International Studies Quarterly (1998) 42, 339–366
Follower at the Frontier:
International Competition and Japanese
Industrial Policy
GLENN R. FONG
American Graduate School of International Management
A dominant orthodoxy in political-economic analyses of international
competition is to highlight how national industrial performance and the
competitive balance between nations are determined by domestic features
of national political economies. In contrast, this article reverses these
causal arrows by highlighting how the international competitive environment itself can shape and reshape domestic and state structures. Japan’s
high-profile, large-scale national research and development programs in
computer and semiconductor technologies serve as instructive testing
grounds for this argument. Illustrating how shifts in international competitiveness can induce changes in domestic structures, Japan’s R&D
projects display a secular decline in the government’s interventionist
capabilities as the country’s computer and semiconductor industry dramatically moves from industry follower to technological pioneer.
A dominant orthodoxy in political-economic analyses of international competition
is to highlight how national industrial performance and the competitive balance
between nations are determined by domestic features of national political economies (Hart, 1992; Katzenstein, 1978b: Zysman, 1983; Zysman and Tyson, 1983). As
encapsulated by one observer, “[T]he primary object of study concerns the extent
to which variation in competitive outcomes traces to different domestic structures
and differences in national government policy” (Stowsky, 1987:1). Such domestic
structural analyses spotlight how certain nations can be bequeathed relative advantages over others in international competition. Along these lines, Japan’s economic
performance—whether its postwar “miracle” or more recent problems—is tied to
distinctive conducive or debilitating features of its government institutions and
broader political economy.
In contradistinction, this article reverses these causal arrows by highlighting how
the international competitive environment itself can shape and reshape domestic
and state structures. It should not be surprising to find that competitors are
influenced by the nature of the competition in which they find themselves. This
article highlights the shaping influence played by international competition.
Author’s note: This research was supported by a grant for Advanced International Research in Japanese Studies from
the Social Science Research Council and the American Council of Learned Societies. I am grateful to Rich Friman, Peter
Hall, Peter Katzenstein, Frank Langdon, T. J. Pempel, colleagues in the American Graduate School of International
Management Department of International Studies, and reviewers and editors of ISQ for helpful comments on earlier
drafts of this article.
©1998 International Studies Association.
Published by Blackwell Publishers, 350 Main Street, Malden, MA 02148, USA, and 108 Cowley Road, Oxford OX4 1JF, UK.
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Follower at the Frontier
In particular, a “relative competitiveness” framework is developed highlighting
how differences and changes in the competitive positions of nations—for instance,
early versus late industrializers, successful followers or challenged pioneers—encompass distinctive imperatives and requirements for government institutions and
state-industry relations. Particularly with respect to a nation that moves from a
position of a “pursuer after the pioneer”1 to a “follower at the frontier,” institutional
and organizational arrangements created during a nation’s catch-up phase are
anticipated to be transformed as it attains world-class competitive status.
This argument is explored with regard to Japan, and to its computer and
semiconductor industry in particular, for two reasons. First, the rapid and dramatic
transformation from industry follower to technological pioneer for the nation at
large and its computer and microelectronics industry in particular provides an
excellent opportunity to explore the domestic effects of international competition.
Domestic responses to changes in competitiveness should be showcased.
Second, the Japanese computer and semiconductor industry offers a series of case
studies that provide revealing insight into Japan’s political economy and domestic
structures. More specifically, nine Japanese national research and development
projects partnering government and industry for ambitious technological breakthroughs in computing and microelectronics serve as telling case studies:
•
•
•
•
•
•
•
•
•
FONTAC Project (1962–64)
High-Speed Computer Project (1966–72)
New Series Project (1972–76)
Very Large Scale Integration Project (1976–80)
Supercomputer Project (1981–90)
Future Electron Device Program (1980–2000)
Fifth Generation Computer Systems Project (1982–93)
SIGMA Project (1985–89)
Real World Computing Program (1992–2001)
Each case is a multiyear, multimillion-dollar effort, sponsored by Japan’s Ministry of International Trade and Industry (MITI). As the preeminent government
agency responsible for Japanese industrial and technology policy, MITI has fostered
the development of industrial technology via large-scale national R&D projects over
the past forty years. The nine case studies represent the ministry’s core sequence of
technology initiatives in computers and semiconductors, beginning with their
inaugural effort in the early 1960s through the onset of the twenty-first century. As
displayed in Table 1, the nine case studies represent some of MITI’s most significant
national research projects.
These cases serve as penetrating windows on important dimensions of Japanese
domestic structures. As elaborated below, the nine MITI research projects reveal
three major faces of government intervention in industrial affairs and governmentindustry relations in Japan: programmatic initiative, technology targeting, and
industry targeting.
In preview, the experiences of the nine MITI research programs support the
outlook of the relative competitiveness framework. The earlier of the programs—FONTAC, High-Speed Computers, and New Series—reflect the imperatives of a “pioneer after the pursuer.” Prior to the mid-1970s, MITI’s research
programs displayed classic traits of an industry follower in a catch-up mode—traits
that included heavy-handed government intervention.
1
This particular terminology is derived from Okimoto, 1983.
GLENN R. FONG
341
TABLE 1. MITI Research Projects in Computers, Semiconductors, and Software
Rank
MITI Funding
(billion ¥)a
Project
Real World Computing
New Series [computer]
**3
Fifth Generation Computer Systems
1982–93
54.0
**4
5
Very Large Scale Integration [semiconductor]
Pattern Information Processing System [software]
1975–80
1971–80
**6
Future Electron Device
1981–2000
29.0
22.0
17.6c
**7
8
Supercomputer
Optoelectronics
1981–90
1979–85
17.5
15.7
SIGMA [software]
1985–89
12.5
High-Speed Computer
Interoperable Database Systems
1966–71
1985–92
10.0
7.6
**9
**10
11
1992–2001
1972–76
70.0b
57.0
**1
**2
12
FRIEND21 [computer]
1988–94
6.8
13
14
Software Production Technology Development
Japan Software Company
1976–81
1967–72
6.5
3.0
15
Software Module
1973–75
3.0
16
17
Software Maintenance Engineering Facility
New Models for Software Architecture
1981–85
1991–98
3.0
2.0d
Formal Approach Software Environment Technology
1985–89
2.0
FONTAC [computer]
1962–64
0.4
18
**19
Source: Ministry of International Trade and Industry.
acurrent yen; bprojected; c1981–1996 only; d1991–1996 only; **case studies
The mid-1970s emerge, however, as a watershed. This is precisely the period in
which Japanese computer and semiconductor manufacturers begin to rapidly close
on and then pull even with their U.S. counterparts, the previously unchallenged
global leaders. And as anticipated by the analysis of relative competitiveness, Japan’s
R&D projects begin to evidence changes in Japanese domestic structures—including diminished MITI autonomy and interventionist capabilities. Such changes
reflect the imperatives of a “follower at the frontier” and are increasingly displayed
by our six latter case studies—VLSI, Supercomputers, Future Electron Devices, Fifth
Generation Computers, SIGMA, and Real World Computing.
Such findings may appear rather unsurprising and common sensical. But as
developed below, they run counter to much of the comparativist analysis of domestic
structures as well as to major schools of thought in Japanese studies.
Relative Competitiveness
The relative competitiveness framework underscores how international competition
shapes and reshapes domestic political economies. The kernel of this framework
can be found in the work of Alexander Gerschenkron (1962). The classic work on
nineteenth-century European industrialization links the organization of politicaleconomic institutions to the extent of a country’s “economic backwardness” and
timing of industrialization:
[T]he more backward a country, the more likely its industrialization
was to proceed under some organized direction; depending on the
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Follower at the Frontier
degree of backwardness, the seat of such direction could be found
in investment banks, in investment banks acting under the aegis of
the state, or in bureaucratic controls (Gerschenkron, 1962:44).
Gerschenkron is quick to add that “one cannot understand the industrial development of any country as long as it be considered in isolation. Backwardness, of course,
is a relative term. It presupposes the existence of more advanced countries” (1962:42;
emphasis added).
Fundamentally, then, Gerschenkron pointed to the shaping influence of a
country’s relative level of industrial and technological development, or, more
simply, its relative competitiveness. The more backward and less internationally
competitive the country, the greater the imperative to concentrate political-economic power to industrialize. Hence, Britain could industrialize early in the nineteenth century without the assistance of centralized political authority because as
Europe’s first industrializer it faced no external competitive challenge. Because of
Britain’s industrial head-start and accompanying competitive advantage later industrializers would have to catch up by combining industrial and banking enterprises (Germany) and turning to a strong centralized state as the agent of economic
transformation (Russia).
But what are the implications of an industrial “follower” successfully catching up
with a previously dominant “leader”? As noted by one reviewer, this natural question
appears to have been overlooked by most analysts: “The catch-up hypothesis in its
simple form does not anticipate changes in leadership nor, indeed, any changes in
the ranks of countries in their relative levels of productivity” (Abramovitz,
1986:396). While the existing literature provides analysis of the initial gap between
leader and follower, much of it does not take the next logical step of considering
the prospect of the competitive gap closing.
