R & D Rivalry, Industrial Policy, and U.S.-Japanese Trade

Abstract

The authors examine how the strategic aspect of Japanese research and development expenditures and industrial policies affected U.S.-Japanese bilateral trade during the late 1970s, and investigate which component of R&D--expenditures on process innovation, product quality improvements, new products and new technology, or technology transfer--proved to be most effective. They find that while Japanese R&D expenditures have generally promoted Japan's trade advantage, certain components of R&D have proved more effective than other. The depreciation subsidy and special status with the Ministry of International Trade and Industry is positively related to the Japanese trade performance, while legal cartelization status has not had any apparent effect. Copyright 1988 by MIT Press.