  of the r o y a l t i e s  lowered.  specified  In t h e event,  MITI r a i s e d  i n t h e c o n t r a c t and,  the receipt  of approval  from  - 165 -  MITI a l s o t o o k p l a c e i n s t a g e s w i t h a p p r o v a l o f t h e t r a n s f e r o f L S I a s s e m b l y technology being obtained i n February  o f 1969 and two l a t e r  o b t a i n e d i n J u n e and A u g u s t o f 1971 f o r s u b s e q u e n t J o i n t Technology  technology  Sharp s e n t two l o g i c  i n t h e development programme.  t h e s e two t e c h n i c i a n s was l i m i t e d  circuitry  experts t o Rockwell  t o t h a t a c q u i r e d up t o t h e u n i v e r s i t y before.  In essence,  that they could read English-language m a t e r i a l ( e s p e c i a l l y of s p e c i a l i z a t i o n ) quite well,  been chosen  understand  in their  level  meant field  spoken E n g l i s h n o t so w e l l , and T h e y had  on t h e b a s i s o f t h e i r r e l e v a n t t e c h n i c a l e x p e r t i s e and b e c a u s e  (discussed e a r l i e r ) .  i n t h e e a r l i e r t e c h n o l o g y development  By c o i n c i d e n c e , b o t h were b a c h e l o r s and t h u s  were no c o m p l i c a t i o n s r e l a t i n g p e r i o d o f time  During the succeeding joint  this  o n l y p o o r l y a t t h e t i m e t h e y were s e n t t o t h e USA.  of t h e i r p r i o r p a r t i c i p a t i o n  an e x t e n d e d  transfers.  The E n g l i s h - l a n g u a g e a b i l i t y o f  i n J a p a n - n e i t h e r o f them had been a b r o a d  speak E n g l i s h  being  Development  As had been a g r e e d , to assist  approvals  year  ( l a t e 1968 t o 1 9 6 9 ) , t h e s e two engaged i n  s i x months an i n i t i a l  different  from  •mass-produceable'  spending  abroad.  the f i r s t  originally  months o f r e f i n e m e n t  there  t o w i v e s and c h i l d r e n t o h i n d e r t h e i r  development a c t i v i t i e s w i t h t h e i r c o u n t e r p a r t s a t R o c k w e l l .  that  programme  d e s i g n was s e t t l e d proposed  by S h a r p ) .  After  upon ( i t was q u i t e Following a further s i x  and d e v e l o p m e n t o f p r o d u c t i o n t e c h n i q u e s t h e n e c e s s a r y  L S I and r e l a t e d  t e c h n o l o g y was  established.  D u r i n g t h i s p e r i o d t h e two Sharp t e c h n i c i a n s - t h o u g h t h e i r e x p e r t i s e was n o t i n p r o d u c t i o n t e c h n o l o g y - i n t h e n o r m a l c o u r s e o f e v e n t s were e x p o s e d t o and  developed  technology.  their abilities  t o work w i t h i n t h e d e v e l o p i n g L S I p r o d u c t i o n  - 166 -  Actual Transfer  o f Technology  With t h e e s t a b l i s h m e n t began t o s u p p l y  the finished  time, Sharp sent  in  specialist  himself  with the production  sent  the necessary plant layouts,  t o Japan t o a s s i s t  ment p r o c u r e m e n t and i n s t a l l a t i o n . by R o c k w e l l the  other The  laid  (a n i s e i ,  Rockwell  d a t a and two  construction  One o f t h e two a d v i s o r s  and w i t h  sent  t o Sharp  n e c e s s a r y equipment f o r t h e p l a n t was i n a c c o r d a n c e w i t h  down by R o c k w e l l .  actually  I t was d u r i n g  Some o f t h i s equipment was a c q u i r e d  placed  the orders  on b e h a l f  I n r e t r o s p e c t , Sharp f e e l s t h a t t h i s  production  regarding  o f Sharp.  and s t a r t - u p  a s t o t h e .present  provided  and f u t u r e  ( f i r s t , of  p r o c e s s o f TT  p e r i o d was i m p o r t a n t  the basic engineering  p l a n t and b e c a u s e o f t h e i n s i g h t  representatives,  Japanese  I n t h e c a s e o f US s u p p l i e r s , R o c k w e l l i n  t h i s period of plant construction  o f t h e knowledge i t a c q u i r e d  specifications  from  a s s e m b l y , t h e n , o f L S I p r o d u c t i o n ) t h a t t h e most e x p l i c i t  occurred.  equip-  poorly.  s o u r c e s and some f r o m US s o u r c e s .  LSI  specialist,  o r e t h n i c J a p a n e s e ) spoke q u i t e good J a p a n e s e w h i l e  spoke J a p a n e s e o n l y  some i n s t a n c e s  of s i x  process.  operational  Sharp w i t h t h e p l a n t  Rockwell  A t t h e same  t o Rockwell f o r a period  t h e r e t u r n t o Japan o f t h i s p r o d u c t i o n  ^mid-1970  advisors  techniques f o r the LSI,  L S I f o r assembly i n S h a r p ' s DTC.  a production  months t o f a m i l i a r i z e Following  of the production  because  o f an L S I  by t h e R o c k w e l l  p o t e n t i a l s o f t h e equipment  involved. In terms o f t h e t h r e e - s t a g e contract  t r a n s f e r process envisioned  ( s e e a b o v e ) , ;the equipment and l a y o u t - r e l a t e d t e c h n o l o g y  w i t h s t a g e s i ) and i i ) were f o r m a l l y t r a n s f e r r e d . different said  i n the o r i g i n a l  perspective,  t o consist ofthree  the t o t a l  Viewed f r o m a s l i g h t l y  package o f t e c h n o l o g i e s  main t y p e s :  involved  i ) assembly t e c h n i q u e s , 1  associated  ii)  can be logic  - 167  d e s i g n , i i i ) wafer d e s i g n . a s s e m b l y t e c h n i q u e s uan total,  -  A l l o f t h e s e were t r a n s f e r r e d  be s a i d t o have been t r a n s f e r r e d  b u t , whereas t h e explicitly  and i n  o n l y t h e f u n d a m e n t a l , g e n e r a l t e c h n i q u e s a s s o c i a t e d w i t h i i ) and i i i )  were e x p l i c i t l y  transferred.  t r a n s f e r o f 'new designed.  T h e r e was,  that  i s , no need f o r t h e  t e c h n o l o g i e s ' . p e c u l i a r to the s p e c i f i c LSI  T h i s was  l a r g e l y because the c l o s e involvement o f  explicit  initially competent  p e o p l e f r o m Sharp i n t h e d e s i g n p r o c e s s a t R o c k w e l l made s u c h an e x p l i c i t of  t h i s knowledge  TT  unnecessary.  R e s u l t s o f t h e TT The  MGSTTLSI  production f a c i l i t y  w i t h i n t h e company. in  was  established  I t produces a l i m i t e d  devices incorporating  circuitry  as a s e p a r a t e d i v i s i o n .  