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Industrial, Science, Technology and Innovation Policies in South Korea and Japan

Murat A. Yülek and Hongyul Han

Designing effective industrial and science, technology and innovation (STI) policies is still an ongoing quest for both developed and developing countries. This book examines industrial as well as STI policies in East Asian countries South Korea and Japan comparatively. Japan is one of the largest industrial economies in the world. However, it is experiencing competitiveness problems with a relative fall in its manufacturing industry indicators such as exports. Korea is, on the other hand, a rapidly rising industrial power challenging larger peers including Japan. The two economies are competing in similar markets and are on different cycles of development. This book looks at the competitive positions of the two countries in the field of industrial and STI policies in general and in the sectors of railway equipment, medical equipment, aviation equipment and electronics.

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Chapter 4: STI and Industrial Policies in Japan: Electronics

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4.1 Industry Overview

Japan successfully implemented strong state-led growth strategy. Industrial policy was effectively combined with close cooperation of the government and the private sector, which was also well organized. The electronics industry had been one of the primary targets of industrial policy since the 1950s. The Temporary Act for Electronics Industry Promotion in 1957 was the first legal structure to enhance basic technologies for the computer industry. Public-private partnership was actively pursued to reduce industrial gap with western advanced countries. The Act of 1957 was expanded in 1971 to encompass technological improvement in facsimile, laser equipment, materials for semiconductors, measurement equipment for electronics and computers. The Act was also intended to integrate the manufacturing of these products with machinery industries. Japan’s semiconductor industry began with the production of integrated circuits in the early 60s. It caught up fast with the U.S. in the early 1980s and led the post-war Japanese economic development.

However, Japan’s electronics industry has been struggling with serious downturn for the last two decades. There are various explanations for this downturn even without considering Japan’s poor macroeconomic performance that lasted for two decades. First of all, Japanese companies failed to keep up with the changes in market structure and fragmentation of production process on the global scale, from integral production of automobiles and digital cameras to modular production of PC and cellular phones. Also, though Japanese firms kept competition in manufacturing technology, they were not able to successfully integrate service...

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