Technological Diversification of Japanese Industry

A Japanese database on research and development that disaggregates an industry's intramural expenditure into 31 different product fields is used tp measure technological diversification. Sectoral patterts are identified in terms of upstream, downstream, and horizontal diversification-that is, respectively, diversification of an industry's research and development activities into product fields that are industrial inputs of that industry, into those that are outputs, and diversification that is not directed through the path of input-output relations. The pattern of the electronics industry is identified as downstream diversification whereas that of the chemical industry is identified as horizontal. The declining industry is generally making upstream diversification. Japanese corporate and governmental policies, such as trade policy, industrial policy, and the research association scheme, have accelerated technological diversification.