r a n g e o f L S I and I C ,  specializing  d e v i s e d f o r use i n S h a r p ' s DTC.  About  8O70 o f t h e d i v i s i o n ' s o u t p u t i s u s e d w i t h i n t h e company i n i t s c a l c u l a t o r and t e l e v i s i o n consisting About of  set production.  largely  The  remaining  2Oyo  i s sold to outside  customers  o f o t h e r DTC m a n u f a c t u r e r s .  1 year a f t e r the start-up  o f Sharp's  'ELSI' p l a n t f o r the p r o d u c t i o n  MOS-LSI and I C , t h e J a p a n e s e d o m e s t i c s e m i - c o n d u c t o r m a n u f a c t u r e r s  r e a c h e d a comparable use i n DTC.  level  T h i s advance  due t o t h e development  o f t e c h n o l o g y in- t h e p r o d u c t i o n o f MOS-LSI f o r i n their technological  programmes begun i n 1967  c a p a b i l i t i e s was ( i n which S h a r p  p a r t i c i p a t e d ) and t o t h e s t r o n g i m p e t u s f o r development a p p l i c a t i o n s once t h e enormous s i z e  primarily  had  o f L S I f o r DTC-  o f t h e p o t e n t i a l market  became  apparent. Partly turers, the to  due t o t h i s t e c h n o l o g i c a l  and p a r t l y b e c a u s e i t wasn't  advance  among d o m e s t i c J a p a n e s e  manufac-  f e a s i b l e f o r Sharp t o p r o d u c e a l l o f  v a r i o u s t y p e s o f L S I and I C which i t needs; t h e company has  continued  use o u t s i d e s o u r c e s f o r a major p o r t i o n o f i t s t o t a l r e q u i r e m e n t s .  - isa At  p r e s e n t (1975) a p p r o x i m a t e l y 20 - 25%  IC a r e met  by t h e  o f r e q u i r e m e n t s f o r DTC  LSI  and  'ELSI' p l a n t w i t h t h e b a l a n c e b e i n g p r o c u r e d f r o m o u t s i d e  sources. The  company's r e q u i r e m e n t s f o r L S I and  p r o d u c t i o n a r e met  90%  by t h e  'ELSI*  plant  IC f o r i t s t e l e v i s i o n  but t h e a b s o l u t e numbers a r e  a very s m a l l p r o p o r t i o n o f the t o t a l p l a n t p r o d u c t i o n (about Sharp's  i n - h o u s e MGS-LSI p r o d u c t i o n t e c h n o l o g y has  One  simplified  measure o f t h i s i s t h e f a c t  can  'pack!; about  ldfa).  advance s i n c e t h e  TT.  that the present techniques  ten times the c i r c u i t r y i n t o  T h i s advance s u b s e q u e n t  set  t o t h e o r i g i n a l TT  an e q u i v a l e n t - s i z e d has been a r e s u l t  g e n e r a t e d t e c h n o l o g i c a l advance r a t h e r t h a n o f any  subsequent  LSI.  of s e l f -  explicit  t r a n s f e r of technology. On of the  t h e o t h e r hand, whereas t h e L S I b e i n g p r o d u c e d ' E L S I ' p l a n t was  p r e s e n t l y produced  the world's  most advanced  L S I a r e n o t t h e most a d v a n c e d .  at the time of  f o r use i n DTC,  start-up  the.  -  169  -  Retrospect  Effect  o f t h e TT  While the  DTC  on t h e  i t might field  Environment  have been e x p e c t e d t h a t t h e i n t r o d u c t i o n  would r e d u c e t h e s t r e n g t h o f t h o s e DTC  an L S I p r o d u c t i o n t e c h n o l o g y t h i s was There  was  an i n i t i a l  w i t h such a c a p a b i l i t y  not, i n f a c t ,  p e r i o d o f about two held a s l i g h t  advantage  into  manufacturers  without  the case.  y e a r s d u r i n g which  manufacturers  over those without  t h e y were n o t dependant on o u t s i d e s e m i - c o n d u c t o r of  of LSI  manufacturers  because  f o r supplies  the necessary LSI. The  size,  use o f L S I I i n DTC power c o n s u m p t i o n ,  market t h a n had for  l e d , however, t o extreme r e d u c t i o n s i n c a l c u l a t o r and  c o s t s and,  previously existed.  very q u i c k l y ,  As a r e s u l t ,  MOS-LSI f o r use i n t h e s t a n d a r d t y p e s o f DTC  m a n u f a c t u r e r s moved q u i c k l y t o f i l l became f r e e l y all  available  o f t h e advanced  needed t o p r o d u c e  and r e l a t i v e l y  t e c h n o l o g y and  the f i n a l  p a s t and  lost  any  advantage  'built-in*  a l a r g e demand  semi-conductor  'standard' LSI  incorporating  'manufacturing*  soon  almost  processes  LSI production f a c i l i t i e s  have h e l d  quickly  i n t h e market f o r t h e  calculators.  a d d i t i o n , w i t h the advent became  larger  i n d u s t r y much e a s i e r t h a n i t had been i n  t h e y might  standard types of e l e c t r o n i c In  the  Such  'part*  most o f t h e  m a n u f a c t u r e r s w i t h t h e i r own  initial  and  demand.  cheap  t h e r e was  a much  product.  T h i s made e n t r y i n t o t h e DTC the  that  created  o f t h e L S I , t h e h i g h t e c h n o l o g y component  of  DTC  t o the LSI chip i t s e l f  to  low-wage a r e a s i n t h e l e s s - d e v e l o p e d c o u n t r i e s f o r f i n a l  r e - e x p o r t t o t h e consumer m a r k e t s .  and  This injected  could r e a d i l y  a new  be e x p o r t e d  assembly  and  c o m p e t i t i v e element  170  -  i n t o the avoid an  industry.  trade  Sharp, i t s e l f ,  restrictions  assembly o p e r a t i o n On  the  other  the  of the  f i n i s h e d DTC,  assembly o p e r a t i o n s  countries  also diminished.  entire c a l c u l a t o r (excluding a single 'part'.  As  emphasizing  the  merits  example o f t h i s  c a s e and  the  (COS)  conclusion.,;  manual  t e c h n i q u e whereby  trend  be  evanscent, over the technological  longer  despite  gained term the  development i n t h e  ongoing importance to the  the  produced  of thought i n  on  the  operations and  labour.  therefore,  a d v a n t a g e t o be  operations  s o r t o f advance would  back t o w a r d s i n t e g r a t e d m a n u f a c t u r i n g  little  LSI  l e s s developed  power s o u r c e ) can  most r e c e n t  of  of l o c a t i n g  s o p h i s t i c a t e d , c a p i t a l - i n t e n s i v e , equipment o p e r a t i o n s  i n v o l v i n g very  competitive  the  a result,  i n d u s t r y seems t o be  In  With t h i s ,  so-called 'calculator-on-substrate*  field  f o r assembly-type  i n low-wage a r e a s i n t h e  An  began  f o r e i g n consumer m a r k e t s .  