Gerschenkron, in fact, provides the basis for expectations of structural and
political adjustments on the part of a successful industry follower.2 He points to
structural changes in Germany, one of his classic industry followers, as the country
reached industrial maturity at the end of the nineteenth century. In particular,
paternalistic relations between German banks and industry, engendered during the
mid-century catch-up period, began to erode: “As the former industrial infants had
grown to strong manhood, the original undisputed ascendancy of the banks over
industrial enterprises could no longer be maintained. The process of liberation of
industry from the decades of tutelage expressed itself in a variety of ways” (Gerschenkron, 1962:22).
The imperatives of a “follower at the frontier” also impacted the role of the state
in Russian industrialization between the 1905 and 1917 revolutions. While heavyhanded government intervention spurred Russian industrialization in the late
nineteenth century, “the character of the industrialization process . . . changed
greatly” after 1907:
Railroad construction by the government continued but on a much
smaller scale both absolutely and even more so relatively to the
increased industrial output. . . . The conclusion is inescapable that,
in that last period of industrialization under a prerevolutionary government, the significance of the state was very greatly
2 This article focuses on the implications of competitive shifts for the industry follower, a perspective relevant for
the Japanese case. While there are innumerable sources of domestic structural change in Japan—including demographic
generational change and foreign political pressure—this article concentrates on domestic changes that flow from
international competition. Work in progress addresses the implications of the closing competitive gap for an industry
leader, specifically the U.S.
GLENN R. FONG
343
reduced. . . . Russian industry had reached a stage where it could
throw away the crutches of government support and begin to walk
independently. (Gerschenkron, 1962:22)
In short, some of the institutional and organizational arrangements created during
the catch-up phase of industrialization “disappear after they have fulfilled their
mission” (Gerschenkron, 1962:139).
In sum, if the competitive gap between an industrial leader and a follower helps
generate structural differentiation in their political economies, then the closing of
that gap can also be expected to have domestic structural consequences. For the
successful follower, institutional arrangements for catch-up become less effective
and even dysfunctional. In particular, in order to promote the innovation and
entrepreneurship necessary for pioneering technology, heavy-handed government
intervention is rolled back.
Our case studies of Japan’s national R&D projects and the political economy of
Japan’s computer and semiconductor industry at large should manifest these
domestic imperatives of changes in relative competitiveness. Over the past four
decades the Japanese industry has made the dramatic transition from a “pursuer
after the pioneer” to a “follower at the frontier.” In the 1950s U.S. companies, the
preeminent international leaders, enjoyed four- to five-year lead times over Japanese competitors in the introduction of computer and semiconductor products.
However, by 1978 in the case of semiconductors and 1983 in the case of computers,
those U.S. lead times had literally vanished. By 1987, the U.S. Department of
Defense reported that with respect to twenty-four major categories of semiconductor
technology, the Japanese held the lead in twelve, there was U.S.-Japanese parity in
eight other categories, and the U.S. enjoyed leadership in only four areas (Defense
Science Board, 1987).
The technological advances of the Japanese have been translated into spectacular
commercial gains in semiconductors. Between 1978 and 1988 the share of the world
semiconductor market held by U.S. producers declined from almost 60 percent to
under 40 percent, whereas the Japanese share rose from less than 30 percent to just
over 50 percent. The competitive gap between Japan and the U.S. has since
re-tightened, with the U.S. holding a two-percentage-point lead in 1995 (40.9% vs.
38.9%); still, there can be no doubt about the arrival of the Japanese at the industrial
frontier (Semiconductor Industry Association, 1996).
Such Japanese semiconductor inroads have begun to be replicated in computer
markets. By 1996 Japanese manufacturers held the number-one position globally
in laptop computers (Toshiba); third position in the U.S. personal computer
market, including the top spot in the home PC market (NEC/Packard Bell); and
over a 90 percent world market share in flat panel displays (led by Sharp). In 1996
a Japanese supercomputer maker (NEC) received its first order from a U.S. federal
agency, and according to Fortune Magazine (1996), the Japanese threaten to capture
up to 50 percent of the U.S. PC market by the year 2001.
From the perspective of the relative competitiveness framework, this dramatic
competitive transformation should alter the political economy of computers and
microelectronics in Japan. Institutional arrangements put into place for a pursuer
trying to catch up to a pioneer should be transformed by the very different
imperatives of a “follower at the frontier.” Such transformations should be reflected
in our case studies of MITI research projects.
3 As illustrated by the maxims “birds of a feather flock together” and “opposites attract,” common sense does not
enjoy internal validity. Using common sense to anticipate Japanese behavior may be particularly problematic.
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Follower at the Frontier
That the Japanese political economy should change along with the competitiveness of its industry may appear utterly unsurprising and assuredly common sensical.
But besides classic warnings against common sense guidance for scientific inquiry,3
it is important to recognize that three prominent bodies of literature would not in
fact anticipate significant changes in Japanese domestic structures.
First, the macrocomparative work on domestic structures points to continuity and
stasis rather than change and dynamism in political economies. The historical
grounding of political and economic institutions and their persistence over time are
emphasized (Katzenstein, 1978a; Krasner, 1984; Krasner, 1988). Structural attributes are said to be the products of rare defining moments, usually wars or economic
crises. Precedent-setting episodes in Japanese history, for instance, are commonly
identified as the Meiji Restoration of 1868 and, to a lesser extent, the postwar
occupation. The domestic structures that emerge from such episodes impinge upon
political and economic affairs long after they were originally cast, and serve as potent
obstacles to subsequent deviation and evolution. Save another extraordinary national crisis, structural characteristics of political economies are, by definition,
resistant to dynamic change.
In Japanese studies, two other bodies of literature would not envision the types
of structural change anticipated by the relative competitiveness argument. Interestingly, while these two schools of thought—the strong-state interpretation of Japan
and their critics—intensely disagree over the nature of the Japanese polity generally,
their analyses converge when it comes to the political economy of high technology.4
They also share the second-image view that Japanese economic performance is
rooted in distinctive domestic structures.
The strong-state argument highlights such embedded characteristics of the
Japanese state as its institutional centralization, relative autonomy from societal
pressures, and vast array of interventionist policy instruments (Johnson, 1982;
Pempel, 1978). With respect to the Ministry of International Trade and Industry,
the sponsor of our case studies of government research projects, strong-state
attributes are said to be particularly evident. This literature spotlights MITI’s
expansive authority over industrial and technology policy, the esprit de corps of its
elite bureaucrats that enhances their insulation from political pressures, and the
vast array of its industry-specific policy tools with which to purposefully and
selectively target Japanese industries.
It is important to point out that updates in this literature emphasize the continued
persistence of such statist characteristics as well as other embedded structures in
Japan’s political economy (Gerlach, 1992a, 1992b; Johnson, 1995; Van Wolferen,
1993). Moreover, news reports out of Japan have carried headlines such as “Reform?
Ministry Officials Unfazed,” “Ministry ‘Twists Arms’ Behind Scenes,” “How OldLine Pols Squelched Great Political Revolt of ’93,” and “Return of Japan’s Old
Guard” (Asahi Shimbun, 1996a, 1996b; Wall Street Journal, 1996; Washington Post,
1997). By pointing out enduring features of the Japanese political economy, such
reports reinforce the expectations of macrocomparative structural analyses as well
as the strong-state thesis.
With respect to MITI research projects in particular, the ministry’s considerable
leverage has been particularly emphasized by the strong-state school. The powerful
influence of the Japanese state is said to be especially applicable to high-technology
sectors such as computers and semiconductors (Anchordoguy, 1989; Borrus et al.,
1983). The Japanese government has targeted the information electronics sector as
key to the country’s continued economic well-being, and computers and microelectronics lie at the core of the much-cited MITI “visions” of the future. With the
4
Portions of this section build upon Fong, 1990.
GLENN R. FONG
345
Japanese government doing its “utmost” to promote advanced electronics (Yamamura, 1986:48), some observers have concluded that this sector has literally
“emerged from the drawing boards of Japan’s economic planners” (Kaplan,
1972:48). Expectations are that the state’s role in this sector will only become “even
more activist” (Yamamura, 1986:204).
The designation of Japan as an exemplar of state strength is, of course, a matter
of intense scholarly debate. But significantly, even critics of the strong-state thesis as
it applies generally to Japan acknowledge the primacy of the Japanese state in arenas
of high technology. Hence, while stressing both private as well as public sources of
Japan’s technological achievements, Peck (1975:572) points to the Japanese computer industry as an “exception” exhibiting “the most extensive government involvement in a particular industry.” Lincoln (1984:36), who makes the overall
argument that Japan’s industrial policies have been rolled back since the 1950s and
1960s, agrees that the computer industry may be “a prime example of an industry
that may actually owe some of its success to the existence of government policy.”
While highlighting private-sector contributions to Japan’s industrial achievements, Levy and Samuels (1989:60) concede that “the success of Japan’s [computer]
hardware manufacturers derives from a number of factors, notably a range of
supportive public policies.” Similarly, while developing the larger position that
Japan is closer to an industry-led than a state-led economy, Calder (1993:20, 247)
argues that in cases such as computers and semiconductors, MITI has a “free rein
to order an industrial sector’s development and to hone its international competitiveness,” and is able to “clearly achieve strategic results, with little need to struggle
in achieving desired outcomes.”
