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Industrial Policy, Innovation Policy, and Japanese Competitiveness

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  • Marcus Noland

    () (Peterson Institute for International Economics)

Abstract

Japan faces significant challenges in encouraging innovation and entrepreneurship. Attempts to formally model past industrial policy interventions uniformly uncover little, if any, positive impact on productivity, growth, or welfare. The evidence indicates that most resource flows went to large, politically influential “backward” sectors, suggesting that political economy considerations may be central to the apparent ineffectiveness of Japanese industrial policy. Rather than traditional industrial or science and technology policy, financial and labor market reforms appear more promising. As a group, Japan's industrial firms are competitive relative to their foreign counterparts. Japan falls behind in the heavily regulated service sector. The problems are due less to a lack of industrial policy than to an excess of regulation. Japan may have more to gain through restructuring the lagging service sector than by expending resources in pursuit of marginal gains in the industrial sector.

Suggested Citation

  • Marcus Noland, 2007. "Industrial Policy, Innovation Policy, and Japanese Competitiveness," Working Paper Series WP07-4, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp07-4
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    Cited by:

    1. Georgy Idrisov, 2016. "Towards modern industrial policy for Russia," Research Paper Series, Gaidar Institute for Economic Policy, issue 169P, pages 157-157.
    2. Liu, Feng-chao & Simon, Denis Fred & Sun, Yu-tao & Cao, Cong, 2011. "China's innovation policies: Evolution, institutional structure, and trajectory," Research Policy, Elsevier, vol. 40(7), pages 917-931, September.
    3. repec:wsi:ceprxx:v:02:y:2013:i:01:n:s1793969013750010 is not listed on IDEAS

    More about this item

    Keywords

    Japan; industrial policy; innovation policy;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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