RIETI Report October 2007

RIETI Should Capitalize on its Unique Status to Pursue Inventive Research

In joining RIETI as President and CRO in May of this year, FUJITA Masahisa continued the trend of globally accomplished and highly reputable academics building on RIETI's growing history and pursuing new frontiers of research. The following is an excerpt of a RIETI editorial interview with Dr. Fujita in which he spoke about the strengths and characteristics of RIETI's research and explained his ideas on what constitute desirable and appropriate policy research activities.

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RIETI Should Capitalize on its Unique Status to Pursue Inventive Research

FUJITA MasahisaPresident and Chief Research Officer (CRO), RIETI

Professor, Konan University
Adjunct Professor, Institute of Economic Research, Kyoto University

Prior to joining RIETI in May 2007, Dr. Fujita served as Professor of the Institute of Economic Research at Kyoto University; President of the Institute of Developing Economies - JETRO (2003-2007); and Professor in the Department of Economics / Regional Science at the University of Pennsylvania. His research and teaching interests are urban economics, regional economics, international trade, and spatial economics. He holds a Ph.D. in regional science from the University of Pennsylvania.

Major works: The Spatial Economy: Cities, Regions, and International Trade, MIT Press, 1999 (with P. Krugman and A. J. Venables); Economics of Agglomeration: Cities, Industrial Location, and Regional Growth, Cambridge University Press, 2002 (with J. Thisse); The International Library of Critical Writings in Economics: Spatial Economics, vol. 1, 2 (editor), Edward Elgar Publishing, Inc., 2005; Regional Integration in East Asia: From the Viewpoint of Spatial Economics (editor), Macmillan, 2007


RIETI Editorial: Before you joined RIETI as president and CRO, you were engaged in some of RIETI's research activities, for instance as a discussant at RIETI policy symposiums. From a third-person viewpoint, what were your impressions?

Fujita: From the outside, the general image was that RIETI, staffed by a number of internationally active researchers, was exclusive and was somewhat intimidating to young researchers. I myself worked for two years as a researcher at RIETI's predecessor, the Research Institute of International Trade and Industry (MITI/RI), and my experience was that there was a demanding atmosphere with presentations made and strictly reviewed. Professor Ryutaro Komiya, then director general of MITI/RI, would typically be accompanied by perhaps two discussants to comment on each paper presented and the presenting researcher would respond. I found the institute to be of a very high level in the quality of its research. I believe that this characteristic of MITI/RI has been passed down and remains unchanged at RIETI, which I consider to be an institute unparalleled in Japan. Also, after the institute was reorganized as RIETI, I have had opportunities to participate in RIETI policy symposiums as a commentator and discussant. Looking back on my experience with MITI/RI and RIETI, I can see that the personality of each of the previous chief researchers - MITI/RI Director General Komiya, RIETI's first President and CRO Masahiko Aoki, and immediate former President and CRO Masaru Yoshitomi - is reflected in the research activities. President Aoki strikes me as an initiator who led a series of unique and inventive research projects while President Yoshitomi is a fine organizer who defined the overall framework and then proceeded with research activities in accordance with that framework.

RIETI Editorial: What is your impression of RIETI after becoming its president? Also, as you have had experience with a number of research institutes, including your term as president of the Institute of Developing Economies (IDE), what characteristics, strengths, and weaknesses do you find in RIETI's research activities compared to other institutes?

Fujita: My impression of RIETI, as a high-level research institute, remains unchanged. One of the unique characteristics of RIETI is that it enables the pursuit of research that simultaneously achieves high academic quality and contributes to policy-making. Another characteristic is its extremely broad research coverage encompassing a wide range of economic and social issues facing Japan. This type of research is likely to materialize in the form of specific medium- and long-term policies. In Japan, RIETI is probably the only institute undertaking such a broad range of research while maintaining such high academic quality.

Compared with other research institutes RIETI is unique in terms of the large presence of faculty fellows who maintain faculty positions at universities while working for RIETI on a part-time basis. For instance, IDE, which I belonged to before coming to RIETI, has 170 full-time researchers, whereas at RIETI that number is just over 10. For better or for worse, this extremely small number of full-time researchers is one characteristic of RIETI. Personally, I would prefer more full-time researchers for ensuring sustainability as a research organization. But that runs against the government's policy calling for streamlining of the public sector and in reality is difficult to realize. So there is no choice but to take this constraint positively in proceeding with our research. I believe the government's basic policy of pursuing a streamlined public sector is in itself correct. A very large number of research issues must be addressed. If RIETI itself were to cover all the issues, 100 full-time researchers would not be enough. Thus, the current method of selecting outside researchers based on their suitability to each theme or subject and inviting them to conduct research at RIETI is not a bad system.

Data are vital for empirical studies. But releasing information is not a simple matter because confidentiality must be respected. Various types of data, including data on individual companies and microdata on households, usually rest in the hands of a government agency or government-related entity. By approaching via RIETI, researchers can access government-held data more easily. In doing an international comparison - for instance, comparing countries' service sector productivity, quite a hot topic these days - common measurement methods need to be applied to common sets of data, which is a task that cannot be accomplished by individual researchers. As a government-affiliated institute, RIETI is in a position that enables it to build a common infrastructure for research activities that is fully compatible with international standards. This, I believe, is a big strength of RIETI. For instance, RIETI is currently developing the Japan Industry Productivity (JIP) Database, which comes at an enormous expense but it is a project that RIETI is distinctively capable of performing. In cases such as these, RIETI's existence is uniquely valuable.

Also, RIETI's strength as an institute for policy research lies in its physical proximity to policy-makers and practitioners. Thanks to the efforts to date of researchers and staff, RIETI has been highly regarded for its research activities and many more researchers are hoping to come aboard, which in turn further elevates the level of those we invite; this is giving birth to incrementally higher quality participation. By the way, what do you think the RIETI logo symbolizes?