Moreover, critics join advocates of the strong-state argument in pointing to MITI
research programs in particular as constituting the “main thrust” of current Japanese targeting efforts in semiconductors and computers (U.S. International Trade
Commission, 1983:148). Hence, Patrick (1986:xvii–xix)—a leading proponent of
the antistatist market-based approach to explaining Japan’s economic “miracle”—while noting the dismantling of traditional instruments of Japanese industrial policy (e.g., tariffs, foreign exchange controls, licensing restrictions), argues
that “the government will focus its sector-specific policies and resources increasingly
on organizing and coordinating large-scale, long-term, high-risk joint generic
research projects.” And Okimoto (1983:39), whose “societal state” conception
represents one of the major critiques of the strong-state thesis, nevertheless concludes that “where microelectronics research is concerned, MITI is firmly in
command.”
In sum, and in contrast to the relative competitiveness framework, critics as well
as advocates of the strong-state thesis in Japanese studies join macrocomparative
work on domestic structures in highlighting the persistence, if not intensification,
of a powerful Japanese state with commanding influence over Japanese high-technology industry.
MITI Research Projects and Domestic Structures
Our nine case studies provide unique insight into fundamental aspects of Japanese
industrial policy and domestic structures:
• In 1962 Fujitsu, Oki, and NEC were brought together in the $2 million,
26-month FONTAC Project. MITI thus pioneered the multifirm cooperative
R&D model, which it has since further developed.
• MITI launched its first “national,” “large-scale” research effort with the $64.5
million High-Speed Computer Project in 1966. NEC’s strengths in memory
346
•
•
•
•
•
•
•
Follower at the Frontier
devices today can be traced back to the firm’s specialization in such devices in
this program (Fransman, 1990:32).
To overhaul the country’s computer industry, MITI launched the massive $455
million New Series Project in 1972. As a result of the program, Japanese
manufacturers were able for the first time to field a full product line including
head-on competition for IBM’s larger mainframes.
In 1976 MITI initiated a $360 million program to develop very large scale
integration (VLSI) technology for the next generation of computer systems. The
VLSI Project produced over 1000 patents and has been singled out by U.S. sources
as providing the underpinning for Japan’s export drive into the U.S. semiconductor market (Semiconductor Industry Association, 1983:21–23; U.S. International Trade Commission, 1983:15, 149).
The $104.5 million Supercomputer Project was established in 1981 to propel
computer processing speeds 100 to 1000 times faster than conventional computers. Breakthroughs were sought in high-speed semiconductor devices using
non-silicon technologies,5 and in parallel processing systems allowing for the
simultaneous execution of programs.
Also established in 1981, the $300 million Future Electron Device (FED) effort
has sought advances in six areas of advanced semiconductor technology:
radiation-hardened, superlattice, three-dimensional, bioelectronic, superconducting electron, and quantum functional devices.
In 1982 MITI inaugurated the $700 million Fifth Generation Computer
Systems (FGCS) Project to catapult the Japanese into the next generation of
computing. The project produced computer systems with logical reasoning,
problem-solving, and inference capabilities “at the level of, or ahead of, the
U.S.” (Denicoff, 1987:4).
The $172 million SIGMA Project was established in 1985 to advance Japan’s
software capabilities. The project sought to develop computer programs that
would automate 80 percent of the software development process and cut
programming time by 75 percent. The program also sought to design a
standardized computer operating system that would allow SIGMA software
development tools to be run on machines made by different manufacturers.
MITI’s most recent computer initiative is the $700 million, 10-year Real World
Computing (RWC) Program. Established in 1992, RWC’s aim is to develop the
“sixth generation computer” with brain-like, human-like information processing characteristics including intuitive, optimization, learning, and adaptive
capabilities.
With regard to industrial policy, and as alluded to above, national R&D
projects have become central among the policy instruments at the disposal of
the government to influence the direction of Japan’s industrial and technological
development. The nine case studies provide unique windows on a potent government ministry targeting strategic sectors of the late twentieth century and
into the next.
With regard to domestic structure, our case studies can also provide remarkable
insight. Generally, the array and types of policy instruments at the disposal of a state
are rooted in domestic structures (Katzenstein, 1978a:297–98, 303, 308). R&D
projects in particular reflect the institutional capacities of the state, and the relationship between state and society. These national initiatives place rigorous demands upon government capabilities by calling for technological forecasting and
5
To date, silicon has served as the predominant substrate material for semiconductors.
GLENN R. FONG
347
concerted long-range planning, the marshaling of public and private resources and
expertise, and the management of powerful industry participants. The responses
to such demands should exhibit the extent and limits of state intervention and
government-industry collaboration.
In analyzing our cases, we isolate three specific attributes of the MITI research
projects that carry structural implications:
• Programmatic initiative: MITI’s ability to strategically and autonomously formulate policy initiatives including R&D projects
• Technology targeting: the ministry’s ability to “target” specific technologies for
state support
• Industry targeting: MITI’s capacity to selectively “pick” favored corporate “winners” for participation in its research projects
Each of these attributes raises issues of domestic structure: can MITI engage in
autonomous, strategic behavior in launching national research projects? Or, instead, are technology initiatives products of industry pressure or nonstrategic
considerations? Can MITI pinpoint technologies for targeting? Or, in contrast, do
the initiatives reflect unfocused technology agendas? And can MITI selectively
anoint corporate participants to the exclusion of others? Or, to the contrary, is
project participation more open ended?
Along these lines, case-specific details carry direct implications for domestic
structure. Moreover, care will be given to identify behavioral patterns or secular
trends manifested by the cases. If “routinized procedures” and “patterns of
behavior” can be established, then the structural nature of our findings are
reinforced.6 Finally, it is along these three behavioral dimensions that we can
track a set of key structural changes anticipated by the relative competitiveness
framework.
Programmatic Initiative
Reflecting mainstream perspectives, a recent analyst of MITI research programs
observes:
In Japan, there is a methodological system for aligning R&D
projects with strategic policy and for evaluating and selecting
technology themes. . . . [There is] a well-developed hierarchy for
policymaking, with national institutions defining general priorities
and industry filling in the details. (Hane, 1993–94:57–58)
A foremost specialist elaborates how MITI in particular
takes vigorous initiative in organizing and administering joint
research projects. . . . Extremely significant . . . in these MITIinitiated joint research projects is that the MITI officials . . . often
exert leadership quite openly. . . . [I]t is not an overstatement to
observe that the MITI officials are exhibiting a strong sense of
“mission” and unusual zeal in promoting joint R&D activities.
(Yamamura, 1986:193, 195)
6 Institutions and structures are variously referred to as “routinized procedures” and “patterns of behavior” (Krasner,
1988:73).
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Follower at the Frontier
While certain of our earlier case studies do, in fact, conform to these orthodox
conceptions, the more recent MITI research projects do not. The initiative for the
projects has shifted away from a sole bureaucratic preserve and toward more private
sector concerns. And within MITI, programmatic motivations have less to do with
strategic considerations of national industrial development than nonstrategic,
technical, and incremental bureaucratic concerns. Such changes are consistent with
the expectations of the relative competitiveness argument.
Prior to the mid-1970s MITI technology efforts were indeed initiated in centralized, hierarchical top-down fashion. MITI’s very first R&D subsidies to the computer
industry grew out of high-level government deliberations and directives in 1957.
MITI worked closely with the leadership of the ruling Liberal Democratic Party for
Diet passage of the Electronics Industry Act of 1957. The act organized MITI to
formulate computer industrial policy and authorized the ministry’s first direct R&D
subsidies to computer manufacturers.
Subsequent Diet legislation, the 1961 Engineering Research Association Law,
authorized MITI funding for groups of companies engaged in cooperative R&D.
Subsequently, MITI launched the 1962 FONTAC Project bringing together Fujitsu,
Oki, and NEC.
High-level concerns also led to the High-Speed Computer Project. The 1964
introduction of IBM’s System 360 and General Electric’s acquisition of Machines
Bull (France’s largest computer manufacturer) triggered grave concern and highlevel discussions between MITI, the LDP, the Keidanren (Japan’s foremost national
business peak association), and the financial community. By 1966 consensus
emerged that development of the computer industry was of highest priority and
critical to Japan’s economic future.
In 1966 MITI called upon its Electronics Industry Deliberation Council (a key
consultative link between the bureaucracy and industry) to develop a systematic
strategy for the further development of the industry. Part of the strategy announced
in March 1966 included the quadrupling of MITI’s R&D budget for computers and
the launching of a series of “large-scale” R&D projects. Among our nine major case
studies, the 1981 Supercomputer Project was implemented under the “large-scale”
banner. But the very first such project was the 1966 High-Speed Computer Project.
High-Speed Computers was budgeted at $64.5 million compared to the $2 million
FONTAC effort.
The New Series Project had similarly high level origins being “initiated solely by
MITI” (Doane, 1984:159). In early 1970 IBM shocked the computing world and
threatened to undermine the competitiveness of other manufacturers, domestic as
well as foreign, with the introduction of its System 370. General Electric dropped
out of the mainframe business in April 1970; RCA followed suit in September 1971.
Japanese manufacturers may have been next, especially in light of the 1971
Japanese commitment to liberalize its domestic computer market by the end of
1975.
