"There's a perception that what Japan does is import all its technology and turn around and export the products," says Maria Papadakis of the National Science Foundation's International Studies Group. But a recent NSF report on R&D funding that Papadakis authored supports her opinion to the contrary, namely that, in Japan, "there's a lot more innovation than the country is given credit for."

The NSF report focuses on how and where Japan spends its R&D dollars, what funding goes to its own scientists, and what technology it imports. According to the foundation, Japan spends about the same percentage of total R&D funds on basic research as does the United States: 13% for Japan, 12% for the U.S. (These figures are based on statistics for 1985, the most recent year for which comprehensive data are available.)

In Japan, imported know-how appears to be playing a decreasing role in the whole manufacturing...

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