Entrepreneurial State_How about in Japan? - Columbia(MPA) to Cambridge(MBA)

There has been a long discussion how to enhance an innovation in Japan.

In the past, the Japanese government, especially Ministry of Economy, Trade and Industry, took a leading role in the industrial policy in Japan. However, a lot of economists criticized that kinds of control. Those people said,

"The states should focus on fixing the markets failure."

"The states cannot do much about an innovation. "

However, Mazzucato (2013) insisted that the State has taken a much more important role in innovation.

She said the States showed the direction to which the states should go, invested a long term capital that VC cannot invest on, attracted top-talented researcher and enhanced the knowledge exchange between them and help commercialize those technology. Especially, U.S government took an important role in the development of the current tech startups such as Apple. She said U.S government support a lot for Apple in their early stage. The followings are the example that she mentioned.

Direct Equity investment during the early stage of venture creation and growth
Access to technologies that resulted from major government research programs.
Creation of tax, trade or technology policies that supported US companies as Apple that allowed them to sustain their innovation effort.

Also, she said that the followings are the major characteristics of DARP that contribute to the current tech development in U.S.

The aim is to create a scientific community to overcome a specific technological challenge.
To the aim, DARP consists of a series of small office led by leading engineers and scientist.
Have an independent authority to use a large amount of budget.
Funding is provided to mix of university lab, start-up and established company.
Because the aim is to enhance usable technological advance, it also help firms to get products commercial viability stage. The support include go beyond the research.
Funding to small and large new technology, have seminar to exchange knowledge, facilitate the introduction of commercialization and VC.

Do we apply these discussion to Japan?

Japanese government established Innovation Network Cooperation of Japan (INCJ) in 2009. This is public-private partnership fund.

The aim of INCJ is " to provide financial, technological and management support in order to promote the creation of next-generation businesses through “open innovation,” or the flow of technology and expertise beyond the boundaries of existing organizational structures."

I think INCJ can be an organization that Mazzucato suggested.

However, very few Japanese believe that the Japanese innovation has become active thanks to INCJ. What is the issue?

INCJ has an investment committee and it is run independently from the government, so it can invest without strong control from the government. But from the Mazzucato perspective, the issue seems to be in staff member. Currently, most staff of this fund has business/financial backgrounds. It would be better to have more people who have understanding of science.

Also, the Japanese government founded Organization for Small & Medium Enterprises and Regional Innovation(SME) in 2004. The SME provides management and financial support to small and medium enterprises.(This seems to have a same function as "The Small Business Innovation Research Programme" in U.S)

However, again very few Japanese believe that the Japanese innovation has become active thanks to SME.

We need to search much more why there is a huge gap between Japan and U.S with regards to the contribution of these organization on the innovation.

Ref:

Mariana Mazzucato, 2013, "The Entrepreneurial State", ANTHEM PRESS