amount o f t i m e r e q u i r e d  such s e p a r a t e  be t h e  p a r t l y to  imposed by t h e E u r o p e a n Economic Community  hand, o n g o i n g t e c h n o l o g i c a l development i n t h e  production  has  p a r t l y f a r t h e s e r e a s o n s and  i n Korea to supply  has. s t e a d i l y r e d u c e d t h e in  -  by  the  originally anticipated  t e c h n o l o g y t r a n s f e r proved to  acquired  field  company.  the f a c t t h a t the  of LSI  capacity for is likely  be  independent  t o p r o v e o f major,  - 171 -  TECHNOLOGY TRANSFER  CASE STUDIES  Case 3  P o l l u t i o n C o n t r o l Technology  -  TT  A.  (technology  General  1.  t r a n s f e r ) of P o l l u t i o n C o n t r o l  I n d u s t r i a l Machinery  Industry  a wide v a r i e t y o f c o m p a n i e s .  u s e f u l l y grouped i n t o t h r e e  major c a t e g o r i e s ,  ' S t a n d a r d ' machine t o o l p r o d u c e r s  (b)  S p e c i a l i z e d p l a n t equipment  (c)  I n d u s t r i a l plant  obviously,  required  extremely high  construction  as  however,  follows:  manufacturers. categories  i s i n the  amount  to support a s i n g l e u n i t of production. i n the  c a s e o f companies c o n t r a c t i n g  of e n t i r e i n d u s t r i a l  case of standard  concept  producers  d i f f e r e n c e over these three  'working c a p i t a l '  loose  T h e s e companies can,  (a)  significant  i n the  Technology  " i n d u s t r i a l machinery i n d u s t r y " i s a r a t h e r  incorporating  One  -  Background  The  be  172  plants.  machine t o o l and  It i s , typically,  of  This i s ,  for  the  much l o w e r  specialized industrial  equipment  producers. As  a consequence,-, i n d u s t r i a l  strong  t i e s t o and  organizations industrial  a relatively  ' p l a n t - m a k e r s ' a l m o s t i n v a r i a b l y have high  f o r financing during  plant.  of such o u t s i d e  d e g r e e o f dependence on  the  period  These r e l a t i o n s h i p s are  organizations  and  are  outside  of construction  of  an  u s u a l l y w i t h a l i m i t e d number  often  accompanied o r a f f i r m e d  by  o w n e r s h i p t i e s a n d / o r m a r k e t i n g agreements between t h e m a n u f a c t u r e r and outside  company o r group o f  Within  the  participant chemical,  companies.  ' p l a n t - m a k e r ' c a t e g o r y one  companies on  p u l p and  the  an  can  b a s i s of the  paper, food  processing,  make f u r t h e r d i s t i n c t i o n s between  type of i n d u s t r i a l etc.)  plant  i n which t h e y  are  (petro-  - 173 -  specialized.  The growth r a t e o f i n d i v i d u a l p l a n t - m a k e r s i s , o f c o u r s e ,  h i g h l y s e n s i t i v e t o growth r a t e s i n t h e i r c l i e n t somewhat between i n d i v i d u a l companies on t h a t the  1960*s was a p e r i o d  i n d u s t r i e s and would  basis.  In general,  however,  o f growth and p r o s p e r i t y f o r mast p l a n t - m a k e r s -  as a consequence o f J a p a n ' s o v e r a l l economic growth and p r o s p e r i t y that  during  period. 2. T h e Pace o f T e c h n o l o g i c a l The  quickening The  Change  r a t e o f t e c h n o l o g i c a l change i s n o t u n i f o r m o v e r a l l i n d u s t r i e s  However, d u r i n g  the  vary  t h e l a t e 1950's and t h e  i n t h e pace o f t e c h n o l o g i c a l  seemed t o be a g e n e r a l i z e d  change.  . . s i g n i f i c a n c e o f t h i s f o r t h e i n d u s t r i a l machinery i n d u s t r y  fact  that the l i f e - s p a n of t h e i r products or plant  - by one e s t i m a t e ,  a pattern  lay in  d e s i g n s was s h o r t e n e d  from an a v e r a g e o f 10 y e a r s i n t h e mid-1950's t o an  a v e r a g e o f 3 y e a r s i n t h e e a r l y 1970's.  period  1960's t h e r e  T h e t e n d e n c y seemed t o be t o w a r d s  o f t h e r a p i d i n t r o d u c t i o n o f new t e c h n o l o g y , f o l l o w e d  o f s a l e s based on t h a t t e c h n o l o g y , f o l l o w e d  by a b r i e f  by a f u r t h e r  introduction  o f new t e c h n o l o g y w h i c h , i f i t d i d n o t make t h e e x i s t i n g p r o d u c t o r p l a n t design  obselete,  did call  f o rextensive  redesign  or modifications.  As a  consequence i t became i n c r e a s i n g l y l e s s p o s s i b l e f o r a f i r m t o a c q u i r e s t a t e - o f - t h e - a r t t e c h n o l o g y and t h e n be a b l e and  marketing As  t o concentrate  an  based on t h a t t e c h n o l o g y f o r an e x t e n d e d p e r i o d  a r e l a t e d development, t h i s t r e n d  created  regarding  the  i n gaining  proprietary technologies.  case o f s m a l l  o f time.  organizations  t e c h n o l o g i c a l developments, a n a l y s i s o f f u t u r e  market n e e d s , and a s s i s t a n c e for relevant  production  a new ( o r s t r e n g t h e n e d an  e x i s t i n g ) dependency by many p a r t i c i p a n t companies on o u t s i d e f o r information  a  a c c e s s t o p a t e n t and l i c e n s e r i g h t s This  dependency was g r e a t e s t i n  and medium-sized companies i n t h e i n d u s t r y  as they,  _ 174 -  typically,  tended to l i m i t  t h e i r c a p a b i l i t i e s t o the production aspect of  m a n u f a c t u r i n g f o r t h e d o m e s t i c i n d u s t r y and t o be more h i g h l y as t o c l i e n t  industry  specialized  o r p r o d u c t l i n e - t h u s , b o t h more v u l n e r a b l e t o and  l e s s able t o a n t i c i p a t e  and cope w i t h t e c h n o l o g i c a l  change.  Among t h e s t r a t e g i e s a d o p t e d by s m a l l and medium-sized f i r m s , t h e p o l a r c a s e s seem t o be, on t h e one hand, t o seek a s m a l l s h a r e o f a l a r g e , sified  market  ( e g . p r o d u c t i o n o f e x h a u s t f a n s f o r use i n a wide v a r i e t y o f  industrial  s e t t i n g s ) and, on t h e o t h e r , t o seek a l a r g e s h a r e o f a  relatively  narrow, s p e c i a l i z e d  specialized  diver-  market  industrial applications).  (eg. precision  instruments f o r  Of t h e s e two s t r a t e g i e s ,  those  companies a d o p t i n g t h e l a t t e r would be more v u l n e r a b l e t o t h e e f f e c t s o f technological in their  change and more i n need o f t i m e l y a c c e s s t o new  chosen  technologies  fields.  One consequence o f t h i s  i n c r e a s e d dependence  on o u t s i d e  organizations  d u r i n g t h e 1960's may have been a growth i n t h e i m p o r t a n c e o f t h e J a p a n e s e trading  companies  ( w i t h t h e i r w o r l d - w i d e i n f o r m a t i o n networks and s p e c i a l i z e d  r e s e a r c h d i v i s i o n s ) i n m o n i t o r i n g t e c h n o l o g i c a l developments abroad, a s s e s s i n g t h e market f o r t h e s e t e c h n o l o g i e s i n J a p a n and - where i n d i c a t e d -  facilitating  t h e t r a n s f e r o f t e c h n o l o g y t o s u c h s m a l l and medium-sized J a p a n e s e  companies.  One p a r t i c u l a r l y good example  o f s u c h a t r e n d might be t h e f o r m a t i o n i n  t h e mid-1960's o f t h e Z j o i n t - v e n t u r e Company o f t h e heavy R & D  USA.  Company by Y T r a d i n g Company and X  X Company i s a l a r g e ,  h i g h - t e c h n o l o g y company w i t h a  commitment i n a v a r i e t y o f f i e l d s .  The Z j o i n t - v e n t u r e  was formed w i t h t h e e x p r e s s p u r p o s e o f f a c i l i t a t i n g t e c h n o l o g y i n J a p a n by making  Company  t h e m a r k e t i n g o f X Company's  o n g o i n g and c o o r d i n a t e d u s e o f t h e Y T r a d i n g  Company's c a p a b i l i t i e s f o r a n a l y s i s o f and m a r k e t i n g t o p r o s p e c t i v e J a p a n e s e customers.  - 175 -  3. The Emergence o f t h e P o l l u t i o n C o n t r o l The  p o l l u t i o n problems a s s o c i a t e d  became i n c r e a s i n g l y e v i d e n t  i n Japan during  however, s u c h p o l l u t i o n was an e x t e r n a l That i s , they incurred  with i n t e n s i v e  t h e l a t e r 1960's.  i n c e n t i v e s f o r the adaption  i n 1967, t h a t t h e r e  development  economy'.  provisions regarding  Japanese i n d u s t r i a l  i n t h i s new m a r k e t .  clause  by  as w e l l  (and some  p o l l u t i o n ) l e d , however, This  included  as much more e x p l i c i t and  a v a r i e t y o f farms o f p o l l u t i o n . t e c h n i q u e s and equipment  f a r a l a r g e s e c t o r o f J a p a n e s e i n d u s t r y and  equipment  i n d u s t r y was q u i c k  t o see t h e  opportunity  Moreover, as t h e p o l l u t i o n c o n t r o l r e g u l a t i o n s  typically  a s c h e d u l e o f l i m i t s on p o l l u t i o n which became i n c r e a s i n g l y s e v e r e  over time, t h i s  market was l i k e l y  advanced, equipment anti-pollution  t o be a c o n t i n u i n g  The  one a s new,  became n e c e s s a r y t o meet t h e p r o g r e s s i v e l y  regulations.  The S p e c i f i c T e c h n o l o g y T r a n s f e r  1.  p u b l i c pressure  t h e " a d o p t i o n o f p o l l u t i o n abatement  became a p r a c t i c a l n e c e s s i t y  B.  Growing  diminished  'harmony w i t h t h e sound  r e v i s i o n o f p o l l u t i o n c o n t r o l l a w s i n 1971.  a d e l e t i o n o f t h e above-mentioned  With t h i s ,  f o r ensuring  s u i t s brought by v i c t i m s o f i n d u s t r i a l  t o an e x t e n s i v e  provided  t o be any c l e a r  o f p o l l u t i o n c o n t r o l t e c h n i q u e s by J a p a n e s e  calling  of the nation's  dramatic c i v i l  the  began  E v e n t h e n , t h e f o r c e o f t h e law .was c o n s i d e r a b l y  i n c l u s i o n of a clause  stringent  or eradicating i t .  u n t i l t h e p r o c l a m a t i o n o f t h e B a s i c -Law f o r  Environmental P o l l u t i o n Control,  the  By and l a r g e ,  due t o t h e p o l l u t i o n n o r would  t h e y r e a p any m e a s u r a b l e b e n e f i t s by r e d u c i n g  industry.  industrialization  diseconomy t o t h e p o l l u t i n g f i r m s .  no m e a s u r a b l e c o s t s  I t was n o t , t h e r e f o r e ,  Industry  Role of Z Joint-venture  Company  more  restrictive  - 176 -  In  1972, t h e X Company o f t h e U S A , . f e e l i n g t h e r e was a p o t e n t i a l  market i n J a p a n f o r i t s a i r - s c r u b b e r t e c h n o l o g y  (a technique f o r reducing  t h e d i s c h a r g e o f p a r i t u l a t e s i n t o t h e atmosphere by i n d u s t r i a l  plants),  made t h e s u g g e s t i o n t o Y T r a d i n g Company t h a t t h e a i r - s c r u b b e r t e c h n o l o g y be marketed i n J a p a n t h r o u g h The  i n J a p a n and f e l t  that  happened, b o t h  lucrative  i t c o u l d be b e s t  companies.  exploited  A c c o r d i n g l y , companies As  o f t h e s e companies were a l r e a d y p r o d u c i n g a i r - s c r u b b e r s As a r e s u l t ,  technology., was more advanced and e n a b l e d  even t h o u g h t h e X Company  t h e p r o d u c t i o n o f a more compact  a i r - s c r u b b e r , n e i t h e r o f t h e s e two companies was w i l l i n g s c r u b b e r under l i c e n s e from exploit  Company.  s u b s i d i a r i e s o f Y T r a d i n g company - were a p p r o a c h e d .  using self-developed technology.  to  venture  t h a t t h e r e was a p o t e n t i a l l y  one o f i t s s u b s i d i a r y m a n u f a c t u r i n g  A and B - b o t h it  joint-venture, Z Joint  Y T r a d i n g company d e t e r m i n e d  market f o r t h e t e c h n o l o g y via  their  t o produce  Z J o i n t - v e n t u r e Company - p r e f e r r i n g ,  t h e i r self-developed technology.  As a r e s u l t ,  a  instead  the e f f o r t t o  market t h e X Company a i r - s c r u b b e r t e c h n o l o g y i n J a p a n was t e m p o r a r i l y * shelved'.  2.  D Manufacturing  Company - B a c k g r o u n d  D Manufacturing operated to  during i t s f i r s t  l a r g e r companies.  