RIETI Editorial: It represents a knowledge network in which the public, academic, and government sectors collaborate with each other and create synergies.

Fujita: You are right. To be honest, I first thought that it was ivy leaves. But actually, the idea is, as Japanese saying goes, "from the counsel of three comes the wisdom of Manjushri," (or in the West you have a similar saying, "two heads are better than one") meaning that people with different knowledge and perspectives can gather together and create synergies. The idea is quite correct, but I would like to add that when the same members are together for too long, their ideas are just ordinary wisdom, nothing that could be described as the wisdom of Manjushri, the wisest of the Bodhisattva. Innovation does not emerge because common knowledge merely swells and ultimately prevails. So, the challenge is sustaining a good balance. Since there are substantial advantages to human resource mobility, we invite faculty fellows on one- to two-year contracts. In this way RIETI has been able to select the optimal researchers for each theme in accordance with needs, free from the constraints of conventional employment arrangements. Such flexibility is not possible in an ordinary research institute; researchers, once recruited, typically stay with the same research institute their entire career. But that is not the case with RIETI, which is free from constraints and thus able to continually select the best combination of researchers. This is just an aside, but there is a Western proverb, "A rolling stone gathers no moss." This can be interpreted in two completely different ways. One interpretation, popular in Japan, has it that even moss cannot grow when one keeps moving. The view prevalent in the United States is that those who do not move will become completely covered in moss. I think both are truthful but what is important for an organization is to find a balance between these two perspectives. The question is whether RIETI has accumulated its own "moss," or idiosyncratic knowledge. I believe it is necessary for RIETI to be a bit stronger in this area.

Also, the current situation is that RIETI's researchers are almost entirely Japanese and doing research regarding Japanese policies. I hope to bring in new perspectives by increasing interaction with overseas researchers. Although we have some foreign researchers engaged in certain, specific research projects, I would like to see more active interaction.

RIETI Editorial: Moving forward, what do you think it will take to ensure that RIETI's policy research activities appropriately respond to the dizzying changes in the economic and social environments? It seems very difficult to create synergies between academic researchers and government officials at the forefront of policy implementation.

Fujita: Among RIETI's designated policy research domains, "Maintaining Economic Dynamism under the Adverse Demographic Conditions of Low Fertility and Aging Population," "Promoting Innovation and Strengthening International Competitiveness," and "Formulating Japan's Strategy in Response to Globalization and Deepening Economic Interdependence in Asia" have been assigned by the government. Therefore our research activities as a whole move in these directions. Meanwhile, researchers are by their nature inclined to undertake research of their own interests so that they can demonstrate originality. They are interested in producing intellectual output regardless of the extent to which their research findings could contribute to government policy-making.

As a vehicle bridging academia and policy-making, RIETI seeks to ensure that researchers' interests are aligned with the overall direction of RIETI's research activities so that their findings will contribute to actual policy-making. Specifically, we select faculty fellows from those engaged in research that is in some way related to government policy. Also, prior to launching each project, we hold a brainstorming session in which research candidates present their proposals, and we hear opinions from relevant government officials. Then we seek consensus in deciding on the direction of the research. We exchange opinions as needed while the project is ongoing and, prior to the project's conclusion, we hold another major session to discuss and make final adjustments. That is how we coordinate between research activities and policy needs in our day-to-day operations. Basically, however, I do hope that our researchers feel free to perform original research as long as they stay within a mutually agreed-upon framework. There remain areas for further improvement, but I believe that the current flow of operations is working well.

RIETI Editorial: How and by what means do you think that research findings from RIETI should be delivered to the forefront of policy-making so as to be incorporated into actual government policy?

Fujita: We make smart use of the internet and have been devising various other means of disseminating information. RIETI discussion papers (which are published on the RIETI website) appear to be quite widely read in the academic community.

In terms of having our research findings reflected in government policies, we are closely interacting with officials from the Ministry of Economy, Trade and Industry (METI) and involving them in our research process. For instance, we always invite several such officials to our brainstorming sessions. In that way we seek to ensure that the ministry will at all times be informed of and ready to use our research findings. We also contribute to government white papers. For instance, in the White Paper on International Economy and Trade 2007, our research findings are used in the chapters on East Asian business networks and on the competitiveness of Japanese service industries. In addition, some RIETI researchers serve as members of government advisory bodies. RIETI Faculty Fellow Takatoshi Ito is a member of the Council on Economic and Fiscal Policy, where he is not necessarily a representative of RIETI but uses his research at RIETI in discussing government policies. Some researchers associated with RIETI are also involved in policy-making or active in areas very close to the government. Although getting deeply involved with the current government can be double-edged, I believe that our approach should be to engage in research activities that are not policy-making themselves but generate input very close to actual policies.

RIETI maintains an academic stance that ensures neutrality. It is problematic when policies are formulated based on research conducted from a subjective point of view. RIETI has examined problems such as the widening economic disparities in Japan as it conducts thorough and objective data analysis using reliable statistics.

RIETI also organizes policy symposiums at least six times a year, along with frequent brown-bag lunch (BBL) seminars. These seminars have built a strongly positive reputation and cover a wide range of themes, including topics not directly linked to RIETI's research. It is important for RIETI, in this way, to serve as a platform for interactions among researchers and specialists, contributing to active exchange of knowledge and expertise. I believe that RIETI should continue to engage in research in a manner that ensures neutrality, serves the needs of both private-sector companies and the general public, and makes its findings available for wide use.

Translated from an interview conducted and edited by Toko Tanimoto (August 23, 2007)

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