Table 9. Japanese receipts and 

 payments for technical know-how, 

 shares by country: 1975 and 1985 



[Percent] 



SOURCE: Government ot Japan. Science and Technology Agency 



R&D expenditures declined signifi- 

 cantly from 1975 to 1985 for all man- 

 ufacturing industries except ceramics 

 (which increased by 1 percentage 

 point) and food processing (which 

 remained the same) (table B-28).'" In 

 1975, the ratio of payments to R&D 

 for all manufacturing industries was 

 11 percent; in 1985, 5 percent. By 



"There are two series of data available for Japa- 

 nese technology transfer. One series is provided by 

 the Bank of Japan and the other by the Govern- 

 ment's Statistics Bureau, and there are some major 

 differences between the two series. The Bank of 

 Japan data are on all economic sectors (government, 

 services, etc.), and reflect only transactions mvolv- 

 ing the payment of royalhes and fees. Statistics Bu- 

 reau data are derived from the annual Rc&D survey 

 (see appendix A, "Technical Notes") and on the 

 industrial sector only. Additionally, the Statistics 

 Bureau data include not only royalhes and fees, but 

 services and sales of whole manufacturing plants if 

 technology is transferred in the transachon. The 

 consequence is that the Statistics Bureau data show 

 a higher volume of technology exports (32 percent 

 higher in 1985) and a lower volume of imports (51 

 percent lower in 1985) than do Bank of Japan data. 



The data discussed in this sechon are from the 

 Statistics Bureau, as disaggregated manufacturing 

 data are not available from the Bank of Japan (the 

 Bank of Japan royalhes and fees data are presented 

 in chapter 1, "NaHonal Patterns"). For more infor- 

 mation on technology transfer data from Japan, see 

 Leonard H. Lynn, "Technology Transfer to Japan: 

 What We Know, What We Need to Know, and What 

 We Know That May Not be So," in Nathan Rosen- 

 berg and Claudio Frischtak, eds., hiternatwnal Tech- 

 nology Transfer: Concepts. Measures, and Comparisons 

 (New York, New York: Praeger, 1985), pp. 255-276. 



1985, in no industry other than ce- 

 ramics did Japanese purchases of 

 technical know-how exceed 8 per- 

 cent of the respective industry's R&D 

 expenditures, and in most indus- 

 tries this ratio was 5 percent or less. 

 As Japanese industry's overall de- 

 pendence on foreign technology ap- 

 pears to have decreased over the past 

 decade, some interesting industrial 

 patterns have emerged. For several 

 industries (textiles, chemicals, iron 

 and steel, and motor vehicles), the 

 technology know-how receipt to 

 payment ratio exceeded 100 percent 

 in 1985 while real payments for tech- 

 nology declined or remained the 

 same: this indicates that the attrac- 

 tiveness of Japanese science and 

 technology in these areas is increas- 

 ing. In fact, for the iron and steel 

 industry, receipts for Japanese tech- 

 nical know-how exceeded Japanese 

 payments by almost 6 to 1. The re- 

 ceipt to payment ratio for all Japa- 

 nese manufacturing industries was 

 36 percent in 1975 and 72 percent in 

 1985, and was about 50 percent or 

 higher for most industries by 1985 

 (table B-28). 



technology trade 



National R&D efforts are often as- 

 sociated with changing positions in 

 world trade. Comparative experi- 

 ence indicates that there is not a one- 

 to-one relationship between R&D 

 efforts and trade performance; rather, 

 a more indirect effect exists because 

 of the large number of variables af- 

 fecting international trade. ''^ Success 

 in international trade is only par- 

 tially dependent on having a good 



innovation; products have to be pro- 

 duced efficiently and marketed ef- 

 fectively to have an impact on trade. 

 In addition, international differ- 

 ences in costs of production, trade 

 barriers, and exchange rates can ad- 

 versely affect the sales of otherwise 

 attractive products. 



Given these caveats, it has never- 

 theless been shown that R&D and 

 technological innovation do play a 

 major role in trade performance.*^ 

 Japan has improved its position in 

 international trade in tandem with 

 its R&D expansion to such a degree 

 that Japan's improved trade position 

 with the United States has been a 

 salient political issue for several years. 

 Japanese technology-intensive trade 

 with the United States has also 

 markedly improved over the 1965- 

 85 period. The Japanese trade sur- 

 plus with the United States in tech- 

 nology-intensive''^ goods increased 

 from current $143 million in 1965 to 

 current $13 billion in 1985 (chart 32). 

 Large trade surpluses existed in 1985 

 in radio and television receiving 

 equipment, communications equip- 

 ment, office and computing ma- 

 chines, and professional and 

 scientific instruments. On the other 

 hand, however, Japan had a nega- 

 tive trade balance in aircraft and 

 parts, industrial inorganic chemi- 

 cals, drugs, and agricultural chem- 

 icals (table 10). Japan has increased 

 its world share of technology-inten- 



^^Raymond Vernon, Then Technology Factor in In- 

 ternational Trade (New York, New York: National 

 Bureau of Economic Research, 1970); and Sherman 

 Gee, Technology Transfer, Innovation, and International 

 Competition (New York, New York: John Wiley and 

 Sons, 1981). 



*See, for example, both Vernon and Gee, op. cit. 

 Also see Rachel McCuUoch, Research and Develop- 

 ment as a Determinant of U.S. International Competi- 

 tiveness (Washington, D.C.: National Planning 

 AssociaHon, 1978); and Regina K. Kelly, The Impact 

 of Technological Innovation on International Trade Pat- 

 terns, Paper presented at the Conference on Gov- 

 ernment industry Cooperation in Technological 

 Innovation (Geneva, Switzerland, June 1977). 



'^here is no universally accepted definihon of 

 technology-intensive products. The definition used 

 here is one that was adopted by the Organisahon 

 for Economic Co-operaHon and Development and 

 the U.S. Department of Commerce (DOC2 defini- 

 hon): technology-intensive products are those prod- 

 ucts for which U.S. R&D expenditures exceed 2.36 

 percent of sales. See table 10 for a list of the product 

 fields included. 



36 



