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Most Americans would probably say The Declaration of Independence. Mercantilism held that wealth was fixed and finite, and that the only way to prosper was to hoard gold and tariff products from abroad. According to this theory, nations should sell their goods to other countries while buying nothing in return. Predictably, countries fell into rounds of retaliatory tariffs that choked off international trade.
The core of Smith's thesis was that humans' natural tendency toward self-interest or in modern terms, looking out for yourself results in prosperity. Smith argued that by giving everyone freedom to produce and exchange goods as they pleased free trade and opening the markets up to domestic and foreign competition, people's natural self-interest would promote greater prosperity than with stringent government regulations.
Smith believed humans ultimately promote public interest through their everyday economic choices. This free-market force became known as the invisible hand , but it needed support to bring about its magic. In particular it was the market that emerged from an increasing division of labor, both within production processes and throughout society that created a series of mutual interdepencies, promoting social welfare through individual profit motives.
In other words, once you specialize as a baker and produce only bread, you now must rely on somebody else for your clothes, somebody else for your meat, and yet somebody else for your beer.
Meanwhile the people that specialize in clothes now must rely on you for their bread, and so on. The automatic pricing and distribution mechanisms in the economy—which Adam Smith called an "invisible hand"—interact directly and indirectly with centralized, top-down planning authorities. However, there are some meaningful conceptual fallacies in an argument that is framed as the invisible hand versus the government. The invisible hand is not actually a distinguishable entity.
Instead, it is the sum of many phenomena that occur when consumers and producers engage in commerce. Smith's insight into the idea of the invisible hand was one of the most important in the history of economics. It remains one of the chief justifications for free-market ideologies. The invisible hand theorem at least in its modern interpretations suggests that the means of production and distribution should be privately owned and that if trade occurs unfettered by regulation, in turn, society will flourish organically.
These arguments are naturally competitive with the concept and function of government. The government is not serendipitous—it is prescriptive and intentional. Politicians, regulators, and those who exercise legal force such as the courts, police, and military pursue defined goals through coercion. However, in contrast, macroeconomic forces—supply and demand, buying and selling, profit and loss occur voluntarily until government policy inhibits or overrides them.
In this sense, it is more accurate to suggest that government affects the invisible hand, not the other way around. However, it is the absence of market mechanisms that frustrates government planning.
Some economists refer to this as the economic calculation problem. When people and businesses individually make decisions based on their willingness to pay money for a good or service, that information is captured dynamically in the price mechanism. In practice, however, this is simply not the case. In fact, the composition and character of the home market usually has a disproportionate effect on how companies perceive, interpret, and respond to buyer needs.
Nations gain competitive advantage in industries where the home demand gives their companies a clearer or earlier picture of emerging buyer needs, and where demanding buyers pressure companies to innovate faster and achieve more sophisticated competitive advantages than their foreign rivals.
The size of home demand proves far less significant than the character of home demand. Home-demand conditions help build competitive advantage when a particular industry segment is larger or more visible in the domestic market than in foreign markets.
A good example is hydraulic excavators, which represent the most widely used type of construction equipment in the Japanese domestic market—but which comprise a far smaller proportion of the market in other advanced nations. This segment is one of the few where there are vigorous Japanese international competitors and where Caterpillar does not hold a substantial share of the world market. More important than the mix of segments per se is the nature of domestic buyers. Sophisticated, demanding buyers provide a window into advanced customer needs; they pressure companies to meet high standards; they prod them to improve, to innovate, and to upgrade into more advanced segments.
As with factor conditions, demand conditions provide advantages by forcing companies to respond to tough challenges. Especially stringent needs arise because of local values and circumstances. For example, Japanese consumers, who live in small, tightly packed homes, must contend with hot, humid summers and high-cost electrical energy—a daunting combination of circumstances. In response, Japanese companies have pioneered compact, quiet air-conditioning units powered by energy-saving rotary compressors.