To rescue the domestic industry, MITI devised the 1971 Law for Provisional
Measures to Promote Specific Electronics and Machinery Industries. This legislation
allowed for corporate mergers and called for expanded subsidies and low-interest
loans for computer research. The 1971 law was implemented a year later with the
launching of New Series.
With the Very Large Scale Integration Project in 1976 we have the beginnings of
very different dynamics in MITI project origins. In fact, both high-level speculation
of another competition-busting IBM product breakthrough and the imminent trade
liberalization in computers motivated MITI to launch the VLSI Project. But the
manufacturers themselves also shared concerns about foreign developments. And
the industry, just reeling from the 1974–75 recession, looked to their government
for support, both financial and technological (Interview materials).
GLENN R. FONG
349
In this setting, a proposal for the VLSI Project was put forward in October 1975
by a subcommittee of the Japan Electronics Industry Development Association, a
computer manufacturer trade association. The subcommittee included forty-one
members from three government bodies (MITI’s Machinery and Information
Industries Bureau, its Electrotechnical Laboratory, and Nippon Telephone and
Telegraph);7 six companies (Fujitsu, Hitachi, Matsushita, Mitsubishi, NEC, and
Toshiba); and two universities (Tohoku University and University of Tokyo). This
committee outlined the project’s technological agenda and proposed major areas
for research including large-scale integration and lithography (Sigurdson, 1989:
40–44). In contrast to the classic picture of MITI acting as an industrial vanguard,
the VLSI Project should best be seen as a product of the convergence of government
and industry interests. While the FONTAC, High-Speed Computer, and New Series
projects were solely government-initiated, the same cannot be said for VLSI.
If the VLSI Project was not solely the creation of high-level government directives,
then the Future Electron Device, Supercomputer, Fifth Generation Computer,
SIGMA, and Real World Computing efforts also do not fit the classic mold given
their incremental, lower-level bureaucratic origins. On the one hand, it may appear
that MITI is still taking the initiative in these cases in accordance with mainstream
expectations. On the other hand, and more precisely, its motivations have become
less strategic than inwardly bureaucratic.
Future Electron Devices grew out of relatively low level 1977 discussions in the
Research Department within the Agency for Industrial Science and Technology
(AIST), MITI’s research and development arm (Fransman, 1990:177–79). Unlike
the high-level national concern and debate that led to the launchings of FONTAC,
High-Speed Computers, New Series, and VLSI, the AIST deliberations were largely
incremental bureaucratic efforts to devise a follow-up to the successful VLSI Project.
FED’s incrementalist origins have been matched by its incremental “mission
creep” over time. The program was originally slated to end in 1990, but new,
ten-year projects were added in 1986, 1988, and 1991 in bioelectronic, superconducting electron, and quantum functional devices, respectively.
Bureaucratic rather than strategic motivations also manifested themselves in the
deliberations that led to the Supercomputer Project. The origins of this effort can
be found within the technical staff of MITI’s Electrotechnical Laboratory (ETL).
Guided by pure technical considerations, ETL staff sought to develop gallium
arsenide– and Josephson Junction–based semiconductor devices that offer superior
speed and lower temperature advantages over silicon devices (Fransman,
1990:147–150). Outside of ETL, MITI’s strategic industrial policy types disassociated themselves from the technology-driven Supercomputer Project (Interview
materials).
The Fifth Generation Computer Systems Project illustrates how even one of the
nation’s most prized government initiatives can have very obscure origins. Three
years of low-level bureaucratic planning and technical debate were led by four
individuals: Kiyonori Konishi, a fifth and lowest-echelon MITI bureaucrat;8 Dr.
Tohru Moto-oka, Professor of Electrical Engineering, Tokyo University; Dr. Hideo
7 The Machinery and Information Industries Bureau is one of three vertical bureaus within MITI responsible for
developing industrial and trade policies for specific industrial sectors; in this case, high-technology and machinery
industries. The Electrotechnical Laboratory is the largest of sixteen in-house research laboratories operated by MITI,
and focuses on computer and semiconductor research. Prior to its privatization in 1985, Nippon Telephone and
Telegraph was the government’s telecommunications monopoly.
8 Specifically, a staff member in the Electronics Policy Division of the Machinery and Information Industries Bureau.
The five levels of the MITI hierarchy are minister, vice minister, bureau chief, division head, and division staff. The
Electronics Policy Division is one of eleven divisions within the Machinery and Information Industries Bureau, and is
responsible for the computer and semiconductor industry.
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Follower at the Frontier
Aiso, Professor of Electrical Engineering, Keio University; and Dr. Kazuhiro Fuchi,
a fourth-level official in MITI’s Electrotechnical Laboratory.9 Konishi, who initiated
the planning process in 1978, wasn’t even career MITI. Instead, he was on loan
from Nippon Telephone & Telegraph, participating in a one-year exchange program between the ministry and the telecommunications giant (Interview materials).
To sketch out the outlines of the Fifth Generation Project, Moto-oka, Aiso, and
Fuchi formed a Japan Information Processing Development Center (JIPDEC)10
study group consisting of 120 government, industry, and university representatives.
This JIPDEC committee ended up resolving a crucial dispute between two major
visions of a next-generation computer and therefore two visions of the government
project itself. While Aiso pushed for a highly distributed system of workstations
networked with a large-scale multi-processor computing system, Fuchi championed
an integrated knowledge processing system that could make parallel inferences
based on a logic programming language. After intense debate the JIPDEC group
sided with the Fuchi approach, and Fuchi became FGCS’s first project director (Aiso,
1988:160–65; Fuchi, 1992:22; Interview materials). FGCS emerged, then, from the
efforts of a government technologist, two professors, and a low-level bureaucratic
temp.
In “marked contrast” to its well-publicized predecessors, the Real World Computing Program “has had a relatively low public profile” (Stanford U.S.-Japan
Technology Management Center, n.d.). Such a low profile is due, in large part, to
the program’s lower-level bureaucratic origins. First, in 1989, with the Supercomputer and Fifth Generation projects winding down, researchers in MITI’s Electrotechnical Laboratory went into gear putting together a “sixth generation computer
project.” ETL was particularly interested in carrying on the work of the Supercomputer Project. The “massively parallel systems” component of RWC provides a
programmatic home for sixty ETL researchers who are continuing their work on
the earlier project’s 128-processor system known as SIGMA-1 (Kahaner Reports, Nov.
11, 1991).11 While technologically ambitious, RWC is, then, programmatically an
incremental off-shoot of its two immediate predecessors.
Second, Real World Computing served as a “budgetary placeholder” to maintain
funding commitments extracted from the government’s budgetary authority, the
Ministry of Finance (Interview materials). It is not by coincidence that the $700
million Fifth Generation Project was succeeded by another $700 million effort.
Bureaucratic inertia and budgetary turf protection more than any strategic calculation of national interest are at play here.
Third, RWC emerged out of an open planning process even more accessible than
the FGCS case. At the center of this process was a 100-member Feasibility Study
Committee established in March 1989. This committee met over a two-year period
and included not just specialists in computer science and electrical engineering but
also researchers in such disparate fields as neuro-physiology, cognitive science,
economics, and philosophy. The committee held four open forums and incorporated the advice of not just Japanese industrial experts and academics but also
foreign researchers from twenty-seven institutions and ten countries (Kahaner
Reports, Nov. 11, 1991; Jan. 30, 1992).
9 Specifically, Chief of the Speech Processing and Machine Inference Sections in ETL’s Information Sciences
Division. The five levels of the ETL hierarchy are director-general, deputy director-general, division director, section
chief, and section staff. The Information Sciences Division is one of fourteen ETL divisions. There are four sections in
this division including the Speech Processing and Machine Inference Sections.
10 JIPDEC is a quasi-governmental, quasi–private sector organization established in 1967 to promote Japanese
information processing.
11 The SIGMA-1 supercomputer is to be distinguished from the software-oriented SIGMA project.
GLENN R. FONG
351
All through this process high-level MITI officials were more in an “information
gathering” than a proactive mode. For instance, when asked whether RWC parallel
systems would build upon more than neural networks—a fundamental issue at the
core of different visions of the “sixth generation computer”—the Director of ETL’s
Intelligent Systems Division responded with a “who knows” expression, and ETL’s
Chief Scientist for Computer Architecture replied with a “I hope so” (Kahaner
Reports, Dec. 26, 1990).
Finally, the SIGMA Project was the product of both lower-level bureaucratic
initiatives and industry pressures. To begin with, SIGMA is a direct descendent of
a series of unsuccessful MITI software initiatives that stretch back to the mid-1960s:
the Japan Software Company (1967–72), the Software Module Project (1973–75),
the Software Production Technology Development Program (1976–81), and the
Software Maintenance Engineering Facility Project (1981–85). Displaying an “if at
first you don’t succeed” persistence, MITI would answer the failure of one effort
with the launching of another. SIGMA was the fifth such iteration. In this way SIGMA
can be seen as an incremental response to the failure of its immediate predecessor,
just as the Future Electron Device and Real World Computing programs can be seen
as riding on the coat-tails of their respective forerunners. In all three cases lowerlevel MITI bureaucrats championed their respective agendas without top-down,
higher-level direction.
