Japanese Financing Policies for Innovation Since the 1990s

Since the 1990s, the Japanese government has made considerable attempts at stimulating innovation with an aim to pull the country out of a possibly permanent economic decline. Several laws and policy initiatives were introduced to encourage better interaction between universities (and research institutions) and industry. The results of these efforts have been mixed. While the number of university-industry joint and commissioned research has increased, revenues from the licensing of university-owned patents have fluctuated year by year. Although the number of startups and spin-offs from universities rose, their long-term survival and contribution to the economy remain uncertain. The Japanese experience features both strengths and weaknesses. Strengths include the long-term commitment of policy makers, the ability to set specific targets, and the active engagement of several key economic ministries. Nevertheless, the effectiveness of these policy initiatives was hampered by limitations within the policies concerning the roles of universities and their mode of interaction with industry based on intellectual property rights, the inadequacy of demand-side innovation policies, the fragmentation of bureaucracy, and a lack of a credible evaluation system.