Japan's economy is grounded on technological advance. While contributing 10% of world GDP, Japan currently undertakes 20% of the world's R&D and the country is keen to maintain its technology dominance in Asia. In both public and private sectors there is a commitment to research and development that has recently been renewed and reinvigorated. Research expenditure is around 3.4% of GDP, of which 80% comes from the private sector.

Government Spending on R&D: Around £18 Billion per year

Government expenditure amounts to 3.6 trillion yen per year, or around £18 billion. The main planning tool for this is the 5-year basic plan, the most recent of which was announced early in 2006. Investment is mainly put into eight priority areas: life sciences, information and telecommunications, the environment, and nanotechnology/materials, energy, monozukuri (manufacturing), infrastructure, frontiers (space/oceans).

Japan's universities are gaining an ever-increasing reputation for excellent research. Tohoku University is the second most cited university in the world for materials science, and Tokyo University the most cited university in physics. New specialist facilities such as the RIKEN Center for Developmental Biology in Kobe have received very strong financial backing and are generating world-leading research.

Recent changes in policy include a shift in emphasis from the ‘hardware’ to the ‘software’ of technology development i.e. human resources, and encouragement of creativity and entrepreneurship. Universities are being urged to develop better links with business to improve exploitation and knowledge transfer and with other countries to improve international engagement and researcher mobility. This is therefore an exciting time to be forging links with Japanese partners.

Industrial Spending on R&D: around £80 Billion per year

Overall, industrial R&D spending accounts for nearly 80% of national R&D spend, and this includes much basic research that would in other countries be carried out by universities. Japan's top ten companies spend more on R&D than the whole of the UK public sector and industry combined. Toyota's R&D budget for 07/08 is expected to exceed 1 trillion yen. Key industrial sectors are automotive, ICT and electronics, and pharmaceuticals, and there are strong opportunities for the UK here: there are 160 Japanese R&D facilities in Britain, and more and more interest in collaborative relationships with British universities and companies, particularly in life sciences and electronics.