Promoting industrial development through technology policy: Lessons from Japan and China

In this paper, we analyzed and compared how Japan and China's technology policies have contributed to their industrial development. Using numerical methods, we found that technological capability has contributed to both countries’ industrial development and upgrade in their peak-growth period. Further, the governments of both countries have intentionally promoted domestic technological capability by effective technology policies, balancing the import of foreign technology and indigenous development, and engaging business/private sector as a major force for improving technological capabilities.We thus offer the following policy recommendations to the governments of developing countries: (1) being aware of the important and appropriate role of government and existing policy tools, (2) adopting for the localized option that fits the country's specific social-economic reality; and (3) utilizing import of foreign technology and indigenous development and developing market mechanisms to encourage private sector engagement.