Market forces Helped Japan Trump America

Willem THORBECKE
Senior Fellow, RIETI

John Thornhill is correct that cold war spending drove technological progress and that Britain should similarly invest in science ("Brexit is a Sputnik moment to fuel research funding", December 24). During the cold war US companies invented countless technologies, but often it was Japanese rather than American companies that profited. For instance, RCA and Westinghouse developed thin-film transistors to apply to liquid crystal displays (LCD). However, Sharp used these to manufacture award-winning LCD televisions. Similarly, RCA developed complementary metal oxide silicon, but Seiko employed it to sell millions of quartz watches. In both cases RCA and Westinghouse abandoned the market before their products became profitable.

Government largesse left US companies inefficient, but market forces compelled Japanese companies to innovate. Korean and Taiwanese companies also harnessed technologies to satisfy consumer demand. One lesson from these events is that companies benefiting from technology policy must face market competition.

December 31, 2019 Financial Times

January 23, 2020