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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 8: STI and Industrial Policies in Japan: Aircraft Manufacturing


8.1 Industry Overview

The Japanese aircraft industry was first established as early as the 1930s, which was strongly promoted by the demand from the Japanese military. In the midst of the Second World War, aircraft production reached its highest level (Table 8.1). In 1944, for instance, the number of aircrafts was recorded as 25,000. Of course, small sized fighters were the majority of total production. As the war ended, Japan was prohibited from producing any aircrafts by the Potsdam Conference of 1945. Thus, during the U.S. occupation of Japan after World War II, aircraft production was banned. It was not until 1952 that the Japanese aircraft industry resumed production in the form of licensed production of military aircraft. The development of the aircraft industry renewed in 1954 as the Japanese government established the Defense Agency.

Table 8.1: Aircraft Production during the 2nd World War

Source: 최우영, 일본 항공기산업의 개요와 동향 2010 (Choi, Wooyoung, Current Status of Japanese Aircraft Industry).

Entering the 1960s, Japan started to actively implement industrial policy instruments by taking advantage of the technological advancement brought from the U.S. in the 1950s. The very first step was to introduce the Aircraft Industry Promotion Act in 1958. According to this law, the Japan Aircraft Manufacturing Company was established, which was a collaboration of public and private efforts. 200 private companies from various areas participated in this project in the form of capital investment. This company produced 182 large aircrafts until it ended production...

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