In industry after industry, the tightly constrained requirements of the Japanese market have forced companies to innovate, yielding products that are kei-haku-tan-sho— light, thin, short, small—and that are internationally accepted. The international success of U. Nations export their values and tastes through media, through training foreigners, through political influence, and through the foreign activities of their citizens and companies.
The third broad determinant of national advantage is the presence in the nation of related and supporting industries that are internationally competitive. Internationally competitive home-based suppliers create advantages in downstream industries in several ways. First, they deliver the most cost-effective inputs in an efficient, early, rapid, and sometimes preferential way.
Far more significant than mere access to components and machinery, however, is the advantage that home-based related and supporting industries provide in innovation and upgrading—an advantage based on close working relationships. Suppliers and end-users located near each other can take advantage of short lines of communication, quick and constant flow of information, and an ongoing exchange of ideas and innovations. Shoe producers, for instance, interact regularly with leather manufacturers on new styles and manufacturing techniques and learn about new textures and colors of leather when they are still on the drawing boards.
Leather manufacturers gain early insights into fashion trends, helping them to plan new products. The interaction is mutually advantageous and self-reinforcing, but it does not happen automatically: it is helped by proximity, but occurs only because companies and suppliers work at it.
By the same token, a nation need not be competitive in all supplier industries for its companies to gain competitive advantage.
The same is true of other generalized technologies—like electronics or software—where the industry represents a narrow application area. Home-based competitiveness in related industries provides similar benefits: information flow and technical interchange speed the rate of innovation and upgrading. A home-based related industry also increases the likelihood that companies will embrace new skills, and it also provides a source of entrants who will bring a novel approach to competing.
The Swiss success in pharmaceuticals emerged out of previous international success in the dye industry, for example; Japanese dominance in electronic musical keyboards grows out of success in acoustic instruments combined with a strong position in consumer electronics. National circumstances and context create strong tendencies in how companies are created, organized, and managed, as well as what the nature of domestic rivalry will be. In Italy, for example, successful international competitors are often small or medium-sized companies that are privately owned and operated like extended families; in Germany, in contrast, companies tend to be strictly hierarchical in organization and management practices, and top managers usually have technical backgrounds.
No one managerial system is universally appropriate—notwithstanding the current fascination with Japanese management. Competitiveness in a specific industry results from convergence of the management practices and organizational modes favored in the country and the sources of competitive advantage in the industry.
In industries where Italian companies are world leaders—such as lighting, furniture, footwear, woolen fabrics, and packaging machines—a company strategy that emphasizes focus, customized products, niche marketing, rapid change, and breathtaking flexibility fits both the dynamics of the industry and the character of the Italian management system.
The German management system, in contrast, works well in technical or engineering-oriented industries—optics, chemicals, complicated machinery—where complex products demand precision manufacturing, a careful development process, after-sale service, and thus a highly disciplined management structure.
German success is much rarer in consumer goods and services where image marketing and rapid new-feature and model turnover are important to competition. Countries also differ markedly in the goals that companies and individuals seek to achieve. Company goals reflect the characteristics of national capital markets and the compensation practices for managers. The United States is at the opposite extreme, with a large pool of risk capital but widespread trading of public companies and a strong emphasis by investors on quarterly and annual share-price appreciation.
Management compensation is heavily based on annual bonuses tied to individual results. America does well in relatively new industries, like software and biotechnology, or ones where equity funding of new companies feeds active domestic rivalry, like specialty electronics and services. Strong pressures leading to underinvestment, however, plague more mature industries. Individual motivation to work and expand skills is also important to competitive advantage.
Outstanding talent is a scarce resource in any nation. In Switzerland, it is banking and pharmaceuticals. In Israel, the highest callings have been agriculture and defense-related fields. Sometimes it is hard to distinguish between cause and effect.
Attaining international success can make an industry prestigious, reinforcing its advantage. The presence of strong local rivals is a final, and powerful, stimulus to the creation and persistence of competitive advantage. This is true of small countries, like Switzerland, where the rivalry among its pharmaceutical companies, Hoffmann-La Roche, Ciba-Geigy, and Sandoz, contributes to a leading worldwide position. It is true in the United States in the computer and software industries.
