For virtually all other major S/T indicators, Japan 

 and the United States now demonstrate similar char- 

 acteristics. For example, both countries have virtually 

 the same ratio of R&D to GNP (2.7-2.8 percent); both 

 distribute their R&D funds in similar proportions across 

 basic and applied research and development; both have 

 approximately the same number of R&D scientists and 

 engineers per 10,000 labor force; and so on. In the years 

 since World War 11, Japan has turned itself into the world's 

 second largest market economy, and its S/T indicators 

 reflect the level of effort of a mature industrial economy. 



Unlike the major S/T input indicators, Japan and the 

 United States have less similar experiences with their 

 output and impact indicator performance. Japan's share 

 of the world's scientific literature increased slightly (from 

 5 percent to 7 percent) during 1973-82, while the U.S. 

 share remained fairly constant at 37-39 percent. Over 

 the 1970-86 period, Japan's share of patents granted an- 

 nually in the U.S. patent system increased from 4 per- 

 cent to 19 percent; the U.S share declined from 73 percent 

 to 54 percent during this period. The trade performance 

 of the two nations in technology-intensive products was 

 similarly inverse: the United States' share of world ex- 

 ports of technology-intensive goods declined slightly from 

 28 percent in 1965 to 24 percent in 1985; Japan's share 

 almost tripled from 7 percent to 19 percent. 



Japan's accomplishments have been the result of 

 several phases of national effort. The first phase of Ja- 

 pan's S/T efforts, which occurred from the immediate 

 postwar period through the early sixties, did not involve 

 indigenous R&D investment so much as a reorientation 

 of Japanese industry. Throughout the period, there was 

 large-scale financial investment aimed at transforming 

 Japan's economy from light manufactures to heavy in- 

 dustry. The acquisition of foreign technology was an 

 integral part of this strategy, and technology was pur- 

 chased which would allow Japan to both manufacture 

 new products and introduce new techniques for the pro- 

 duction of existing goods. Once the new industrial base 

 was established, Japan embarked on its own research 

 and technology development. 



This report is concerned with Japanese S/T efforts 

 following the "pre-R&D" era, and provides a quantita- 



tive comparison of U.S. and Japanese S/T activity prin- 

 cipally for the period 1965-85. (Comprehensive data are 

 avaOable on Japan only through 1985; where 1986 data 

 are available, they are so reported.) The patterns over 

 the 20-year period reveal two distinct phases of R&D for 

 both countries. In 1965, the United States' R&D effort 

 was beginning to peak in terms of total constant R&D 

 expenditures and concentration of R&D personnel in the 

 labor force; this level of performance bottomed out in 

 the mid- to late seventies and was not regained until the 

 early 1980's. In contrast, Japanese R&D grew throughout 

 the period, increasing substantially from 1965 to the mid- 

 seventies, slowing slightly at that time, and then rees- 

 tablishing its momentum, as did the United States' R&D. 



Much quantitative information is available on Ja- 

 pan's scientific research and experimental development. 

 While most data for the United States and Japan are 

 directly comparable, there are some definitional differ- 

 ences in particular statistical series; in such cases, em- 

 phasis is placed on each country's trends rather than on 

 absolute values. Appendix A, "Technical Notes," details 

 such differences and any adjustments that were made 

 to the Japanese or U.S. data to make them more com- 

 parable. 



Another comparative problem arises when Japanese 

 expenditures are converted into U.S. dollars. Yen-dollar 

 market exchange rates have become rather volatile, re- 

 flecting dynamics that are increasingly independent of 

 the relative purchasing power of the currencies. To avoid 

 the distortions that arise from market exchange rate con- 

 versions, purchasing power parities calculated by the 

 Organisation for Economic Co-operation and Develop- 

 ment are used to convert yen to dollars. Additionally, 

 GNP implicit price deflators are used to convert current 

 dollars into constant 1982 dollars in order to provide time 

 series data that reflect real, rather than nominal, trends 

 in expenditures. A brief discussion of purchasing power 

 parities is included in appendix A. 



This report profiles patterns in the major R&D per- 

 forming sectors and analyzes S/T output and impact in- 

 dicators in order to provide a comprehensive comparison 

 of Japanese SfT resources with those of the United States. 



VIII 