Company was f o u n d e d  i n t h e 1920's and was  30 y e a r s o r so a s a b o i l e r - m a k e r * s u b c o n t r a c t i n g  I n t h e mid-1950's, however, a d e c i s i o n  was made t o  b r e a k t h e p a t t e r n o f dependency a s s o c i a t e d w i t h s u b c o n t r a c t i n g by d e v e l o p i n g a c a p a c i t y t o do b u s i n e s s i n d e p e n d e n t The  management f e l t  technology, their to  that  labor-intensive,  from  i t s current a c t i v i t i e s industry offered  dependence on l a r g e r m a n u f a c t u r e r s .  move t h e company i n t o  a l a r g e r manufacturing  company.  i n a r e l a t i v e l y low-  little  hope o f e s c a p i n g  from  I t was d e c i d e d , t h e r e f o r e , t o t r y  a more p r o m i s i n g f i e l d ,  industrial  plant construction  -  and,  t o do  that,  i t was  felt  177  -  t h a t the  company would have t o  develop a  greater  independent t e c h n o l o g i c a l c a p a b i l i t y . To  t h i s end,  technical  the  company a d o p t e d a p o l i c y o f i n v e s t i n g more h e a v i l y  p e r s o n n e l by r e c r u i t i n g i n c r e a s e d  technically-trained  numbers o f e n g i n e e r s and  people i n i t s annual recruitment  P a r t l y as  a r e s u l t of t h i s p o l i c y , the  company was  to evolve  i n t o a plant-maker ( b u i l d i n g i n d u s t r i a l  c u s t o m e r s ) w i t h a s p e c i a l i z a t i o n i n p u l p and  able,  course of t h i s  r e l a t i o n s with outside marketing  plant  designs.  3»  f a r , being  was  experiencing  T h e r e was, in  Accordingly,  would n o t  t h a t with the  end  a general  plant  to Enter  of the  the  which had  growth and  profits.  was  most  close  financing company's  such important  Company.  i n the  early  f o r . new  r a p i d and  characterized  Field 1970*s D Company  plant  construction.  r e p e t i t i v e increases  much o f t h e  1960's  repeated. i n c r e a s i n g emphasis on i t s The  p o l l u t i o n - c o n t r o l equipment i n t h e  a t t r a c t e d the  n e c e s s a r y t o form  the P o l l u t i o n C o n t r o l  1960's and  corporate  equipment.  companies - t h e  Y Trading  company began t o p l a c e  therefore,  for  as w e l l ,  company e s t a b l i s h e d  o f s p e c i a l i z e d i n d u s t r i a l equipment.  large^market.;for  e a r l y 1960's,  purposes of o b t a i n i n g  slowdown i n i t s o r d e r s  capacity  soon, i f e v e r , be  Accordingly, production  i t was  moreover, a g r o w i n g f e e l i n g t h a t t h e  industrial  the  p a p e r p l a n t s and,  the  number o f t r a d i n g  D Company's D e c i s i o n Towards t h e  f o r the  by  i n c r e a s i n g l y , access to technology f o r the  r e l a t i o n s h i p s with a small o f w h i c h , by  evolution  organizations  s e r v i c e s , and,  p r o d u c t s and  corporate  other  graduates.  plants to order  producing a l i m i t e d range of s p e c i a l i z e d i n d u s t r i a l In the  o f new  in  sudden emergence o f  a  e a r l y 1970's n a t u r a l l y ,  company's a t t e n t i o n as a p o s s i b l e s o u r c e o f  future  - 178 -  As t h e company had no e x p e r i e n c e it  had t o l o o k t o o u t s i d e s o u r c e s  i n producing  pollution-control  f o r the necessary  t e c h n i c a l and market a s s e s s m e n t o f any g i v e n i t e m Therefore,  At t h i s ,  the e f f o r t  had  "shelved  1  technology  of a i r - p o l l u t i o n  equipment. which  begun  o f Technology  two p r i n c i p a l s i n v o l v e d i n t h e m a r k e t i n g  of the air-scrubber  i n J a p a n were X Company o f t h e USA and Y T r a d i n g Company. the technology  decided  companies t o l i c e n s e  between t h e s e  their  concerned.  v e h i c l e f o r marketing  was Z J o i n t - v e n t u r e Company.  t h a t they  The  I t was  two J a p a n e s e m a n u f a c t u r e r s  w i t h r e s t r i c t i o n s on t h e i r r e s p e c t i v e m a r k e t s s u c h w i t h one  control  i n 1972, was r e a c t i v a t e d and n e g o t i a t i o n s were  The A c t u a l T r a n s m i s s i o n The  technology.  t o market t h e X Company a i r - s c r u b b e r t e c h n o l o g y ,  between t h e v a r i o u s companies  4.  o f such  and f o r  i n 1973, D Company a p p r o a c h e d Y T r a d i n g Company t o s e e k  a s s i s t a n c e i n moving i n t o t h e p r o d u c t i o n  been  technology  equipment  -  would n o t compete  another.  D Company was a s s i g n e d t h e r i g h t s t o p r o d u c e t h e a i r - s c r u b b e r f o r t h e p u l p and p a p e r i n d u s t r y and C Company - a member o f t h e l a r g e group centered  corporate  on Y Company - was a s s i g n e d t h e r i g h t s t o p r o d u c e f o r s a l e  to the petrochemical  and m e t a l  refining  industries.  I n November 1973, D Company s i g n e d agreements w i t h Z J o i n t - v e n t u r e Company t o p r o d u c e t h e a i r - s c r u b b e r u n d e r l i c e n s e and w i t h Y T r a d i n g Company t o the marketing  o f D Company's o u t p u t  of air-scrubbers.  Company t o e n t e r i n t o t h e s e a g r e e m e n t s was made m a i n l y the t e c h n i c a l 'brochure'  handle  The d e c i s i o n o f D on t h e s t r e n g t h o f  e v a l u a t i o n and market f o r e c a s t s o f Y T r a d i n g Company and a  d e s c r i b i n g t h e a i r - s c r u b b e r and i t s o p e r a t i o n .  r e f l e c t s a c o n s i d e r a b l e amount o f c o n f i d e n c e  This  probably  by D Company i n b o t h X Company  -  and  Y Trading  Company - due  parties  Contract  a strong  communality o f i n t e r e s t o f a l l  a l i c e n s e t o use  t o pay  s a l e p r i c e of each u n i t s o l d . required.  The  however, t h e  T h e r e was  agreement s i g n e d  'hidden' cost  between D Company and  Company 2r% o f  'initial'  the  l i c e n s e payment  sales.  In  Y  Trading  addition,  company t o p u r c h a s e one  particular  e x c l u s i v e l y f r o m X Company i n  p a r t was  (at l e a s t i n the  g o i n g market v a l u e of a c q u i r i n g the  the& t i m e o f t h i s w r i t i n g  air-scrubber  h a n d l e d e x c l u s i v e l y by  o b l i g e d the  price specified for this  Company) i n e x c e s s o f t h e additional  no  commission o f 3[o o f t o t a l  standard  ( r e q u i r e d f o r each a i r - s c r u b b e r ) The  X Company's  to Z Joint-venture  a c t u a l s a l e s were t o be  Company f o r t h e  USA.  -  Provisions  t e c h n o l o g y , D Company was  part  was  established reputations  involved.  I n exchange f o r a c q u i r i n g  part  -  t o t h e i r l a r g e s i z e and  as w e l l as a f e e l i n g t h a t t h e r e the  179  and  view o f  air-scrubber  their  0  thus t h i s represented technology.  ( l a t e 1975), however, n e g o t i a t i o n s  X Company r e g a r d i n g  the  joint  an  At  were underway  production  of  this  i n Japan.  Transmission  of the  Technology  I n F e b r u a r y o f 1974, plant  i n t h e USA.  themselves with the  The  D Company s e n t  air-scrubber  I n September o f 1974,  This required  construction  and  and  i t s construction  operating  X Company s e n t  where t h e y a s s i s t e d i n t h e  The  e n g i n e e r s t o X Company's  group of e n g i n e e r s spent t h r e e  b r o u g h t back d e t a i l e d p l a n s  scrubber.  three  construction  only  of the  about one  air-scrubber  weeks and,  pilot  familiarizing on  their  return,  manuals.  three and  e n g i n e e r s t o D Company i n J a p a n  t e s t i n g of the  initial.air-  month, i n a l l . called  f o r no  s p e c i a l new  plant  -  expansion or c o n s t r u c t i o n company t o a c q u i r e  the  i n the  t r a n s l a t i o n of t e c h n i c a l material  o f a p r o t o t y p e machine.  one  i n t h e USA.  month s t a y  construction  A l l t h e s e c o s t s were b o r n e ,  by D Company - as were t h e  t o X Company's p l a n t with the  costs of sending t h e i r  In a d d i t i o n , a l t h o u g h the  i n Japan o f the  three  of  10,000 yen  explicitly engineers  costs  associated  e n g i n e e r s from X Company were  e n t e r t a i n m e n t e x p e n s e s , f o r each o f t h e  ( a r o u n d $33.00) p e r  day.  and  sample  r e s p o n s i b i l i t y o f X Company, D Company e s t i m a t e s t h a t i t ( o f i t s  volition) incurred  the  Technology  o f b l u e p r i n t s e t c . as w e l l as f o r t h e  or i m p l i c i t l y  necessary f o r  some s p e c i a l (Japanese-made) t o o l i n g e q u i p m e n t .  Some c o s t s were i n c u r r e d  p a r t s and  -  by 0 Company however i t was  I n c i d e n t a l Cost of acquiring  preparation  180  three,  of  own about  - 181 -  BIBLIOGRAPHY 1. E n g l i s h - L a n g u a g e m a t e r i a l  (a)  Books  A b b e g l e n , James.  The Japanese F a c t o r y .  G l e n c o e ; T h e F r e e P r e s s , 1958.  Almond, G.A. and P o w e l l , G.B. J r . C o m p a r a t i v e P o l i t i c s : B o s t o n ; L i t t l e , Brown, 1966. B u r n s , Tom e d .  I n d u s t r i a l Man.  H a l l , Edward T .  Approach.  Harmondsworth; P e n g u i n , 1973.  C o l e , Robert E . Japanese Blue C o l l a r . P r e s s , 1971. F e i n s t e i n , Otto ed. 1964.  a Developmental  Berkely; University  Two W o r l d s o f Change.  The Hidden Dimension.  of California  Garden C i t y , N.Y.; A n c h o r  Books,  New Y o r k ; D o u b l e d a y , 1966.  H a r b i s o n , F r e d e r i c k H., e t a l . Q u a n t i t a t i v e A n a l y s i s o f M o d e r n i z a t i o n and Development. P r i n c e t o n , N . J . ; P r i n c e t o n U n i v e r s i t y P r e s s , 1970. I n d u s t r i a l Bank o f J a p a n . Law c o n c e r n i n g f o r e i g n i n v e s t m e n t , t h e r e g u l a t i o n r e l a t i n g t o t h e e n f o r c e m e n t o f t h e law c o n c e r n i n g f o r e i g n i n v e s t m e n t and t h e f o r e i g n i n v e s t m e n t commission l a w . Tokyo; I n d u s t r i a l Bank o f J a p a n , 1950 ( c i t e d i n Ozawa, J a p a n ' s T e c h n o l o g i c a l C h a l l e n g e ) . I n s t i t u t e o f I n t e r n a t i o n a l . Investment. S e t t i n g up i n J a p a n . I n s t i t u t e o f I n t e r n a t i o n a l I n v e s t m e n t , 1973. K a p l a n , E.H. J a p a n : T h e G o v e r n m e n t - B u s i n e s s Department o f Commerce, 1972.  Relationship.  Tokyo;  Washington;  US  K o j i m a , K. and Wionczek, M.S. e d s . T e c h n o l o g y T r a n s f e r i n P a c i f i c Economic Development. Tokyo; J a p a n Economic R e s e a r c h C e n t e r , 1975. L i v i n g s t o n , J . e t a l . The Japan Reader. M c l e l l a n d , D a v i d C. 1961.  New Y o r k ; Random House, 1973.  The Achieving  Society.  P r i n c e t o n , N . J . ; Van N o s t r a n d ,  Moore, W.E. S o c i a l Change, Second H a l l , 1974.  edition.  Englewood  Cliffs,  N e g h a n d i , A.R. e d . E n v i r o n m e n t a l S e t t i n g s i n O r g a n i z a t i o n a l Kent, Ohio; Kent S t a t e U n i v e r s i t y P r e s s , 1970.  N.J.; P r e n t i c e -  Functioning.  O r g a n i z a t i o n f o r Economic C o o p e r a t i o n and Development. Gaps i n T e c h n o l o g y : A n a l y t i c a l R e p o r t . P a r i s ; OECD P u b l i c a t i o n s C e n t r e , 1970. . I n t e r i m R e p o r t o f t h e Committee on I n t e r n a t i o n a l E n t e r p r i s e s . OECD P u b l i c a t i o n s C e n t r e , 1974.  Paris  -  182 -  O r g a n i z a t i o n f o r E c o n o m i c C o o p e r a t i o n and D e v e l o p m e n t Development C e n t r e . C h o i c e and A d a p t a t i o n o f T e c h n o l o g y . P a r i s ; OECD P u b l i c a t i o n s , 1974. f  . . T r a n s f e r of Technology Publications Centre,ly'M.  t  —————  f o r Small I n d u s t r i e s .  P a r i s ; OECD  Qzawa, T e r u m o t o . J a p a n ' s T e c h n o l o g i c a l C h a l l e n g e t o t h e West, 1950-1974. C a m b r i d g e , Mass.; MIT P r e s s , 1974. Rostow, W.W. T h e S t a g e s o f E c o n o m i c Growth, Second U n i v e r s i t y P r e s s , 1971  edition.  