Nowhere is the role of fierce rivalry more apparent than in Japan, where there are companies competing in machine tools, 34 in semiconductors, 25 in audio equipment, 15 in cameras—in fact, there are usually double figures in the industries in which Japan boasts global dominance.
Conventional wisdom argues that domestic competition is wasteful: it leads to duplication of effort and prevents companies from achieving economies of scale. In fact, however, most national champions are uncompetitive, although heavily subsidized and protected by their government. In many of the prominent industries in which there is only one national rival, such as aerospace and telecommunications, government has played a large role in distorting competition.
Static efficiency is much less important than dynamic improvement, which domestic rivalry uniquely spurs. Domestic rivalry, like any rivalry, creates pressure on companies to innovate and improve. Local rivals push each other to lower costs, improve quality and service, and create new products and processes. But unlike rivalries with foreign competitors, which tend to be analytical and distant, local rivalries often go beyond pure economic or business competition and become intensely personal.
With domestic rivals, there are no excuses. Geographic concentration magnifies the power of domestic rivalry. This pattern is strikingly common around the world: Italian jewelry companies are located around two towns, Arezzo and Valenza Po; cutlery companies in Solingen, West Germany and Seki, Japan; pharmaceutical companies in Basel, Switzerland; motorcycles and musical instruments in Hamamatsu, Japan.
The more localized the rivalry, the more intense. And the more intense, the better. Another benefit of domestic rivalry is the pressure it creates for constant upgrading of the sources of competitive advantage. The presence of domestic competitors automatically cancels the types of advantage that come from simply being in a particular nation—factor costs, access to or preference in the home market, or costs to foreign competitors who import into the market.
Companies are forced to move beyond them, and as a result, gain more sustainable advantages. Moreover, competing domestic rivals will keep each other honest in obtaining government support. Companies are less likely to get hooked on the narcotic of government contracts or creeping industry protectionism. Instead, the industry will seek—and benefit from—more constructive forms of government support, such as assistance in opening foreign markets, as well as investments in focused educational institutions or other specialized factors.
Ironically, it is also vigorous domestic competition that ultimately pressures domestic companies to look at global markets and toughens them to succeed in them. Particularly when there are economies of scale, local competitors force each other to look outward to foreign markets to capture greater efficiency and higher profitability.
And having been tested by fierce domestic competition, the stronger companies are well equipped to win abroad. Each of these four attributes defines a point on the diamond of national advantage; the effect of one point often depends on the state of others.
Sophisticated buyers will not translate into advanced products, for example, unless the quality of human resources permits companies to meet buyer needs. Selective disadvantages in factors of production will not motivate innovation unless rivalry is vigorous and company goals support sustained investment.
But the points of the diamond are also self-reinforcing: they constitute a system. Two elements, domestic rivalry and geographic concentration, have especially great power to transform the diamond into a system—domestic rivalry because it promotes improvement in all the other determinants and geographic concentration because it elevates and magnifies the interaction of the four separate influences.
The role of domestic rivalry illustrates how the diamond operates as a self-reinforcing system. Active local rivals also upgrade domestic demand in an industry. In furniture and shoes, for example, Italian consumers have learned to expect more and better products because of the rapid pace of new product development that is driven by intense domestic rivalry among hundreds of Italian companies.
Domestic rivalry also promotes the formation of related and supporting industries. The effects can work in all directions: sometimes world-class suppliers become new entrants in the industry they have been supplying. Or highly sophisticated buyers may themselves enter a supplier industry, particularly when they have relevant skills and view the new industry as strategic.
In the case of the Japanese robotics industry, for example, Matsushita and Kawasaki originally designed robots for internal use before beginning to sell robots to others. Today they are strong competitors in the robotics industry. In Sweden, Sandvik moved from specialty steel into rock drills, and SKF moved from specialty steel into ball bearings. Competitive industries are not scattered helter-skelter throughout the economy but are usually linked together through vertical buyer-seller or horizontal common customers, technology, channels relationships.
