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Determinants of R and D Activity in Japan
Author(s) -
Cortes Bienvenido
Publication year - 1994
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/j.1467-8381.1994.tb00018.x
Subject(s) - rivalry , profitability index , economics , competition (biology) , investment (military) , classical economics , macroeconomics , finance , political science , ecology , politics , law , biology
Numerous studies by Schumpeter (1950), Comanor (1965, 1967), Mansfield (1988), and Scherer (1992), among others, have identified and analysed various causes and motivations for firms’innovative activity including firm size, profitability, market concentration, ‘returns’to R and D investment, and interfirm rivalry. 1 Recent international trade studies indicate that comparative advantage results partly from investment in R and D. According to Takenaka (1991), R and D activity in Japan is primarily led by the private sector, it is becoming more capital‐intensive, and has a higher marginal profitability. He also argues that despite the strong relationship between R‐and‐D‐intensive industries and technology imports (which fuels the criticism that Japan ‘freeloads’on the R and D activity of other countries), basic research as a percentage of R and D spending is higher in Japan than in the US. Mansfield states, however, that Japanese basic research has not been productive and that much of Japan's success is due to its ‘applied R and D’. Another important difference, Mansfield points out, is that R and D spending is more positively related to firm size in Japan than in the US. 2 This paper analyses the determinants of R and D spending in Japan. In particular, it looks at the relationships between R and D activity and factors such as firm size, profitability and the degree of competition or rivalry in the market. The study uses cross‐sectional data for a number of major industries in Japan.