In conjunction with bureaucratic trial-and-error, important industry forces
forged the SIGMA Project. Small Japanese software houses, particularly through
their Information Processing Promotion Association (IPA) and the Joint System
Development Corporation (JSDC),12 pressured MITI for software development
support. While many of the larger computer makers did not take a direct role in
SIGMA’s formulation, IPA and JSDC planning committees played key roles in
proposing and designing the initiative (Interview materials).
To summarize these case results, Figure 1 illustrates the shift that has taken place
in MITI project origins. These findings reveal a subtle yet significant trend. On the
one hand, MITI research projects were once the product of high-level ministerial
directives, crafted as components of grand “visions” of the future, carrying out
national, political mandates for advancing the global position of Japanese technology and industry. The experiences of FONTAC, High-Speed Computers, New
Series, and partially VLSI fit such a mold.
On the other hand, more recent MITI research projects have emerged from more
diffuse and incremental processes.13 Initiatives have come from industry as well as
government, and within the government, lower levels of the bureaucracy. The VLSI,
Future Electron Device, Supercomputer, Fifth Generation Computer, SIGMA, and
Real World Computing cases evidence how champions of national R&D efforts can
now be industrial engineers or lower-level bureaucratic officials.
The dissipation of the commanding role and control of high-level government
officials reflects dynamics of Japan as a “follower at the frontier.” High-level
officials now have greater difficulty keeping tabs on technology, and have ceded
initiative to a more dispersed set of players in closer touch with technological
developments. As natural as this development might appear, such findings are
important correctives to our interpretations of the Japanese state and political
economy.
12 IPA is a quasi-governmental organization established by MITI in 1970 to promote small independent software
houses. JSDC is a joint venture of seventeen software houses established in 1976 to coordinate software development.
13 The diffused and incremental nature of the policy-making processes is similar to Campbell’s (1992) “inertial”
model of Japanese policy change and Nelson’s (1993) framework incorporating firms and industrial research laboratories into the Japanese “national innovation system.”
352
Follower at the Frontier
High-level
government
initiative
Industry
sources
Lower-level
bureaucratic
origins
FONTAC
High-Speed
Computer
New Series
VLSI
Supercomputer
Future Electron
Devices
Fifth Generation
Computer
SIGMA
Real World
Computing
FIG. 1. Programmatic Initiative
Technology Targeting
A noted scholar has observed that, with respect to government research projects,
MITI officials “are playing a much more visible, as well as important, role in
determining the research agendas than they ever did in promoting the technological capabilities of the major industries during the rapid growth period” (Yamamura,
1986:195).14 And an analyst who has conducted a careful examination of Japanese
R&D projects reports that MITI has “played an important role in specifying the
goals to be met [and] selecting and organizing qualified participants. . . . Participating companies were assigned a specific task by the government ‘sponsor’ ” (Doane,
1984:138–39).
Such direct, if not surgical, government targeting of specific technologies and
firms is directly tied to domestic structures. The interventionist capability of a state
is enhanced if it can turn to such precise and immediate forms of intervention,
compared to less selective or diffuse policy instruments such as macroeconomic
policy changes or general science and education policies. The availability of such
intrusive policy instruments also reflects a sufficiently amenable government-
14
Yamamura refers to 1945–1973 as Japan’s rapid growth period.
GLENN R. FONG
353
business relationship. Such instruments are constrained under conditions of more
adversarial state-industry relations.
To examine the intrusiveness of MITI research projects, in this section we look
at MITI’s targeting of specific technologies. The targeting of selected firms for R&D
support is addressed in the next section. In both instances the cases evidence
structural change along the lines anticipated by the relative competitiveness framework.
The degree to which MITI has targeted specific technologies in its national
research projects can be operationalized in two ways: (1) by classifying the targeted
technologies according to standard stages of the research and development process,
and (2) by identifying the number of competing, alternative technological approaches supported by the ministry.
First, the stages of the R&D process refer to standard distinctions drawn between
basic research, applied research, exploratory development, prototype development, and engineering development.15 Each successive stage is progressively more
targeted and focused in the sense that more specific technologies, processes, and
products are identified and developed:
• Basic research: original investigations advancing scientific knowledge. This
research may or may not be relevant to or guided by practical or commercial
objectives but does not itself devise or develop products or processes.
• Applied research: scientific investigations guided by and leading toward practical
or commercial applications of knowledge.
• Exploratory development: technical activities concerned with translating scientific
knowledge to meet practical or commercial purposes. This work includes
assembly of hardware used to test technologies without regard to form factors.
• Prototype development: technical activities concerned with development of prototypes of materials, devices, systems, or processes for experimental and operational testing.
• Engineering development: technical activities concerned with pre-production
engineering of specific materials, devices, systems, or processes.
While research in “earlier” R&D stages, including basic research, may have
significant practical implications, those implications are more uncertain, more
diffuse, less direct, and less immediate than work in later stages of the R&D process.
Government projects oriented toward the “latter” stages focus on nearer-term
technical objectives of more immediate relevance to industry.
Utilizing these distinctions, the FONTAC, High-Speed Computer, and New
Series projects can be classified as narrowly targeted engineering development and,
to a lesser extent, prototype development efforts. These first cases conform to
mainstream analyses by highlighting MITI capabilities to “determine research
agendas,” “specify goals,” and target specific technologies for development.
FONTAC sought the immediate development of hardware to directly counter
IBM’s popular 1401 small computer. Fujitsu directly incorporated FONTAC technologies into its 230 series computer (Fransman, 1990:30). Similarly, the HighSpeed Computer Project sought a direct answer to IBM’s System 360. MITI’s
Electrotechnical Laboratory outlined the design of an entire mainframe computer
and identified specific memory and logic circuit technologies for development.
15 These stages of the R&D process are derived from distinctions used by the U.S. National Science Foundation and
Department of Defense. While subsequent references will be made to “earlier” and “latter” R&D stages, utilization of
this typology does not imply a linear and especially unilinear relationship between the five stages.
354
Follower at the Frontier
Hitachi commercialized its project work in its 8700 model mainframe, and Fujitsu
used its work to upgrade its 230 series (Fransman, 1990:32).
The New Series Project also resulted in the development of specific computer
systems; sixteen in all. MITI even designated which systems were to be developed
by whom: IBM-compatible systems by Fujitsu and Hitachi; General Electric- and
Honeywell-based systems by NEC and Toshiba; and specialized industrial systems
by Mitsubishi and Oki. The ministry even specified which product lines would be
produced by which companies. Fujitsu and Hitachi were to develop four large
“M-series” mainframes; Fujitsu, the largest and smallest models, and Hitachi, the
two mid-line models.
In each of these first three cases specific electronic devices and computer systems
were developed for almost immediate commercialization. In contrast, the VLSI,
Supercomputer, and SIGMA projects can be classified as broader exploratory and
prototype development efforts, while Future Electron Devices, Fifth Generation
Computers, and Real World Computing are closer to applied research.
The VLSI Project avoided direct effort to develop specific products. Its research
on integrated circuit devices, semiconductor manufacturing, and silicon crystal
materials certainly found their way into the marketplace, but not nearly as quickly
as in the cases of earlier MITI research. Representative of the distance of its work
from the marketplace was VLSI’s development of 256-kilobit dynamic random
access memory (256K DRAM) technology, one of the major priorities of the project.
Whereas project research began in April 1976 and ended four years later, Japanese
manufacturers first moved into commercial production of 256K DRAMs only in late
1983. More generally, “it took a number of years before its results began feeding
into companies which were members of the VLSI Project” (Fransman, 1990:82–83).
A major objective of the Supercomputer Project was to achieve calculation speeds
100 to 1000 times faster than conventional computers. Although these speed
objectives were impressively met by a demonstration system of four parallel processors, the demonstration “was not a prototype of a machine that could be directly
commercialized” (Kahaner Reports, June 28, 1992). A second, much more ambitious
128-parallel processor system was developed with a programming language that
was “only partly a functional language” (Kahaner Reports, July 2, 1990). Conveying
the project’s exploratory development nature, one expert observed that the initiative was “all hardware, no software” (ibid.). A third major thrust of the project was
the development of gallium arsenide and Josephson Junction circuits to be tested
in the supercomputer demonstrations. Few of the former devices and none of the
latter reached the demonstration stage (Kahaner Reports, June 28, 1992).
The “unfinished” as well as long-range nature of the Supercomputer Project’s
research is reflected in the fact that a major portion of the project’s work has been
carried over into the current Real World Computing Program. Putting the two
projects together, a full twenty-year effort will be devoted to the advanced systems.
While the SIGMA Project was forged as an effort at prototype development of a
standardized software development platform, its results were largely of an exploratory development character. SIGMA’s original mission called for “the construction
of a prototype system” and a “practical system . . . to be put into widespread
commercial use beginning in April 1990” (Akima, 1987)—one year after the
project’s conclusion. Such expectations were far from realized when the project
ended up producing “only external specifications of the hardware and operating
system” (Kahaner Reports, Feb. 29, 1992).
SIGMA work devolved from prototype to exploratory development, whereas
the Future Electron Device and Fifth Generation Computer programs were
explicitly designed as exploratory development and applied research efforts.