Nor are clusters usually scattered physically; they tend to be concentrated geographically. One competitive industry helps to create another in a mutually reinforcing process. Japanese strength in laptop computers, which contrasts to limited success in other segments, reflects the base of strength in other compact, portable products and leading expertise in liquid-crystal display gained in the calculator and watch industries. Once a cluster forms, the whole group of industries becomes mutually supporting.
Benefits flow forward, backward, and horizontally. Aggressive rivalry in one industry spreads to others in the cluster, through spin-offs, through the exercise of bargaining power, and through diversification by established companies. Through the conduits of suppliers or customers who have contact with multiple competitors, information flows freely and innovations diffuse rapidly. Interconnections within the cluster, often unanticipated, lead to perceptions of new ways of competing and new opportunities.
The cluster becomes a vehicle for maintaining diversity and overcoming the inward focus, inertia, inflexibility, and accommodation among rivals that slows or blocks competitive upgrading and new entry. In the continuing debate over the competitiveness of nations, no topic engenders more argument or creates less understanding than the role of the government.
Many see government as an essential helper or supporter of industry, employing a host of policies to contribute directly to the competitive performance of strategic or target industries. Both views are incorrect.
On one hand, advocates of government help for industry frequently propose policies that would actually hurt companies in the long run and only create the demand for more helping. On the other hand, advocates of a diminished government presence ignore the legitimate role that government plays in shaping the context and institutional structure surrounding companies and in creating an environment that stimulates companies to gain competitive advantage. Government cannot create competitive industries; only companies can do that.
Government plays a role that is inherently partial, that succeeds only when working in tandem with favorable underlying conditions in the diamond. Government policies that succeed are those that create an environment in which companies can gain competitive advantage rather than those that involve government directly in the process, except in nations early in the development process.
It is an indirect, rather than a direct, role. By stimulating early demand for advanced products, confronting industries with the need to pioneer frontier technology through symbolic cooperative projects, establishing prizes that reward quality, and pursuing other policies that magnify the forces of the diamond, the Japanese government accelerates the pace of innovation. But like government officials anywhere, at their worst Japanese bureaucrats can make the same mistakes: attempting to manage industry structure, protecting the market too long, and yielding to political pressure to insulate inefficient retailers, farmers, distributors, and industrial companies from competition.
It is not hard to understand why so many governments make the same mistakes so often in pursuit of national competitiveness: competitive time for companies and political time for governments are fundamentally at odds. It often takes more than a decade for an industry to create competitive advantage; the process entails the long upgrading of human skills, investing in products and processes, building clusters, and penetrating foreign markets.
In the case of the Japanese auto industry, for instance, companies made their first faltering steps toward exporting in the s—yet did not achieve strong international positions until the s. But in politics, a decade is an eternity. Consequently, most governments favor policies that offer easily perceived short-term benefits, such as subsidies, protection, and arranged mergers—the very policies that retard innovation.
Most of the policies that would make a real difference either are too slow and require too much patience for politicians or, even worse, carry with them the sting of short-term pain. Deregulating a protected industry, for example, will lead to bankruptcies sooner and to stronger, more competitive companies only later. Policies that convey static, short-term cost advantages but that unconsciously undermine innovation and dynamism represent the most common and most profound error in government industrial policy.
There are some simple, basic principles that governments should embrace to play the proper supportive role for national competitiveness: encourage change, promote domestic rivalry, stimulate innovation.
Some of the specific policy approaches to guide nations seeking to gain competitive advantage include the following. Focus on specialized factor creation. Government has critical responsibilities for fundamentals like the primary and secondary education systems, basic national infrastructure, and research in areas of broad national concern such as health care.