Schumpeter, J o s e p h . T h e T h e o r y o f Economic D e v e l o p m e n t . H a r v a r d U n i v e r s i t y P r e s s , 1934. S m i t h , T.C. T h e A g r a r i a n O r i g i n s o f Modern J a p a n . S t a n f o r d U n i v e r s i t y P r e s s , 1959. Tilton,  United  Cambridge, Mass.;  Stanford,  California;  John E . ' I n t e r n a t i o n a l D i f f u s i o n - o f Technology: t h e case o f semic o n d u c t o r s . Washington; B r o o k i n g s I n s t i t u t e , 1 9 7 1 . S t a t e s , Department o f Commerce. F a c t o r s A f f e c t i n g t h e I n t e r n a t i o n a l T r a n s f e r o f T e c h n o l o g y among D e v e l o p e d C o u n t r i e s . Washington; US Government P r i n t i n g O f f i c e , F e b r u a r y , 1970.  Vernon, _______  Cambridge;  R. e  S o v e r e i g n i t y a t Bay.  Harmondsworth; P e n g u i n , 1973.  d - The Technology F a c t o r i n I n t e r n a t i o n a l T r a d e . U n i v e r i s t y P r e s s , 1970.  W e l l s , L o u i s T. J r . e d . T h e P r o d u c t L i f e - c y c l e Boston; D i v i s i o n o f Reaearch, Graduate t r a t i o n , H a r v a r d U n i v e r s i t y , 1972.  New York;  Columbia  and I n t e r n a t i o n a l T r a d e . School o f Business Adminis-  Yamamoto, N o b o r u . T h e M o d e r n i z a t i o n o f t h e Economy and P o s t w a r E x p a n s i o n T o k y o ; I n t e r n a t i o n a l A s s o c i a t i o n f o r E d u c a t i o n a l I n f o r m a t i o n , 1973. Y o s h i n o , M.Y. (b)  J a p a n ' s M a n a g e r i a l System.  Cambridge, Mass.; MIT P r e s s , 1968.  Articles  Adelman, I . and M o r r i s , C.T. "An e c o n o m e t r i c model o f s o c i o - e c o n o m i c and p o l i t i c a l change", T h e A m e r i c a n E c o n o m i c Review. V o l . L V I I I , No. 5, p a r t 1 (December 1968J, pp 1184-1217. Caves,  R i c h a r d E . " M u l t i n a t i o n a l f i r m s , c o m p e t i t i o n , and p r o d u c t i v i t y i n h o s t c o u n t r y m a r k e t s " , E c o n o m i c a , V o l . 41, No, 62 (May 1974) pp 176-193.  Giral,  Jose. "Development o f a p p r o p r i a t e c h e m i c a l t e c h n o l o g y : a programme i n M e x i c o " i n OECD. C h o i c e and A d a p t a t i o n o f T e c h n o l o g y i n Developing Countries. P a r i s ; OECD P u b l i c a t i o n s C e n t r e , 1974.  Hahn, F.A. and Matthews, R.C.O. "The t h e o r y o f economic E c o n o m i c J o u r n a l , V o l . 74 ( 1 9 6 4 ) .  growth:  a survey",  H a l l , G.R. and J o h n s t o n , R.E. " T r a n s f e r s o f U n i t e d S t a t e s a e r o s p a c e t e c h n o l o g y t o J a p a n " i n R. V e r n o n e d . T h e T e c h n o l o g y F a c t o r i n I n t e r n a t i o n a l T r a d e . New Y o r k ; C o l u m b i a U n i v e r s i t y P r e s s , 1970.  - 183  "Highway C o n s t r u c t i o n  . . ."  -  V a n c o u v e r Sun,  10 March, 1975.  p  25.  H o s e l i t z , B e r t F. " N a t i o n a l i s m , economic development and democracy" i n O t t o F e i n s t e i n ed. Two W o r l d s o f Change. G a r d e n C i t y , N.Y.; Anchor Books, 1964. J o h n s o n , R.T. and O u c h i , W.C. "Made i n A m e r i c a - u n d e r J a p a n e s e Management", H a r v a r d B u s i n e s s Review, September - O c t o b e r , 1974, pp 61-69. J o r g e n s o n , D.W. and G r i l i c h e s , Z. "The e x p l a n a t i o n o f p r o d u c t i v i t y change", Review o f E c o n o m e t r i c S t u d i e s , V o l . 34 ( 1 9 6 7 ) , pp 249-283. Kosobud, R i c h a r d . "The r o l e o f i n t e r n a t i o n a l t r a n s f e r o f t e c h n o l o g y i n J a p a n ' s economic growth", T e c h n o l o g i c a l F o r e c a s t i n g and S o c i a l Change, 5, 1973, pp 395-406. R u t t a n , V. " U s h e r and Schumpeter on i n v e n t i o n , i n n o v a t i o n , and t e c h n o l o g i c a l change", Q u a r t e r l y J o u r n a l o f E c o n o m i c s , November 1959, pp 596-606. Schmookler, J . "Economic s o u r c e s o f i n v e n t i v e a c t i v i t y " , H i s t o p y y March, 1962,•pp 1-20.  J o u r n a l of Economic  Sigelman, Lee, " L e r n e r ' s model o f m o d e r n i z a t i o n : a R e a n a l y s i s " , D e v e l o p i n g A r e a s . Nov 8, J u l y 1974, pp 525-536. Solow, R.M. " T e c h n i c a l change and t h e a g g r e g a t e p r o d u c t i o n Review o f E c o n o m i c s and S t a t i s t i c s , V o l . 39, 1957,  The  Journal  of  function", pp 312-320.  S p e n c e r , D a n i e l L, "An e x t e r n a l m i l i t a r y p r e s e n c e , t e c h n o l o g y t r a n s f e r , and s t r u c t u r a l change". K y k l o s , F a s c . 3. B a s e l ; , 1965, pp 451-474. V e r n o n , R. " I n t e r n a t i o n a l i n v e s t m e n t and i n t e r n a t i o n a l t r a d e i n t h e p r o d u c t c y c l e " , Q u a r t e r l y J o u r n a l o f E c o n o m i c s . V o l . LXXX, No. 2. (May 1966), pp 190-207. (c)  Miscellaneous  Japan, M i n i s t r y of F i n a n c e . of Finance, 1950.  A Guide t o Investment i n Japan.  Tokyo; M i n i s t r y  , M i n i s t r y of Foreign A f f a i r s . F o r e i g n Investment i n Japan. Tokyo; P u b l i c Information Bureau, M i n i s t r y o f F o r e i g n A f f a i r s , 1968. Hymer, S t e v e n . direct  " I n t e r n a t i o n a l o p e r a t i o n s of n a t i o n a l f i r m s - a study f o r e i g n i n v e s t m e n t " , Phd d i s s e r t a t i o n , MIT, 1960.  of  I n t e r n a t i o n a l Chamber o f Commerce, K o r e a N a t i o n a l Committee. Investment T r a n s f e r o f T e c h n o l o g y . B a c k g r o u n d p a p e r , Doc. No. 5 2 0 / X X l l / l . S e o u l ; I.C.C., K o r e a N a t i o n a l Committee, 1974. »  » T e x t s o f Speeches and R e p o r t s , A s i a n and F a r - E a s t e r n A f f a i r s . S e o u l ; Committee, 1974.  and.  22nd S e s s i o n , Committee f o r I.C.C., Korean N a t i o n a l  -  2.  Japanese-language (a)  184  -  material  Books  Ando, Y o s h i o , e d . K i n d a i N i h o n K e i z a i s h i Y o r a n . (A Handbook_of_modern Japanese economic h i s t o r y j . T o k y o ; U n i v e r s i t y o f Tokyp^ 1975. A r i s a w a , H i r o m i e d . N i h o n Sangyo H y a k u n e n s h i - Gekan. (A 1 0 0 y e a r i n d u s t r i a l h i s t o r y o f J a p a n - volume 2 j . T o k y o ; N i h o n K e i z a i S h i n b u n s h a , 1970. Arita,  Kyosuke. Sogo S h o s h a . Shinbunsha, 1970.  Fujiwara, Ichiro.  (General t r a d i n g  c o m p a n i e s ) . Tokyo;  Shihon J i y u k a t o Takokusekikigyo.  