The FED Program was launched in 1981 as part of MITI’s larger “Basic Technologies for Future Industries” (BTFI) initiative. Distancing itself from near-
GLENN R. FONG
355
term applied work, BTFI criteria for project selection included “technology which
generally requires 10 years or more of research and development risk” (Kahaner
Reports, Feb. 18, 1993). FED research in particular has been “highly uncertain”
and “not of great commercial importance within the planning horizon of the
participating companies” (Fransman, 1990:196). Reflecting an applied research
orientation, much of FED work has involved “a significant conceptual dimension” (Fransman, 1990:182).
With regard to the Fifth Generation effort and its central research organization,
the Institute for New Generation Computer Technology (ICOT), U.S. experts have
observed:
The 5G Project is not trying to produce prototypes for commercial
products . . . but rather research prototypes. . . . ICOT is not doing
short-term development, with specific low-risk goals, they are doing innovative long-term applied research, and they know that this
is high risk, and that a lot of blind alleys will have to be explored.
(Goguen and Hewitt, 1987:13)
To draw a contrast with other Japanese and foreign “pre-competitive” government research projects, ICOT director Kazuhiro Fuchi dubbed his effort “pre-precompetitive” (Fuchi, 1992:27). Fuchi resisted pressures to identify specific, practical
applications as guides for FGCS research, arguing that such applications-oriented
work should be left to the private sector. Instead, he stressed the long-term,
fundamental nature of FGCS research: “I do not believe that the basic research . .
. which we have been working on will be completed within the next five years. . . .
There are problems that will not be solved in five years, ten years, or even a hundred
years in some cases” (Fuchi, 1992:28). Near-term technologies of immediate application in industry were certainly not the target of the FGCS effort.
The Real World Computing Program does the Fifth Generation Project one
better by extending its research back up the R&D process formally into the basic
research category. To begin with, RWC officials have repeatedly stressed that
“the primary goal of RWC is not to develop a computer but instead to explore
basic technologies that are not yet established” (Kahaner Reports, Jan. 30, 1992,
emphasis in original). Underscoring RWC’s basic research thrust is the fact that
one of the four core components of the program is designated as “theory” and
is designed to “provide a theoretical foundation for flexible information processing” and “clarify the theoretical framework of ‘soft logic’ ” (Kahaner Reports,
Mar. 9, 1992).
RWC officials are cognizant of the distinctiveness of their effort:
In the 1960s and ’70s, Japan conducted national R&D projects that
targeted the performance of American-made computers. . . . Now,
in the 1990s, Japan aims through the RWC Program to originate
basic technologies of the 21st-Century computer and diffuse these
to the rest of the world. (Kahaner Reports, July 19, 1993)
While most of its work falls in the formal category of applied research, RWC is the
first MITI project to encompass pure basic research.
Figure 2 summarizes the shift that has occurred in the R&D orientations of the
MITI technology projects. On the one hand, the shift away from engineering
development and toward basic research is not surprising. For years now leading
Japanese public and private authorities have announced the need for making
precisely this transition in government technology policy and industrial R&D. As
summarized by MITI’s 1988 (pp. 15–16) White Paper on Industrial Technology:
356
Follower at the Frontier
Basic
research
Applied
research
Exploratory
development
Prototype
development
Engineering
development
FONTAC
High-Speed
Computer
New Series
VLSI
Supercomputer
Future Electron
Devices
Fifth Generation
Computer
SIGMA
Real World
Computing
FIG. 2. Technology Targeting: R&D Stages
“R&D in Japan has made rapid progress chiefly in the application and development
areas of industry. Now, the nation’s industrial technology R&D programs stand at
a turning point, calling for . . . a more aggressive approach to basic and original
research.” This shift in R&D priorities reflects, of course, Japan’s transition to a
“follower at the frontier.” Having successfully caught up by applying and refining
foreign technology, the country has moved into indigenous technology creation and
innovation.
On the other hand, it is often not recognized that this shift toward basic research
represents a dissipation of MITI’s technology targeting capability. The more basic
research thrusts of more recent MITI projects may be vital to Japan’s long-term
technology base, but they are less relevant to the short-term needs of Japanese
industry. MITI’s support for industrial technology has become less focused and
more uncertain, and less direct and immediate for commercialization. Such are the
consequences of becoming a “follower at the frontier.”
Along with the shift of MITI R&D projects toward basic research has been MITI’s
financing of broader ranges of alternative technologies. As R&D efforts move back
toward basic research, it becomes more difficult to identify the precise technology
with the greatest technical and market potential. Accordingly, instead of selecting
a specific technological target, MITI has increasingly moved toward a “shotgun”
approach to R&D: funding multiple, competing, and alternative technologies.
Table 2 displays this second indicator of MITI’s targeting capacity, the number of
competing technological approaches in major research areas pursued in our nine
case studies.
Demonstrating bureaucratic resolve, MITI stipulated the development of single
computer architectures in the FONTAC and High-Speed Computer projects. A dual
GLENN R. FONG
357
TABLE 2. Technology Targeting: Number of Approaches
Research Area
Approaches
FONTAC
mainframe architecture
1
High-Speed Computer
mainframe architecture
1
New Series
VLSI
mainframe architecture
lithography
2
5
Supercomputer
non-silicon devices
parallel processing
programming languages
4
3
2
Future Electron Devices
three-dimensional devices
superlattice devices
biochips
parallel inference machines
programming languages
4
4
2
5
5
Fifth Generation Computer
SIGMA
operating systems
workstation architectures
3
13
Real World Computing
massively parallel systems
programming languages
neural network models
VLSI neuro-chips
5
5
3
4
but still relatively narrow strategy was adopted in the New Series Project with the
development of both IBM and GE-Honeywell architectures. These earlier cases
manifest a more intrusive, interventionist Japanese state as well as closer, if not
symbiotic, relations between government and industry.
The mid-1970s emerge, once again, as a breakpoint. MITI moves from “picking”
one or two “winning” technologies to casting wider technological nets across several
and up to over a dozen competing, alternative approaches. To begin with, a shotgun
strategy was put into place in the VLSI Project for work on lithography equipment
for fine line circuit etching. Not only were all three major lithographic approaches
pursued—ultraviolet rays, x-rays, and electron beams—but three different electron
beam systems were developed (Interview materials).
In the Future Electron Device Program, six groups of circuits have been developed—radiation-hardened, superlattice, three-dimensional, bioelectronic, superconducting electron, and quantum functional devices. In addition, alternative
subtypes within each group have been explored. Similarly, in the Supercomputer
Project, three different types of gallium arsenide devices along with one Josephson
Junction circuit were investigated. Also, three divergent paths to parallel processing
were researched (Fransman, 1990).
In the Fifth Generation Computer Project, initial plans to survey and identify key
next-generation computing technologies were abandoned; instead, the project was
launched with only vague outlines of the areas to be developed. These “visions”
roughed out desired technical performance levels, but how they were to be achieved
was left open ended (Interview materials). Subsequently, five demonstration systems
competed to meet the project’s “inferences per second” speed targets. The five
parallel inference machines differed in terms of their computer architectures,
machine instructions, processor connections, device technology, and process technology (Uchida, 1992:43).
On the software side, the programming language used by these machines was far
from preordained at the outset of the project. Instead, one language would be
explored, its limitations determined, and an off-shoot effort initiated. This trialand-error process repeated itself at least five times, and along the way ICOT
358
Follower at the Frontier
“repeatedly created and discarded” alternative programming languages (Uchida,
1992:32).
The SIGMA Project ratchets up the technology shotgun approach a couple more
notches. In this case, no less than thirteen different workstation systems, each with
its own system architectures, were drawn up to demonstrate software automation
tools.
Our extreme case of the “non-picking” of technology winners is the Real World
Computing Program. RWC has been explicitly designed to “pursue a wide range of
research targets” (Kahaner Reports, Jan. 30, 1992). Within each of RWC’s four
research areas—theory, massively parallel systems, neural networks, and optoelectronics—multiple, alternative, and competing approaches are being pursued. For
instance, in massively parallel computing, five architecture paradigms and five
different programming languages are being investigated. In neural networks three
system architectures and four VLSI chip architectures are being explored.
Altogether, forty-two distinct RWC major projects were being carried out at
nineteen different sites as of 1994. Additional funding was going to another
forty-four smaller projects at another forty-two sites. One specialist remarked that
“there are enough research topics listed to keep an army of researchers busy for
decades” (Kahaner Reports, Mar. 9, 1992). Moreover, each of eighty-six projects
constitutes “highly individual research” (ibid.), each being “organizationally equal
in relation to one another” (Kahaner Reports, July 19, 1993). Putting it all together,
RWC looks less like a coherent, cohesive research effort and more like a “general
umbrella under which a large number of research topics [are being] covered”
(Kahaner Reports, Dec. 26, 1990).
The reason MITI has not been more targeted in its RWC research is that it is
simply not in a position to do so: “MITI admits that they do not really know the
right approach to many of the problems they want to solve, so . . . competitive
approaches to the same target will be tested by different groups” (Kahaner Reports,
Jan. 30, 1992).
