Asian Developmental States: Innovation, Industry, and Investment in China and Japan

-          This paper examines the transformation of Asian Capitalism tracking innovation policies in China and Japan. Chalmers Johnson’s seminal study of Japan as a “plan-rational” polity initially challenged the neo-liberal assumptions of development in the West. State intervention to discipline companies where necessary to achieve national goals of development proved similarly successful in the Asia’s newly industrializing countries (NICs), leading to a mid-range theory of state/market ties termed the “developmental state.”

-China followed a far different trajectory, but again with a prominent state role I look here to the current status of the developmental state in China and Japan, to assess continuities in Asian Capitalism. I focus the study to state coordination in national innovation systems, where both nations have excelled. Innovation offers perhaps the best indicator of future competition between capitalisms of the East and West.

 The paper opens with plan and profile in national innovation systems (NIS) with attention to higher value-added exports. I then look to the role of major firms in both nations since enterprise plays the major role in R&D. In the third section of the paper, I turn to global ties with a contrast of foreign investment in the two nations, and the role of foreign firms in innovation systems.

-The review of industrial policy evident in NIS efforts suggests three major differences in the state role . As might be expected, China’s party/state plays a far more directive role than that of the Japanese state. Secondly, the Chinese party/state continues to evolve, with curious discrepancies between central and regional governments. We find more continuity in central government policy in Japan, though with greater regional participation. Thirdly, inward FDI plays a major role in China’s NIS, in contrast to Japan where outward FDI links them to innovation network in the U.S. and Europe.