By 1985, most Japanese manufac- 

 turing industries were investing at 

 least one-half of the company-funded 

 R&D amount of their U.S. counter- 

 parts (chart 20). In the textiles, ce- 

 ramics, and iron and steel industries, 

 actual Japanese R&D expenditures 

 exceeded U.S. levels by nearly 2 to 

 1 or more. In only two industries — 

 petroleum and professional and sci- 

 entific instruments — were Japanese 

 R&D expenditures significantly less 

 than one-half that of the U.S. These 

 high levels of industrial R&D 

 expenditures are particularly im- 

 pressive if it is recalled that in 1985 

 Japan's GNP was little more than 

 one-third of the United States'. 



r&d to net sales and 

 r&d concentration 



The relative importance of R&D 

 can be gauged by measuring the 

 proportion of available resources 

 being invested in R&D. The ratio of 

 company-funded R&D expendi- 

 tures to net sales provides a measure 

 of R&D intensity which can be com- 

 pared across industries and coun- 

 tries. This ratio for all Japanese 

 manufacturing industries in 1985 was 



2.7 percent — slightly less than the 



2.8 percent reported for company- 

 funded R&D in the United States 

 (chart 21). Generally, those Japanese 

 industries with R&D expenditures 



Chart 20. R&D expenditures in manufacturing by selected industries: 1985^ 



[Constant 1982 dollars] 



Millions of dollars 

 2.000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 



2,000 



4,000 6,000 8,000 10.000 12,000 14,000 16.000 



^U S daia are company-funded 



NOTE U S data have been adiusled. computers tiave been removed from the general machinery classilicafion to 



electricaf machinery 



SOURCE: Naiional Science Foundation, SRS. table Bt7 



equivalent to about 60 percent or 

 more of their U.S. counterparts had 

 the same or higher R&D to net sales 

 ratios as the U.S. industries; Japa- 

 nese industries with R&D expendi- 

 tures equivalent to less than about 

 60 percent of U.S. industries had ra- 

 tios lower than those for the United 

 States. Drugs and medicines was the 

 most R&D-intensive industry in Ja- 

 pan with an R&D to net sales ratio 

 of 7 percent; it was followed by com- 

 munications and electronic equip- 

 ment (5.3 percent) and professional 

 and scientific instruments (4.5 per- 

 cent). In the United States, the 

 professional and scientific instru- 

 ments (9 percent), drugs and med- 

 icines (8.4 percent), and 

 communications and electronic 

 equipment (7.6 percent) industries 

 were the most R&D intensive. 



Evidence indicates that R&D is 

 slightly less concentrated in Japan 

 than in the United States. In 1985, 

 the top five Japanese R&D firms ac- 

 counted for 18 percent of total man- 

 ufacturing R&D compared to 23 

 percent for the top five U.S. firms 

 (table B-18). For most manufactur- 

 ing industries, the levels of indus- 

 trial 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. 

 U.S. company-dominance of R&D is 

 much higher than Japan's in the in- 

 dustrial chemicals, ceramics, fabri- 

 cated metals, general machinery, 

 motor vehicles, and professional and 

 scientific instruments industries. 



In Japan, the greatest levels of 

 company concentration of manufac- 

 turing R&D occurred in the iron and 

 steel (78 percent of R&D accounted 

 for by the top five R&D firms), pe- 

 troleum and coal (71 percent), motor 

 vehicles (69 percent), and rubber (60 

 percent) industries. In the United 

 States, the concentration was high- 

 est in the motor vehicles (96 per- 

 cent), petroleum and coal (71 

 percent), industrial chemicals (70 

 percent), and professional and sci- 

 entific instruments (65 percent) in- 

 dustries. 



20 



