Tsukada and Nagaoka (2015) highlights the role of cultural distance in shaping the pattern of innovative activity in Northeast Asia. The paper demonstrates the intuitively plausible notion that lack of facility in English hinders international research collaboration, a fact of life that creates challenges for populations whose languages are, linguistically speaking, far from English. Such challenges are particularly acute for native Japanese, Korean, and Chinese speakers, but also present difficulties for native speakers of other languages such as Arabic that are quite distinct from English. Beyond the language issue, however, there are marginal differences in the patterns of cooperation and ownership across the reporting countries with one exception – China – which really stands out. It is the only country where domestic sole ownership is not the dominant mode of patenting. The China difference strikes me as worth exploring. Is it due to China simply being at a much lower level of income than the others? That is to say, if one added other middle- or low-income countries into the sample, would one obtain similar results, or do the Chinese results reflect something distinctive about China per se? If the answer is the latter, then what makes China different? Where the paper might go further is in the exploitation of sectoral results. Specifically, Arora et al. (2013) demonstrate that software patents have become an increasingly prominent component of patenting overall and that this sector is associated with some distinctive patterns. The rise of software has had a significant impact on Japanese patenting behavior and its pattern of international collaboration. As Tsukada and Nagaoka (2015) observe on page 15, the estimated regression coefficients for Japan, while having the same sign pattern as those obtained for the USA and Korea, are only about one-tenth the magnitude, “which may imply significant opportunity less from realizing the gains from international co-inventions in Japan.” Japan lags in international cooperation and exhibits relative weakness in the rapidly growing software sector. Specifically, Japan absorbs far fewer immigrant information technology (IT) workers than does the USA; by 2001, labor inflow into the software sector from homegrown and immigrant sources was three times as large in the USA as Japan, driven in significant part by the US importation of software professionals via its H-1B visa program. In addition to its greater importation of talent, American firms were more active than their Japanese counterparts in offshoring software activities as well. So the USA appears to engage in international cooperation in this crucial sector far more intensively than does Japan on both as a sender and as a receiver. An open issue is whether this pattern reflects a failure of Japanese management. One hypothesis is that Japanese managers are simply blind to what is happening around them. Another is that they understand their predicament, but are constrained by the attenuated supply of software professionals at home. If the latter is the case, then it is possible that Japanese firms will exhibit compensatory behavior in their international collaboration activities undertaken abroad. Arora et al. (2013) show that in fact, software patents account for only 6% of overall Japanese patents, but 24% of Japanese patents issued in the USA, which is higher than the 17% share prevailing among American firms. This is to say that Japanese managers seem to understand their problem and use international collaboration to compensate. The deeper policy issue confronting Japan is how do deal with the underlying weakness. Should Japan redouble its efforts to teach English in its educational system? Should Japan relax its immigration laws? Should it adopt changes in its pension and promotion systems to make it easier for Japanese scientists and engineers to change jobs? These questions are particularly important as Japan (and Korea for that matter) move into more long-cycle and science-based activities.
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