Yet these kinds of generalized efforts at factor creation rarely produce competitive advantage. Rather, the factors that translate into competitive advantage are advanced, specialized, and tied to specific industries or industry groups. Mechanisms such as specialized apprenticeship programs, research efforts in universities connected with an industry, trade association activities, and, most important, the private investments of companies ultimately create the factors that will yield competitive advantage.
Avoid intervening in factor and currency markets. By intervening in factor and currency markets, governments hope to create lower factor costs or a favorable exchange rate that will help companies compete more effectively in international markets.
They work against the upgrading of industry and the search for more sustainable competitive advantage. The contrasting case of Japan is particularly instructive, although both Germany and Switzerland have had similar experiences. Over the past 20 years, the Japanese have been rocked by the sudden Nixon currency devaluation shock, two oil shocks, and, most recently, the yen shock—all of which forced Japanese companies to upgrade their competitive advantages.
The point is not that government should pursue policies that intentionally drive up factor costs or the exchange rate. For example, Japan's grant element and the grant share are less satisfactory in comparison with other aid donors, as more than 40 percent of Japan's ODA consists of loans. The Government of Japan is making efforts to increase grant aid and technical assistance.
The ratio of the untied aid the procurement ratio of goods and services not restricted to those from the donor country is at world's highest level as a result of consistent efforts, but further qualitative improvement should be made in the future. In order to further expand and enhance ODA in the future, public understanding and support are necessary.
For this reason, it is essential to heighten the transparency of ODA. The Government of Japan has endeavored to promote public understanding of ODA through various methods, such as distribution of public relations materials on ODA and intends to strengthen this effort in the future. At the same time, there is a need to foster a social environment so as to encourage the people to directly participate in development assistance activities.
In this regard, the Government intends to make further efforts for development education, in addition to promoting public relations activity. Japan gives priority to assistance in the environmental field. In coping with the global environment problem, which is attracting international attention recently, it is necessary particularly to support efforts of the developing countries in environmental preservation.
Moreover, Japan takes full consideration in implementing ODA so that its development projects do not adversely affect the surrounding environment. At the London Summit of , Japan announced plans to enhance assistance particularly in the priority areas on the global environmental problem, such as forest preservation and pollution prevention, and asserted that environmental considerations in extending assistance should be embodied in the improved research capability on impacts of development assistance programs on the environment.
There is a need to cooperate with and support non-governmental organizations NGOs , which can extend assistance directly to the grassroots level and respond to urgent needs swiftly and flexibly.
It is also important to promote assistance with due consideration for the benefit and the participation of women, which is expressed in the idea of "Women in Development" WID. In order to respond specifically to wide-ranging development needs and different situations of the developing countries, diverse wisdom and undertakings are required.
Technical cooperation has an aspect, on the one hand, of training human resources who will assume nation building in the developing countries and, on the other, an aspect of deepening mutual understanding and goodwill between Japan and the recipient countries through human contacts.
Technical cooperation is an area in which further improvement is anticipated in the future, as a means of cooperation using the abundant technologies of Japan. Official technical cooperation is provided mainly through the Japan International Cooperation Agency JICA in various forms: acceptance of trainees to meet the diverse needs of the developing countries, dispatch of experts, provision of equipment, development studies Note 1 , project-type technical cooperation Note 2 , development cooperation Note 3 , dispatch of Japan Overseas Cooperation Volunteers, Youth Invitation Program Friendship Plan for the 21st Century and dispatch of Japan Disaster Relief Teams in international emergency cases.
In order to improve the content of the overall ODA, there is a need to expand the volume of technical cooperation. Toward that goal, it is necessary to strengthen the implementation system that can respond to the quantitative enhancement of technical cooperation, as well as to enhance the training of personnel engaged in assistance. Grant aid involves the provision of funds to a developing country without the imposition of a repayment obligation.
It provides a means of responding to a variety of needs in developing countries centering on basic human needs and human resource development. Grant aid includes grant aid for general projects, grant aid for fishery projects, emergency disaster relief, grant aid for cultural projects, food aid Note 1 and increased food production aid Note 2.
