As an era of mega-competition unfolds, Japan must develop its national environment to make it attractive for both companies and individuals. The key to this endeavor is to boost industrial productivity, which is achieved through independent efforts of the private-sector, such as those to reform the supply-side structure, to promote industrial innovation, and to create new industries and businesses.
Countries such as the United States are currently designing and executing policies to strengthen industrial competitiveness. In Japan, however, the government is only slowly moving toward the reform of institutions and policy frameworks relevant to corporate technological capacity, which is beginning to slip. To break out of this track and boost productivity and competitiveness, Japan needs to promote joint projects among industries, academia, and the government. Such joint projects should establish concrete objectives and require unified efforts of relevant ministries and agencies. Japan also needs to create a better business environment by providing relevant systems and public infrastructure. Especially, Japan should improve transport infrastructure, which will strengthen the foundation under all other industrial activities by contributing to smooth and efficient distribution of goods.
To enhance industrial competitiveness, it is necessary to make maximum use of market dynamism and to have the actors of industries, academia, and the government fully contribute their resources. These three actors should recognize their respective roles and tasks, and develop effective collaborations. Policies need to be developed based on this approach and to be implemented in a strategic, focused, and speedy manner. Keidanren wants to see new efforts in the areas of institutions, planning, budgeting, and the legal framework, which establish strategic policies underpinned by a philosophy of "selection and concentration."
Japan needs to selectively foster and strengthen core areas of economic activities that promise to lead the way toward realizing an industrial structure with high value added. This effort enable Japan to improve its industrial competitiveness, to provide the Japanese people with a vision of a bright future, and to encourage the creation of new industries.
There are many new and growing business areas in both the manufacturing and non-manufacturing sectors, and each has the potential to play a front-running role. Especially Keidanren finds a strong possibility that the front-runners will emerge in areas requiring a concentration of high-level technologies with the help of strategic industrial technology policy including those for intellectual property. Specific examples include: (1) such areas as information, telecommunications, and biotechnology, where Japan is lagging behind the United States but rapid development can be expected in the years to come; (2) areas where the government should take the lead, such as the environment, high-level medical care and welfare, energy and nuclear power, and aerospace and oceanic resources; and (3) areas underpinning various industries, such as new substances and materials and new manufacturing technology.
Of these, new markets will be created by current and consistent trends toward an information society, the aging of society, and the eco-conscious society since the trends formulate future needs of the economy and society. Technologies that are applied to many industries, such as information, telecommunications and biotechnology, will significantly contribute to Japan's overall industrial competitiveness.
Japan must have a solid industrial technology strategy and a unified setup for tackling tasks among industries, academia, among the government. These three actors should play their respective roles to strengthen industrial technology; the private sector should lead in research and development(R&D) using market dynamism, academia should supply the market with both human talent and the fruits of academic research activities, and the government should provide support to R&D activities while constructively assisting corporate efforts to make their technologies international standards. The government should also have its ministries and agencies take a unified approach to cultivating an environment suited to the formation of the future marketplace. To do so will require an improved "intellectual basis" (for scientific and technological data relating to biological resources, chemical substances, standard materials, and other items), and an associated infrastructure. Above all, the environment-building efforts must cover the transfer of government-funded R&D results to the private sector and their commercialization. This will enable the Japanese people to benefit widely from new goods and services born of such R&D activities.
More specifically, Japan needs: (1) to develop a system that places the intellectual property rights emerging from government-funded R&D in the hands of the private sector (i.e. the so-called Bayh-Dole Act of the United States); (2) to expand governmental budget used for patent applications by universities and to build a framework that eases the rigidity in university decision-making procedures in order to promote patent applications from universities; and (3) to promote and strengthen the development of Technology Licensing Offices(TLO) and joint industry-academia research centers.
Such integrated efforts by industries, academia, and the government should create new businesses and industries and contribute to competitiveness for the Japanese industry as a whole.
As a bridge to the future, Japan needs joint industry-academia-government projects, rooted in the above kind of promising core areas. The government should promptly formulate concepts of the required framework.
Following a request from Prime Minister Keizo Obuchi at the Industrial Competitiveness Council, Keidanren proposes joint industry-academia-government projects to respond to three aspects of the Japanese society in the twenty-first century; the information, the aging, and the environment. The Keidanren's proposal encourages further promotion of the R&D efforts of private companies and facilitates the creation of new technologies that meet the emerging needs of the Japanese society, and the commercialization of research results.
Keidanren calls for the Prime Minister to take the lead in setting a time-schedule and lending immediate consideration to government-wide promotion policies in order to quickly bring the projects into action. The realization of the projects will require a scheme of priority budget allocations made under the leadership of the Prime Minister, which will separate them from the ordinary ministry and agency budgets. The government should also rethink the single-year budget system to achieve the longer-term projects: the ministries and agencies should work together to promote priority projects that last for about five years using measures of contract authorization and continued expenses. It will also be important to create a forum to facilitate discussions on the specific projects among representatives from public and private sectors.
Government finances are expected to tighten as the birthrate declines and the population ages. To realize a society that allows its members to live peacefully and comfortably, the government must set time-frames for creating the socioeconomic infrastructure that will be truly necessary for the twenty-first century, and also put this infrastructure into place strategically and efficiently.
The government must review public works projects by reconsidering their needs, reassessing their legitimacy, and revising or scrapping projects as necessary. In addition, a scheme should be worked out for budget allocations made under the direction of the Prime Minister in a form that is separate from the current ministry and agency budgets.
Increasing the efficiency of distribution-the foundation of all industrial activity-is crucial for strengthening industrial competitiveness and reforming Japan's high-cost structure. Therefore, specific development objectives and priorities must be established to realize better transport infrastructure, .
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