Universities that Win in Competition

* This publication is in Japanese. An English translation is not available.

An examination of the impact of IT innovation on the Japanese economy, based on the quantitative analysis from the perspectives of macro economics and at the firm level

Many analysts point to the global competitiveness of the U.S. university system as a factor that enabled the United States, then suffering from the prolonged economic and industrial stagnation in the 1980s, to achieve a remarkable recovery in the 1990s. U.S. universities have fostered highly capable people, generated technology that has opened the way to new industries such as biotechnology and information technology, and given birth to numerous start-up companies. And there is no country that rivals the strength and depth of U.S. basic research capabilities.

For Japan, which has suffered its own prolonged economic and industrial slump since the 1990s, the resurgence in research and technology development is required, and Japanese universities are expected to serve as the core of innovation. But due to the closed nature of the postwar Japanese university system, one cannot deny its estrangement from the economic system. With the challenge posed by emerging nations such as China, Japan cannot maintain its economic superiority through low cost and high quality alone. Hence it is no exaggeration to say the creation of capable people and new knowledge will open the way for Japan's future.

This book is like a sequel to Daigaku kaikaku kadai to souten ("University reform: Issues and controversy"), edited by Masahiko Aoki, Akihiro Sawa, Michiro Daido, and the "Studies in International Trade and Industry" series editing committee, Toyo Kezai Shimposha, compiled by the former Research Institute of International Trade and Industry (predecessor to RIETI) in February 2001. Daigaku kaikaku kadai to souten was compiled amid rising concerns that Japanese universities, which must shoulder the intellectual production of our nation, are in fact suffering from the deterioration not only of their research function but also their educational function of nurturing future human resources because of their rigid organization and personnel administration, as well as the lack of an effective funding system that would otherwise revitalize research.

The book attempts to analyze in detail the educational and research functions of a university, and its relationship to the economy, centered on industry, from both historical and international perspectives, while seeking the types of reform needed to make universities function as our nation's key innovation system. Since the book's publication, the Japanese university system has undergone major changes, as the need for university reform has became a major social issue. National universities have transformed themselves into independent administrative entities and university lecturers and employees have lost their status as public servants. The need for structural reform of the science and technology system in general, part of which is university reform, has finally become apparent to the government, and a concrete direction has been set in the second phase of the Basic Program for Science and Technology.

In this environment, and as various systemic reforms are implemented in the future, the book seeks to make policy proposals in order to ensure our country's reform will head in the right direction and allow the Japanese university system to improve its international competitiveness by reexamining the source of the competitiveness of the science and technology system at U.S. universities, which has served as a model for reforms in Japan as well.

Turning national universities into independent administrative entities: A major opportunity

Japanese universities were transformed into independent administrative entities in April 2004, following the development of the Independent Administrative Legal Entity system. This move has been touted as the most innovative government reform since the Meiji period, but it is merely equivalent to a private company acquiring a legal-entity status and being given a certain degree of business autonomy. Just as a change in organization does not guarantee business success, the transformation of national universities into independent administrative entities does not by any means guarantee the success or the increased competitiveness of Japanese universities.

During the various steps taken in shifting to an independent administrative entity system, administrators at Japanese universities have been overwhelmed by paperwork and have been unable to hide their confusion and uncertainty over the systemic and environmental change. University presidents and vice presidents have been swamped by the need to establish new rules and have been unable to concentrate on the more important issue of formulating a view on how leadership should be exercised. There are also complaints of a lack of sufficient resources to exercise this leadership. There is no consensus over what kind of governance the internal and external organizations such as the board of trustees, management council and education research council should exercise, and what kind of relationships between the university president and deans should be developed. University instructors are worried that their once stable career paths are now threatened by the adoption of an evaluation system that is likely to affect their research funds and salaries. On the other hand, administrators are agonizing over the gap between old rules and the new as they face the task of constructing more flexible administrative rules in line with the new system.

Debate over how to take advantage of the newly acquired freedom with the transition to independent administrative entities, and how to link this freedom to further improvement of universities, as well as what kind of action should be taken is still ongoing; it is unlikely that many universities have reached the final stages of systemic reform with respect to the revision of internal rules. Rather, the concrete changes are seen, ironically, in major private universities rather than public universities as private institutions feel threatened by the increased competition that will be brought about by the transformation of public universities into independent administrative entities.