The expansion of Japan's grant aid is a reflection of the rising expectations of developing countries and other major aid donors toward this type of aid. This is approximately 1. Since the achievement of both quantitative and qualitative improvement of aid activities has become a major priority for Japan, grant aid will play an extremely important role in this context.
This allowed relief activities in the refugee camps and provided chartered planes to repatriate them to their home countries. The small-scale grant assistance system was introduced in fiscal to promptly and appropriately finance relatively small-scale projects that were not suitable for assistance under the existing system of general grant aid.
This flexible approach to aid has earned high praise in a number of fields as a means to reach the grassroots level. In order to implement grant aid more efficiently and effectively, the following measures have been taken: 1 the enhancement of preliminary studies; 2 the strengthening of coordination with technical assistance; 3 the strengthening of coordination with other donor countries, international organizations and non-governmental organizations; 4 the enhancement of follow-ups implementation of follow-up cooperation which provides additional contingency parts of equipment and machines already furnished and the rehabilitation assistance which improves and reinforces the existing projects.
Direct government loans ODA loans provide funds to developing countries at low interest rates and over long repayment periods. The average interest rate in fiscal was 2. ODA loans can meet demands for large-scale development funds, however the recipient countries are required to repay the principal amount and service interest and debt burden is created.
Therefore, yen loans are provided to those projects for improvement of social and economic infrastructure which has relatively high returns and which can directly contribute to the social and economic development of the developing countries.
Thus, yen loans with such features have played an important role in contributing to the economic growth of countries which have relatively high demands for development funds, such as the Association of Southeast Asian Nations ASEAN member countries.
Moreover, Japan has recently increased extension of non-project type loans to those countries which are faced with immediate difficulties in the international balance of payments. As regards the procurement conditions of the ODA loans, taking into consideration the requests of the developing countries and from the standpoint of attempting efficient management of development funds, general untying of loans is being promoted.
As a result, the general untied ratio in fiscal on the Exchange of Notes basis was In terms of the actual procurement record, the procurement rate from Japanese corporations is on a decreasing trend annually and this rate was 27 percent in fiscal , 11 basis points lower than in fiscal The procurement rate from other industrialized countries OECD member countries other than Japan and the developing countries were 21 percent and 52 percent respectively, making the rise in procurement rate of the developing countries particularly notable.
The recent notable trends in the ODA loans is exemplified by the emergency project loans or commodity loans with a high grant element to the Middle East countries Egypt, Jordan and Turkey to support them in overcoming economic difficulties resulting from the Gulf Crisis.
Japan, in addition to bilateral aid, provides aid through international organizations. This figure in fiscal was The advantages of multilateral aid include: 1 access to the sophisticated and specialized knowledge and experience of various organizations; 2 the ability to secure political neutrality in furnishing aid and 3 access to global aid networks.
The range of aid can be expanded by the interactive linkage multi-bi cooperation of this type of aid and bilateral aid, which enables Japan to extend assistance flexibly and carefully, targeted in line with its foreign policy objectives and which is useful to improve relations with recipient countries. Japan has also begun to positively cooperate with the newly established European Bank for Reconstruction and Development EBRD in April , whose objective is to support the political and economic reforms of the Central and Eastern European countries.
Furthermore, Japan has positively cooperated with the activities of the U. Japan's contribution to these U. Cooperation on Science and Technology.
Japan is considered today one of the most advanced countries in the area of science and technology. Accordingly, expectations and requests from other countries for cooperation in this field are rapidly growing and responding to them is now an important foreign policy objective. In addition, coping with global problems, such as the environment, utilizing science and technology is becoming an increasingly important international task. As a responsible member of the international community, Japan must endeavor to solve these problems through making contributions that are commensurate with its scientific and technological strength.
To this end, Japan must concentrate its efforts particularly on the following. The first is the enhancement of basic research activities in Japan. Japan has been highly evaluated for applied research that leads to product development. But, it can hardly be said that its international contribution in the area of basic research, the outcome of which is an intellectual asset common to mankind, is compatible with its economic and scientific strength.