In the RWC program, then, the shotgun approach to technology development
takes on the added attributes of “shots in the dark.” Intriguingly, MITI officials
make a geographic analogy to highlight the distinctiveness of RWC’s technology
agenda:
Until the Fifth Generation Computer Project, all the large-scale
projects established a single, clear development goal at the outset.
The research progressed towards this goal directly as in the “Climbing Mt. Fuji” metaphor. In contrast, RWC has adopted for itself the
metaphor of “Climbing the Eight Peaks,” derived from the mountain chain “Eight Peaks” in central Japan. . . . Multiple research
groups will start in parallel on the basis of their own distinct theories
and principles to pursue identical goals. (Kahaner Reports, July 19,
1993)
MITI’s more recent shotgun approach to technology development may be very
prudent given the uncertainties of more basic research. This approach can also yield
technological “hits” if not “bull’s eyes” in terms of commercial payoffs. But in the
process MITI’s support for any one technology is being spread thin and watered
down. MITI’s ability to “pick winners” in technology terms has dissipated as its
research projects have moved closer to basic research and, more generally, as Japan
has moved into the status of a “follower at the frontier.”
GLENN R. FONG
359
Industry Targeting
Besides targeting “winning” technologies, MITI has been credited with picking
“winner” companies—i.e., designating specific firms for government favor and
largess; hence references to MITI’s “picking,” “selecting,” “organizing,” ”recruiting,” and “mobilizing” participants for its research projects (Doane, 1984:138–39;
Hane, 1993–94:58–59).
Quite notably, exclusive industrial targeting by MITI has been acknowledged and
indeed elucidated even by critics of the strong-state argument such as Haley,
Okimoto, and Samuels. In policy arenas that are certainly not limited to either MITI
or technology policy, Haley (1991:167–68) notes that Japanese bureaucrats “expend
considerable efforts at reducing the number of participants” with which they deal.
Okimoto (1989:38–39) considers how MITI’s selective industrial targeting is motivated by concerns over “excessive competition” in Japanese industry where “an
excess number of producers possess supply capacities that far exceed demand.”
To reduce the number of domestic producers in computers and microelectronics,
MITI not only has encouraged corporate mergers (Anchordoguy, 1989) but has
used its research projects to influence which Japanese firms would become major
players in the industry. Samuels, while a prominent critic of the strong-state
interpretation of Japan, captures the essence of the use of R&D projects as an
instrument of industrial targeting:
Six firms . . . have participated in virtually every MITI-sponsored
venture since the mid-1960s. What is more, they have been the only
participants in these ventures. Prior to the 1980s, efforts to gain
admittance by electronics giants such as Sharp and Sanyo were
rebuffed by MITI, which served as the industry’s gatekeeper.
(Samuels, 1994:69; emphasis in original)
Given this context, it would be appropriate to use the number of corporate
participants in MITI research projects as a third indicator of the bureaucracy’s
interventionist capability and relationship with the private sector. More selective
corporate participation in government projects can be taken as evidence of MITI’s
capacity to identify specific firms for government support as well as the capacity to
deny such support to other firms. On the other hand, more widespread participation
in MITI projects is an indication that the ministry is less able or less willing to target
selected firms for support.
Table 3 displays the number of corporate participants in our nine case studies.
The first column lists the number of full-fledged contractors in each MITI project;
the second and third columns refer to the number of companies and research
institutes that have been affiliated with each effort. With respect to prime contractors, the FONTAC Project starts off with Fujitsu, NEC, and Oki. The High-Speed
Computer and New Series programs add Hitachi, Mitsubishi, and Toshiba. The
VLSI Project drops Oki. The Supercomputer Project reincorporates Oki. The Fifth
Generation Computer Project adds Matsushita and Sharp. The SIGMA Project
brings on Mitsubishi Research Institute and Nippon Telephone & Telegraph. The
Future Electron Device Program incorporates Matsushita Research Institute, Mitsubishikasei, Sanyo, Sony, and Sumitomo Electric. To these fifteen companies the
Real World Computing Program adds another ten contractors.
Over a thirty-year period, then, the number of MITI research contractors has
expanded from three to twenty-five. This withering of exclusivity in MITI’s industry
targeting is further reinforced when one considers the even greater numbers of
companies that have been affiliated with the more recent MITI projects.
360
Follower at the Frontier
TABLE 3. Industry Targeting
Research
Contractors
Associated
Japanese
Institutions
Associated
Non-Japanese
Institutions
Total
FONTAC
3
0
0
3
High-Speed Computer
New Series
6
6
0
0
0
0
6
6
VLSI
5
50
0
55
6
13
0
12
0
0
6
25
8
20
10*
10
25**
177
33
Supercomputer
Future Electron Devices
Fifth Generation Computer
SIGMA
Real World Computing
5
4***
38
192
62
*Non-Japanese institutions with FGCS exchange agreements; **includes six members of the Japan Iron
and Steel Federation and four non-Japanese research contractors; ***includes joint research agreement
with the U.S. government, does not include four non-Japanese research contractors
Consistent with other findings, MITI’s industrial targeting was at its zenith in its
earlier research projects. Not only were there only three participants in FONTAC,
one of them—Fujitsu—was designated for favored treatment, receiving the lion’s
share of project subsidies. Similarly, of the six participants in the High-Speed
Computer Project, Fujitsu, Hitachi, and NEC were “picked” as the strongest
companies, and received most of the project’s funds. In contrast, the other three
members of the project—Mitsubishi, Oki, and Toshiba—were consigned to work
on peripherals. These latter firms were being “nudged” away from mainframe
computers and toward the less sophisticated end of the industry (Anchordoguy,
1989:46–47).
MITI continued to play favorites in the New Series Project. Forty-five percent of
project subsidies went to the Fujitsu-Hitachi team, 40 percent to the NEC-Toshiba
pair, and only 15 percent to Mitsubishi and Oki (Anchordoguy, 1989:108). Moreover, the first team was favored by MITI in developing large IBM-compatible
mainframes while the other two teams worked on less prominent technologies.
In these first three cases MITI is explicitly attempting to shape the very structure
of Japan’s computer industry. By way of selective project participation and skewed
funding, certain firms were “crowned” national champions while others were
relegated to “ladies in waiting.” In this context, and as anticipated by orthodox
analyses, MITI’s capacity for pinpoint industrial targeting is set in bold relief.
Cracks in this interventionist might emerge, however, after the New Series
Project. Under the MITI-stipulated New Series division of labor, Fujitsu and Hitachi
were to target different market segments so that their products would not compete
directly against one another. Immediately upon completion of the project in 1976,
however, each company introduced new products that competed directly against
the other’s New Series–sponsored systems (Gresser, 1980:13). By the mid-1970s,
MITI’s ability to structure competition in computers was beginning to crumble.16
MITI’s last substantial attempt at selective industrial targeting and restructuring
in computers and microelectronics was the VLSI Project. To thin out the ranks of
Japanese manufacturers, MITI excluded Oki Electric—a participant in the minis-
16
1990.
On the related theme of MITI’s difficulty in engendering cooperation among its project participants see Fong,
GLENN R. FONG
361
try’s first three projects—from the VLSI effort. MITI determined that Oki’s technological and financial weaknesses prevented the company from becoming a major
player in the industry (Interview materials).
While MITI was successful in dropping Oki from the VLSI Project, it is important
to point out that the ministry could not prevent the company from becoming a major
semiconductor producer including in the VLSI market. Oki’s semiconductor highlights include serving as a producer of the IBM AT chip set and supplier of the
microprocessor for the Tandy 100, the first successful laptop computer. The
company has been a second source manufacturer of the Intel microprocessor and
has become a producer of the reduced-instruction-set-computing (RISC) microprocessor. Oki has established major semiconductor production facilities in
California and has entered into licensing agreements with U.S. chip makers for
which the Japanese company has served as the supplier of chip technology. The
company has been an active and early participant in every generation of memory
chips from the 16K DRAM through the 64K, 256K, 1-megabit, 4-megabit, 16-megabit, and 64-megabit generations. In 1985 Oki was implicated as a culprit in the
dumping of memory chips in the U.S. market; hardly what one might expect from
a MITI-designated non-player.
Not only has MITI’s attempt to structure Oki out of the mainstream semiconductor business clearly failed, but the ministry has given up altogether in its efforts to
“untarget” the firm. MITI has reversed course by including Oki in every one of its
research projects since the VLSI effort.
It is not even accurate to say that the VLSI Project targeted only its five formal
project participants. In fact, fifty other companies “worked in close cooperation”
with the VLSI project (Sakakibara, 1983:9). These companies were mostly suppliers
to the large semiconductor makers, specializing in lithography and testing equipment, semiconductor raw materials and chemicals, and semiconductor packaging.
These companies were provided with technical specifications directly from VLSI
labs around which they could design their products. They were awarded VLSI
subcontracts that subsidized up to one-fourth of their development costs. Indeed,
the upgrading of Japan’s semiconductor supplier industries has been highlighted
as a major VLSI Project outcome (Kodama, 1991:88–92; Sigurdson, 1989:68–93).