Major gap between Japan and the United States

When one takes a look at the situation of Japanese universities, the ranking of Japanese universities is very severe, with Japanese university education ranking 49th, or the lowest, in the "2002 World Competitiveness Yearbook" published by the International Institute for Management Development. While Japanese universities are more respected in terms of research than in the educational field, the number of references to research papers from Japan between 1993 and 2003 was a mere 4.6 million, or one-sixth of the 29.9 million references to papers from the United States (one-third when taking into account the population difference). Furthermore, Japan ranks lower than Britain and Germany, which both have smaller populations than Japan. The number of references to a single research paper is roughly half that of the United States, which ranks Japan the lowest among industrialized nations (editors' analysis based on information from Thomson ISI website).

Japan is also far behind in business-academia collaboration compared to the United States. University income from technology licensing fees in Japan is one-two hundredth that of the United States, and research sponsorship by private companies has dropped to ¥97.8 billion in 1999 from ¥106.4 billion in 1990. In contrast, research sponsorship nearly doubled to ¥156.2 billion from ¥68.1 billion in the United States during the same period.

Even in terms of exchange of researchers, the ratio of researchers coming to Japan versus Japanese who go abroad is 3:7, indicating a massive brain drain. According to a survey of Japanese researchers, an environment that allows them to concentrate on their work and the adequate research assistants and other forms of support are the reasons cited for going abroad for research activities (2001 survey by the Ministry of Education, Culture, Sports, Science and Technology). Meanwhile, the reasons foreign researchers give for not coming to Japan are language difficulties and the closed nature of the research community, as well as the view that coming to Japan will not help their careers. These problems help to explain the extremely wide gap in the research environment of the two nations.

Along with the transition to independent administrative entities, Japanese universities are also working on reforming systems such as the research funding system in order to improve the research and educational level of universities, but these changes have yet to be fully implemented. For example, Japan has begun putting into place a competitive research funding system similar to that of the United States but, as this book points out, neither the quality nor the quantity is up to par. And rather than adopting a flexible evaluation system and organization in setting a standard for judging the universities and research that would serve as the basis for resource distribution such as funding, the direction is toward adopting a uniform system.

As mentioned above, this book was conceived in the hope of enhancing the competitiveness of the science and technology system as a whole from an international perspective by taking advantage of the major opportunity afforded by the transition to independent administrative entities, and improving the level of Japanese universities and graduate schools. In order to achieve this goal, the book attempts to highlight points which Japan can learn from by analyzing and citing concrete examples from the science and technology promotion policies of the U.S. university system, which is the most advanced in the world in the fields of both basic and applied research.

The key characteristic of the U.S. university system is full-fledged competition, with universities and researchers helping each other to improve by competing in all areas, from research funding to acquisition of human resources. To win this competition, it is important for university presidents and vice presidents to show leadership in developing and implementing the management, education and research strategies of the entire university. The administrative board exercises governance from the inside, while various groups rank universities, providing pressure from the outside to ensure such competition is effective in constantly improving the university's research and education standards.

Of course, this does not and should not mean that everything can be imported directly from the United States. What is important is to adopt what is appropriate in a form which fits the Japanese system. Hence this book not only introduces and analyzes the U.S. system but also analyzes various issues such as the form research funding system should take, how to deepen business-academia collaboration, the acquisition of human resources from a global perspective, and the proper form of university management. The book also includes interviews with Japanese researchers working in the United States to examine differences in the research environment between the United States and Japan, as well as an overview of papers by experts in the Japanese research development system and university reform. Based on these analyses, the final chapter makes nine proposals aiming to advance Japan's university reform program.

The editors strongly hope that Japan's university reform does not stop merely with the change to independent administrative entities, but that universities take advantage of this change as a major opportunity to make fundamental reforms to their management, to raise the level of Japanese universities, and to increase their international competitiveness, along with the reform of Japan's entire science and technology system such as the research funding system. We would be greatly honored if this introduction to and analysis of the U.S. university system and the nine proposals in the book are of use to such reform efforts, as well as to the third phase of the Basic Program for Science and Technology to take place from 2006.

SAWA Akihiro, TERAZAWA Tatsuya, and INOUE Satoshi