National Innovation Ecosystems: The Similarity and Disparity of Japan-US Technology Policy Systems toward a Service- Oriented Economy

Watanabe, C. & Fukuda, K. (2005). National Innovation Ecosystems: The Similarity and Disparity of Japan-US Technology Policy Systems toward a Service- Oriented Economy. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-05-057

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Abstract

Coinciding with the announcement of the National Innovation Ecosystem proposed by the US Council on Competitiveness, Japan's Industrial Structure Council proposed a significant shift from a technology policy to an innovation policy based on the ecosystem concept.

Aiming at analyzing the complex mutual relations between human activities centered around industry and the surrounding environment, Japan's Ministry of International Trade and Industry postulated the concept of industrial ecology in the early 1970s, similar to that initiated in the USA in the early 1990s by the National Academy of Engineering, which corresponds to the mutually inspiring cycle in the two nations.

The basic principle of industrial ecology suggests substitution among available production factors in a closed system in order to achieve sustainable development under certain constraints. Based on this concept, Japan achieved notable energy efficiency improvements in the 1980s that can be attributed to technology substitution for energy.

Contrary to its economic stagnation in the 1980s, the USA achieved a significant economic development in the 1990s, while Japan experienced a "lost decade" due to economic stagnation. The US success can be attributed to information technology (IT) substitution for the traditional manufacturing technology, leading to a new functionality development corresponding to the requirement of an information society. However, after the bursting of the IT bubble, the USA has again been confronting the "new reality."

While the USA and Japan demonstrated contrasting success through mutual inspiration, given the new paradigm of a post-information society moving toward a ubiquitous society in the early 20th century, they need a new approach to sustaining their national innovation. Recognition of this led both countries to reexamine the broader application of the ecosystem, leading to the concept of the National Innovation Ecosystem.

Based on an empirical review of the technology policies of the USA and Japan over the last three decades with a focus on the ecosystem perspective, this paper attempts to demonstrate the hypothetical view outlined above and to provide new insights for a service-oriented economy.

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