Japan needs to tackle challenges across the entire innovation value chain. To that end, Japan must increase the ratio of public spending on basic research to GDP and shift to high-trust funding that funds human resources rather than projects. President Peter Gruss of the Okinawa Institute of Science and Technology Graduate University (OIST), which is ranked 10th in the world (1st in Japan) in the Nature Index, made an appeal at the Japan International Science and Technology Exchange Center's CST International Salon.
Despite being the world's third largest economy, Japan ranks 13th among innovative countries in the WIPO (World Intellectual Property Organization) Global Innovation Index, behind South Korea and other smaller economies. A major factor for this is low public spending on education, research, and the human capital of individuals with a PhD.
Japan's real GDP growth rate has been declining since the 1950s, and a McKinsey report has pointed out that Japanese industrial R&D departments are no longer world-class performers, despite their high R&D spending.
The innovation ecosystem consists of human resources, funding, technologies, venture capital, universities, companies, and funding agencies, among other stakeholders, but if even a portion of them stops working then the whole system will malfunction. Of these, the most important element in the ecosystem is basic research. Scientific discoveries have extended human lifespans, fed the world, and informed us about the Earth and the universe. Basic research can help prepare us for humanity's future challenges.
In fact, looking at trends in per capita GDP growth rates in OECD countries, it can be seen that economic growth is brought about by numerous innovations, but it is difficult to predict when and what innovations will occur.
An example will help illustrate how investments in basic research leads to economic growth. The United States invested $3.3 billion worth of federal government research funding into the Human Genome Project, and this directly created 152,000 jobs (850,000 jobs if related industries are included), an annual economic impact of $265 billion, and direct federal tax revenue of $5.2 billion. The technologies that made up the original iPod were created by DARPA, DoE, CERN, NIH, NSF, and others, and the same also applies to the iPhone. 73.3% of the papers cited in US patents come from publicly funded research institutions (both US and foreign). In short, groundbreaking innovation cannot happen without long-term, government-supported research funding.
Excellence in research is necessary for Japan to enhance its innovation capabilities.
The Max Planck Society in Germany has ensured research excellence by attracting premier researchers from around the world and then giving them complete autonomy. In order to respond to emerging sciences, new research units are created as necessary, and young research group leaders are given independence at an early stage. High-trust funding (research funds from the Max Planck Society) allows these researchers to conduct creative experiments and research for five years, but then after five years the research and experiments are strictly evaluated via peer review, with the funding being terminated if results are not achieved but continuing if results have been achieved. The researchers receive stable, long-term institutional funding (increases of 5% per year for 2005-15 and 3% per year for 2015-30). As a result of this initiative, 23 individuals from the Max Planck Society have won a Nobel Prize.
Japanese researchers are not inferior. It's just that, without the right environment, they cannot achieve a high level of competitiveness. High-trust funding is of particular importance for this. Countries with a high proportion of projects funded by competitive research funds are less efficient at converting input funds into publications, and Japan ranks 19th, behind other countries. OIST professors receive 80-85% of their research funding from university funds, which allows them to conduct research in a stable manner.
In order to increase high trust funding, investments in basic research must be increased. According to OECD statistics, Japan's ratio of basic research expenditures to GDP is 0.4%, which is lower than South Korea's 0.7%, Switzerland's 1.32%, and Israel's 0.49%. While other countries are increasing government R&D spending, Japan's R&D spending has remained flat since 2001. University R&D expenditures are small when compared to other countries, and, even once the 10 trillion-yen university fund begins operating, it will not result in a large increase in investment as a whole.
The structure and functions of national universities should be revamped, the language at some graduate schools should be completely changed to English, young researchers should become independent at an early stage, all professorships should be open to international recruitment, and hiring decisions should be made by international committees. The European Research Council should be taken as a reference for funding programs, and, at the same time, high-trust funding must be strengthened. Additionally, incentives for VCs and high-tech startups should be increased so as to revitalize startups.
Produced by the Science Japan Editorial Team