and m u l t i n a t i o n a l  enterprises J.  Tokyo;  (Capital  Nihon K e i z a i  G a i k o k u G i . j u t s u Donyu Y o r a n . (Foreign technology importation T o k y o ; JQkagaku Kogyo T s u s h i n s h a , 1 9 6 5 .  Nihon  Keizai  liberalization Shinbunsha,  1973.  handbook).  Hayashi, Y u j i r o , ed. S e k a i n i K a k e r u N i h o n no G i j u t s u . (Japanese technology c h a l l e n g i n g t h e w o r l d ) . T o k y o ; Kogakusha, 1972. Hazama, H i y o s h i . Nihonteki Keiei. K e i z a i Shinbunsha, 1971. Kanamori,  ( J a p a n e s e management).  H i s a o . K e i z a i S e i c h o no H a n a s h i . Nihon K e i z a i Shinbunsha, 1962.  (On economic  K o b a y a s h i , Y a s h i a k i . _ Showa K e i z a i s h i . (An economic era). Tokyo; Sotekkusha, 1975.  Tokyo;  growth).  history  K o k u s a i Rengo, ( U n i t e d N a t i o n s ) . S e k a i T o k e i Nenkan yearbook - 1 9 7 3 ) . Tokyo; Harashobo, 1974.  1973.  Watanabe, T o k u j i and H a y a s h i Y u j i r o . N i h o n no Kagaku Korjyo. chemical i n d u s t r y ) . T o k y o ; Iwanami S h o t e n , 1974.  (b)  Government Note:  Nihon  Tokyo;  o f t h e Showa  (Statistical  ( j a p a n *s  Publications  E x c e p t where o t h e r w i s e n o t e d , a l l government p u b l i c a t i o n s l i s t e d below a r e p u b l i s h e d by O k u r a s h a , I n s a t s u k y a k u ( M i n i s t r y o f F i n a n c e , P r i n t i n g O f f i c e ) and o n l y t h e i r d a t e o f p u b l i c a t i o n i s g i v e n . The o f f i c i a l o u t l e t f o r c u r r e n t J a p a n e s e government p u b l i c a t i o n s i s however n o t t h e Okurasho I n s a t s u k y o k u b u t , r a t h e r , S e i f u Kankobutsu S a b i s u S e n t a (Government p u b l i c a t i o n s s e r v i c e c e n t r e ) , Chiyoda-ku, Kasumigaseki 1 - 2 - 1 , Tokyo.  J i n k o Mondai S h i n g i k a i (Population c o u n c i l ) . N i h o n J i n k o no Doko Jinko o mezashite. (Japanese p o p u l a t i o n t r e n d s - towards a population), 1974. Kagaku G i j u t s u c h o  ( S c i e n c e and t e c h n o l o g y a g e n c y ) .  N e n j i Hokoku.  (importation  , G i j u t s u Donyu Hokoku.  of foreign  Gaikoku G i j u t s u  Seishi stable  Donyu  technology, annual r e p o r t ) v a r i o u s .  ( R e p o r t on t e c h n o l o g y i m p o r t a t i o n . ) . U n p u b l i s h e d ,  i n t e r n a l r e p o r t - • a- copy- o f w h i c t r isj. h e l d  i n t h e Kagaku G i j u t s u c h o  I  - 185 Library  i n Tokyo,  • .  >  1966.  Kagaku G i j u t s u c h o , Kagaku G i j u t s u Hakusho Showa 49 nen. ( W h i t e P a p e r on s c i e n c e and t e c h n o l o g y , 1974J 1974. , Kagaku G i j u t s u Y o r a n Showa 48 Nenpan. ( S c i e n c e and t e c h n o l o g y handbook, 1 9 7 3 J , 1973. K e i z a i K i k a k u c h o , Chosakyoku (Economic P l a n n i n g Agency, r e s e a r c h b u r e a u ) . S h o h i t o C h o c h i k u no Doko. ( T r e n d s i n consumption and s a v i n g s ) . Various years. K o s e i T o r i h i k i I i n k a i ( F a i r Trade Commission). Dokusen Hakusho, Showa 49 Nenpan (Monopoly White Paper'"',-. 1974 e d i t i o n ) , 1975. S o r i f u , T o k e i k y o k u ( O f f i c e o f _ t h e Prime M i n i s t e r , b u r e a u o f s t a t i s t i c s ) . Kagaku G i j u t s u Kenkyu C h o s a Hokoku, 1973. ( R e p o r t on t h e s u r v e y o f r e s e a r c h and development, 1 9 7 3 J . B i l i n g u a l . Tokyo; N i h o n T o k e i K y o k a i , 1974. T s u s h o s a n g y o s h o , K i g y o k y o k u ( M i n i s t r y o f . ' i n t e r n a t i o n a l t r a d e and i n d u s t r y "MITI" - E n t e r p r i s e b u r e a u ) . G a i k o k u G i j u t s u Donyu no G e n j o t o Mondaiten. ( P r e s e n t c o n d i t i o n s and i s s u e s o f f o r e i g n t e c h n o l o g y importation). TSkyo; Sangyo K y o k a i , 1962. ,  . G a i s h i Donyu: sono S e i d o t o J i t t a i . ^Induction of foreign investment: p r o c e d u r e s and a c t u a l s t a t u s J . Tokyo;. T s u s h o s a n g y o s h o , C h o s a k a i , 1960.  ,  . G a i s h i k e i k i g y o no Doko. enterprises J, 1973.  i  • G a i s h i k e i k i g y o " : sono J i t t a i t o E i k y o . e n t e r p r i s e s : t h e i r s t a t u s and i m p a c t J , 1968.  advance  (Trends i n f o r e i g n  N i h o n K i g y o no K o k u s a i t e k i T e n k a i . o f -'Japanese e n t e r p r i s e ) , 1973.  capital-related  (Foreign  (The  capital-related  international  , Kogyogijutsu I i n ( i n d u s t r i a l technology board). Gijutsu C h o s a Hokokusho. (Technology trends, r e s e a r c h r e p o r t ) . J i g y o Kohosha, 1963.  Doko Tokyo;  , Sangyo S e i s a k u k y o k u ( i n d u s t r i a l p o l i c y b u r e a u ) . Wagakuni K i g y o no K a i g a i J i g y o K a t s u d o , Showa 49 Nenpan. (the overseas business a c t i v i t i e s o f J a p a n ' s e n t e r p r i s e s , 1974 e d i t i o n ) , 1974. MITI —  see  Tsushosangyosho,  Nihon Ginko, Tokeikyoku (Bank o f J a p a n , s t a t i s t i c s d e p a r t m e n t ) . Keizai T o k e i Nenpo. (Economic s t a t i s t i c s a n n u a l ) . Tokyo; N i h o n G i n k o Tokeikyoku, various years.  (c)  Miscellaneous  " ' G i j u t s u N i b a n t e ' d a p p i e" (Outgrowing Kogyo S h i n b u n , A u g u s t 5, 1975. Kanamori,  'hand-me-down' t e c h n o l o g y ) ,  Nihon  H i s a o . "Nihon no k e i z a i s e i c h o r i t s u wa naze t a k a i ka" (Why i s J a p a n ' s economic growth r a t e h i g h ? ) , K e i z a i B u n s e k i , V o l . 31, July,, 1970, pp 1-9.  

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Country Views Downloads
China 15 6
United States 12 0
Japan 5 1
France 3 0
United Kingdom 2 0
Netherlands 2 0
Russia 2 0
Ireland 2 0
Republic of Korea 1 0
Malaysia 1 0
City Views Downloads
Unknown 17 13
Shenzhen 8 6
Beijing 6 0
Ashburn 3 0
Columbus 3 0
Mountain View 2 0
Wilmington 2 0
Foxrock 2 0
Chicago 1 0
Hangzhou 1 0

{[{ mDataHeader[type] }]} {[{ month[type] }]} {[{ tData[type] }]}
Download Stats

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
http://iiif.library.ubc.ca/presentation/dsp.831.1-0093522/manifest

Comment

Related Items