The trend toward “unselective” industry targeting continued with the Future
Electron Device Program. From five formal contractors in the VLSI Project, corporate participation expands to thirteen in this direct successor program. In addition,
twelve other companies are members of the Research and Development Association
for Future Electron Devices which oversees the effort. These companies have direct
access to the project’s research and results, and include such nontraditional MITI
R&D beneficiaries as Seiko Instrument and Sumitomo Metal Mining.
This trend explodes with the SIGMA Project’s ten research contractors and 182
other affiliated companies that directly participated in the project’s research. With
the affiliates, MITI reached out to numerous, smaller software development houses,
rather than reserve research assistance for a narrow range of favored firms.
Moreover, SIGMA was the first MITI research project open to foreign participation. Five of the SIGMA affiliates were foreign firms—AT&T, IBM, NCR, Olivetti,
and Burroughs—which gained direct access to the project’s work. Any targeting of
domestic firms is significantly diluted when foreign entities have access to project
research and results.
Regarding the Fifth Generation Computer Project, while there were only eight
formal members of its Institute for New Generation Computer Technology, in fact,
the research of some twenty other Japanese companies, research institutes, and
universities was sponsored by ICOT. And following the SIGMA precedent, the Fifth
Generation effort was open to foreign researchers. ICOT received technical visits
from approximately one hundred foreign researchers from some twenty-four
362
Follower at the Frontier
different countries. Included were visits by U.S. computer concerns Alliant Computer Systems, Cimflex Teknowledge, and the Microelectronics and Computer
Technology Corporation. Moreover, ICOT-sponsored research was undertaken by
some ten foreign universities and research institutes—including Stanford University and SRI International. ICOT also established formal exchange agreements with ten foreign institutes including the Argonne National and Lawrence
Berkeley Laboratories. In the summer of 1990 ICOT installed two of its parallel
inference machines at Argonne and networked them with systems at ICOT’s
Tokyo headquarters.
In addition, with the project’s completion in April 1993, MITI launched a
“Follow-on Project” with the express purpose of widely disseminating FGCS results.
Without precedence, one hundred FGCS computer programs have been released
as public domain software over the internet. As of July 1996, 25,000 files had
been downloaded to over 2200 sites in forty-seven countries. Two-thirds of these
files were downloaded outside Japan, and half of those to the U.S. (Uchida,
1994:2; Hirose, 1995:9; Research Institute for Advanced Information Technology, 1996).
Inclusivity rather than exclusivity is further enhanced in the Real World Computing Program. The core of RWC work is carried out by twenty contributing
“partners”—up from eight FGCS prime contractors. Moreover, one of the RWC
partners is the Japan Iron & Steel Federation which serves as a conduit for the
participation of Nippon Steel, NKK, Kawasaki Steel, Sumitomo Metals, Kobe
Steel, and Nisshin Steel. With the inclusion of these steel firms along with RWC
partner Nippon Sheet Glass, MITI has come a long way from narrow selectivity
in its research projects. Add thirty-six universities and research institutes that
have received RWC subcontracts, and the number of RWC participants rises to
sixty-two.
As in the case of SIGMA and Fifth Generation Computers, RWC’s accessibility
extends to foreign participation. The difference from these earlier programs,
however, is that from the very outset the Real World Computing Program was
conceived with foreign participation in mind (Kumano, 1993; Stanford U.S.-Japan
Technology Management Center, n.d.). As raised earlier, input from non-Japanese
researchers was solicited during the program’s very formulation. One U.S. official
appreciated participating “in what would normally be considered internal discussions about a program that is still taking shape” (Kahaner Reports, Dec. 26, 1990).
A full 10 percent of the RWC budget is reserved for non-Japanese participants.
Four of the twenty core “partners” and three of the thirty-six subcontractors are
non-Japanese research institutes and universities. Moreover, RWC became the first
MITI project with a formal collaborative research tie with a foreign government. In
January 1993 MITI’s Electrotechnical Laboratory and the White House Office of
Science and Technology Policy launched a Joint Optoelectronics Project to support
the merging of optical and electronic technologies. A formal component of the RWC
Program, the financial backing for this joint effort comes entirely from the Japanese
government.
In light of these developments MITI can hardly be accused any longer of
husbanding its sponsored research for the exclusive benefit of a handful of Japanese
firms. To draw upon yet another analogy, MITI has replaced a precision fishing
spear with which it could single out firms literally one by one for a trawling net that
can take in literally hundreds of firms, some of which are not even native to Japanese
waters.
Paralleling our analysis of MITI’s technology targeting, this more inclusive
approach to corporate participation in MITI research projects may be a sound
strategy for a “follower at the frontier.” The putting of MITI’s eggs all in one or a
few baskets may be imprudent from the standpoint of stimulating innovation. Access
GLENN R. FONG
363
to leading-edge foreign technology and expertise also motivates reciprocal access
to MITI-sponsored research.
Moreover, as Japanese computer and semiconductor producers have moved from
“followers” to “pioneers,” MITI is unable and finds it unnecessary to target selected
firms for exclusive support. Industrial heavyweights are more difficult to exclude
from MITI projects. And the success of scores of Japanese high-tech firms relieves
MITI of the burden of having to pick “winners” from a weak field.
What is important to recognize is that MITI support for any one Japanese firm
and the exclusive targeting of domestic firms altogether has dissipated in the
process. These findings provide further substantiation of the relative competitiveness framework.
Conclusion
The case results evidence the secular decline of MITI’s interventionist capability
along three dimensions. First, programmatic initiative for MITI research projects
has shifted from top-down strategic ministerial directives to bottom-up industry
pressures and/or lower-level bureaucratic incrementalism. Second, MITI’s technology targeting has shifted from precision-focused development of commercializable
technologies toward broad-based support of multiple alternative technologies,
many with uncertain commercial payoff. And third, the ministry’s selection of firms
for support has moved from exclusive targeting of a select few to inclusive support
of broad ranges of firms including non-Japanese firms.
One certainly could not generalize from the placement of one or two case studies
along any one of the three comparative dimensions. Instead, we have nine case
studies arrayed across three indicators resulting in an n, respectable for case
research, of 27.
The earlier MITI research projects—particularly FONTAC, High-Speed Computers, and New Series—do, in fact, conform with mainstream domestic structuresbased analyses. In these cases, MITI played the vanguard role in launching
high-priority national initiatives, identifying key technological objectives, and selectively anointing firms as national champions.
Such top-heavy, heavy-handed features are also consistent with the relative
competitiveness argument. From the 1950s through the early 1970s, MITI-sponsored research manifested the needs of an industrial follower trying to catch up with
foreign pioneers. Playing out a central Gerschenkronian tenet, as long as the
Japanese computer and semiconductor industry was in the “follower” mode, intrusive government intervention and proactive state direction were in order.
In contrast, the six more recent MITI projects—VLSI, Supercomputers, Future
Electron Devices, Fifth Generation Computers, SIGMA, and Real World Computing—display the very different attributes of a “follower at the frontier.” With the
ascension of Japanese firms to the forefront of technology and global markets,
MITI’s need and capacity to identify key technologies and to limit corporate
participation in its research projects has diminished. Indeed, government intrusiveness can become counterproductive for the pioneering of new technologies. Hence,
MITI research projects have increasingly emerged from technical and industrial
circles rather than from high-level political, strategic, or national decrees. As
highlighted by the relative competitiveness framework, the competitive transformation of Japan’s computer and semiconductor industry has also transformed Japanese industrial policy.
These case results provide penetrating windows on the Japanese political economy and its future. In the first instance, MITI research projects serve as microcosms
of the broader political economy of computers and microelectronics in Japan. That
broader picture, to be sure, includes continued efforts on the part of the Japanese
364
Follower at the Frontier
state to advance the technological and industrial base of the Japanese economy.
Indeed, in July 1996, the Japanese government made the remarkable commitment
to double its R&D expenditures by the year 2000 (Government of Japan, 1996). But
the case results highlight the limits of government intervention and state-industry
collaboration in Japan. While the efforts of the Japanese state to push technology
development are not abating, international concerns may be tempered by a keener
appreciation of the qualified nature of the government’s efforts.
Second, if MITI research projects reflect broader features of the political economy of computers and microelectronics, the latter may also be indicative of the
broader national political economy of Japan. Computers and semiconductors are
“leading sectors” that can set the tone for government industrial policies across the
board and for the overall relationship between public and private sectors (Kurth,
1979). To gain a grasp of trends in MITI research projects, then, is to be offered a
glimpse of the future for the entire Japanese political economy. With respect to that
future, two respected analysts have underscored the importance of Japan’s international setting:
To understand how Japan is changing, and where it appears to be
headed, requires an analysis not only of its domestic institutions
and processes but also, equally important, of the changing international environment within which Japan’s political economy functions. Perhaps the strongest impetus for change in Japan comes
not from within, but from the impingement of international developments. (Okimoto and Inoguchi, 1988:8)
In particular, our case research illustrates how shifts in the competitive balance
between nations can induce changes in government policies, state institutions, and
government-industry relations. The relationship between international competition
and domestic political economy is therefore a two-way street. While orthodox
analyses have highlighted how trends in global competition are determined by the
domestic political-economic characteristics of the competitors, the causal arrows
also run in the opposite direction. Domestic structures can be restructured and
reorganized as a nation’s competitive position and the competitive balance between
nations shift over time.
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