MITI is the third largest funder (13 percent). (See pp. 

 9-13.) 



• Besides its funding and policymaking roles, the Jap- 

 anese Government also performs R&D through more 

 than 80 national institutes and public corporations 

 which conduct ongoing research. There are a number 

 of large-scale, special R&D programs that have been 

 initiated by STA and MlTl; these focus primarily on 

 basic research and development of new technologies. 

 (See p. 15.) 



industrial r&d 



• Industrial R&D has always been the most prominent 

 sector in the Japanese system, accounting for 69 per- 

 cent of all R&D funds in 1985 (compared with 49 per- 

 cent in the United States). Less than 2 percent of direct 

 industrial R&D funds comes from the Japanese Gov- 

 ernment, compared to 35 percent in the United States. 

 (See p. 17.) 



• Japanese industrial R&D expenditures increased at an 

 average annual rate of 11 percent from 1965 to 1985; 

 U.S. total industrial R&D increased at a rate of 3 per- 

 cent and company-funded R&D at a rate of 5 percent 

 for the same period. Consequently, Japanese indus- 

 trial R&D expenditures increased from less than one- 

 tenth of the U.S. level in 1965 to one-third of the total 

 U.S. level and one-half of the company-funded level 

 in 1985. Japanese industrial R&D expenditures were 

 constant $24.4 billion in 1986; total U.S. expenditures 

 were constant $73.3 billion with company-funded R&D 

 expenditures of constant $47.9 billion. (See p. 18.) 



• As a percentage of GNP, Japanese industrial R&D 

 more than doubled from 1965 to 1986. In 1986, this 

 ratio was comparable to that of the United States: 1.9 

 percent and 2.0 percent, respectively. Since Japanese 

 industrial R&D is almost entirely (98 percent) financed 

 by companies themselves, Japanese company-funded 

 R&D as a percentage of GNP has surpassed the U.S. 

 ratio every year since 1970. In 1985 and 1986, the ratio 

 of company-funded R&D to GNP was 1.9 percent for 

 Japan and 1.3 percent for the United States. (See p. 

 18.) 



• Electrical machinery, chemicals, general machinery, 

 and the motor vehicles industries are the four largest 

 performers of manufacturing R&D in Japan. These 

 industrial sectors together accounted for 68 percent of 

 manufacturing R&D in 1965 and 73 percent in 1985. 

 The United States has a slightly different set of the 

 largest company-funded R&D performers of manu- 

 facturing R&D (electrical machinery, chemicals, motor 

 vehicles, and professional and scientific instruments); 

 they accounted for 70 percent of manufacturing R&D 

 in 1985. (See p. 19.) 



• The ratio of R&D to net sales for all Japanese manu- 

 facturing industries in 1985 was 2.7 percent, compared 

 to 2.8 percent for company-funded R&D in the United 

 States. The ratios for the two countries were similar 

 for many manufacturing industries. Drugs and med- 

 icines, communications and electronic equipment, and 

 professional and scientific instruments were the most 

 R&D-intensive industries in both countries. (See p. 

 20.) 



• R&D is slightly less concentrated in Japan than in the 

 United States. In 1985, the top five Japanese R&D 

 firms accounted for 18 percent of total manufacturing 

 R&D, compared to 23 percent for the top five U.S. 

 firms. For most manufacturing industries, the levels 

 of industrial R&D concentration are lower in Japan 

 than in the United States; an appreciably higher level 

 of Japanese industrial R&D dominance is found only 

 in the iron and steel industry. (See p. 20.) 



• During the past 2 decades, the number of Japanese 

 industrial R&D scientists and engineers has increased 

 at an average annual rate of 7.1 percent; in the United 

 States, this increase was 2.5 percent. By 1985 Japan 

 employed 231,000 scientists and engineers engaged in 

 industrial R&D, two-fifths as many as the U.S. 570,000 

 full-time equivalent. (See p. 21.) 



• Although Japan has a lower absolute number of in- 

 dustrial scientists and engineers, its ratio of manufac- 

 turing R&D scientists and engineers per 10,000 

 employees is higher than that of the U.S. (which uses 

 full-time equivalent scientists and engineers). The Jap- 

 anese ratio in 1985 was 470, compared to 400 for the 

 United States. (See p. 21.) 



higher education 



• In contrast to the U.S. system of relying principally 

 on separately budgeted R&D project awards, Japan 

 depends principally on a system of institutional fund- 

 ing in which universities and colleges receive general 

 university funds (GUF) from the national Government 

 for teaching, research, and facilities and equipment. 

 Three-quarters of all Japanese higher education R&D 

 funds are received through such general funds, whereas 

 an estimated three-quarters of U.S. higher education 

 R&D funds are obtained from specifically budgeted 

 project items. (See p. 24.) 



• Nearly 31 percent of Japan's natural scientists and 

 engineers engaged in R&D in 1985 were in higher 

 education (60 percent of these were in health-related 

 fields), compared with 14 percent of such personnel 

 in the United States. As a share of total R&D, higher 

 education R&D expenditures account for 20 percent 

 in Japan and 12 percent in the United States. Both in 

 Japan and the United States, however, the higher ed- 



XI 