Examples are cited such as the extremely few Japanese Nobel Prize laureates in the field of natural science in comparison with major Western countries, or the fact that products such as automobiles, semiconductors, VTRs, industrial robots, etc. In order to strengthen basic research in Japan, it is necessary to consolidate an environment where inventive and innovative spurts of research and development in the public sector, which should play a major role, are stimulated.
In particular, upgrading research bases and improving research systems in universities are urgent tasks. Second, there is a disequilibrium in international exchange of researchers.
The number of Japanese researchers going abroad to the Western countries is overwhelmingly higher than the number of researchers visiting Japan from these countries. This is one of the factors inviting such criticism as Japan being a "free-rider of basic research. From this viewpoint, the Government of Japan is gradually enhancing its program to invite foreign researchers.
Moreover, in April , the Japan Foundation Center for Global Partnership was created, and part of the foundation's income from fund management will be utilized to invite American researchers and students in cooperation with the NSF. Besides, an increasing number of foreign researchers are participating in basic research programs undertaken by government-run research institutes. In order to increase the number of foreign researchers visiting Japan, it is necessary not only to expand invitation programs, but also to improve living conditions for the visiting researchers, and to exert more efforts in disseminating information abroad about research projects conducted in Japan.
Along with the progress in scientific and technological research, the areas requiring a massive amount of investment for research such as outer space, nuclear fusion and high energy physics are increasing. In these disciplines, international cooperation is necessary in sharing the cost as well as in coordinating the substance of research and feedback to the international community from the results of these research endeavors are also called for.
This type of cooperation should also promote visiting researchers from abroad as well. As described in the following, Japan has already actively contributed in this sphere, but further contribution will be required in the future. Production technologies, which are the subject of applied and development research, are the area in which Japan excels.
In this area, competition often overpowers cooperation. Excessive competition should be avoided since it can lead to techno-nationalism which restricts transfers of advanced technology or unnecessarily reinforces the protection of intellectual property rights. At least in the field of the so-called common basic technology, research cooperation that is open to foreign countries to the extent possible should be extended. Based on the above perception, the Government of Japan pursues international cooperation in science and technology as follows.
Japan signed science and technology cooperation agreements with the United States and 17 other countries and cooperation is actively pursued through joint committees and the like with each partner country. Based on the Japan-U. These meetings enabled both countries to agree on specific joint projects and to exchange views to further promote the exchange of researchers and scientific and technical information between the two countries.
This agreement was the revision of the old agreement signed in , based on the recent developments in science and technology in both countries. It offers new opportunities in strengthening the cooperative relations between France and Japan. Prominent results from IBRD operations include:. Bosnia and Herzegovina: A Bank operation supported reforms to facilitate cross-border trade.
The project helped simplify government processes for issuance of export-import licenses, made it easier to obtain permits, and reduced approval costs. The reductions in trade-related administrative costs helped strengthen the business environment and reduced the costs of doing business in the country. Macedonia: the WBG supported government efforts to improve the efficiency of trade logistics services two projects under a programmatic approach.
The operation included measures to make inspections more efficient to foster cross-border trade and to support the transport industry to be export-ready by incentivizing fleet upgrades to comply with EU emission standards. Results include a 70 percent reduction in physical border inspections, with reduced transit times for both exports and imports. Furthermore, the compliance rate of new vehicles with Eurozone standards was percent.
The DPL supported work to implement procedures, customs, and formulation of reduced and simplified non-tariff barriers. Results include a reduction in the number of days needed to export and import: between and , time to export was reduced from 21 to 17 days and time to import was reduced from 27 to 23 days.
The IPF operation financed investments and technical assistance for the Directorate General of Customs and Excise to strengthen client services through improved customs operations and trade facilitation. The World Bank Group works with a wide range of stakeholders, including donor and client countries, the private sector, CSOs, multilateral institutions and regional economic communities among others.
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