Japan’s National Innovation System Helped It Grow Leaps & Bounds: Lessons For Dream India 2047

In the digital age of day-to-day innovations, India demands the National Innovation System (NIS) cater to the potential economic growth, which can serve as a medium to resolve multiple lagging social problems through technological progress. The Japanese NIS model has the potential elements to pose multiple time-tested solutions for the Indian landscape.


Evidently, the countries that took innovation as a tool in the industrial revolution leaped their developmental indexes. The discoverers of the technological gap amid the institutional journey led to increasing invention and scientific activities resulting in the better economic development of the countries. National Innovation System (NIS) stresses the flow of technology and information among people, enterprises, and institutions to push innovation.

The complexity in technology integration and production into an innovative solution is bridged by NIS. The diffusion of knowledge and technologies simplified it to the end users. Globally, in general, OECD countries have implemented the NIS in any form to revolutionize their economy via technological innovations. It empowered them to become the leader in the domains where international competition was stiff and driven by technological stints.

The Japanese Story

The primary literature on Japanese growth always emphasized the role of the State led by the Ministry of International Trade and Industry (MITI) in Japan’s technological innovation and success story. But parallelly, international & some local literature tends to debunk this notion by highlighting – the role of Japanese management led to technical change by enterprises.

To clear the fumes, in 1982, the Director General of MITI objectively summarized it the respective roles of the market and central government to devise measures for tapping the ingenuity and vitality of private individuals and firms by ensuring the maximum efficiency of market mechanisms.

Japan introduced the system of innovation in the country under ‘The Meiji Revolution of 1868’ which included primary policy augmentation:

  1. Strong impetus from central administration to promote modernization of the Japanese economy.
  2. Identified education and training as key factors in innovation enhancement.
  3. Intense push for best technology imports.
  4. Close cooperation between the government and large industries.

This integration intensified with Western support in the post-WW2 phase when Japan became an ally of those at the helm. Market dynamism of more than half of the century built enough competitive strength in 20th-century Japan to respond to markets in tandem with industry market leaders.

Japan innovation India
Representational Image

The central part of Japanese success must be attributed to the technology management led by MITI in sync with big enterprises. NIS augmented the role of free competition in the marketplace instead of the Central government in the Japanese system.

The core of learning from the Japanese innovation model is that they specifically rejected a long-term development strategy based on the traditional theory of competitive advantage. Rather than advocating the non-restrictive free trade doctrines, the Bank of Japan endorses the ‘natural’ path of industrial development led by innovation centers working in synchronization with MITI and academic excellence centers.

The first success Japan achieved in various sectors was the automobile. By integrating the best practices from the world, this innovation system established Japan as a pole in the next-gen technological R&D epicenter. The story was repeated in multiple sectors across the globe.

Japanese Innovation Management

The buzz of Japanese miracle is identified globally in the corridors of management through names of companies known as ‘Keiretsu’ like – Mitsukoshi, Nippon Gakki, Kanebo, Mitsubishi, Kawakami, etc. These business organizations work on the principle of interlocking business relationships and shareholdings.

Japanese Management ethics developed this sustainable model of big companies based on three fundamental principles – a) Lifetime employment, b) Seniority Wage system, and c) Vague Job classification. These principles make the Japanese management style unique worldwide as employees won’t choose their profession; they choose their employer.

The main challenge for Japan is not to become innovative but to exploit its results globally. That was why this successful model lost its edge in the 1990s after the huge success seen in the 1980s in competitive indexes.

The rejuvenated National Innovation System of the 2000s is well clubbed with a network perspective to enhance their growth through innovative performance, at least on the core and basic sectors from long decades back. As a result, its product percolation and its goodwill on global markets are way ahead of its competitors.

Learnings For Indian Dream – 2047

It is needless to say that a sound macroeconomic environment is necessary for dynamic innovation to take place. The India of 2023 is living in the age of this dynamic, innovative solutions offered from within. The young generation of entrepreneurs and industry-loving innovators are dealing with their long-existing solutions with the new technological solutions provided through the country’s digitalization.

The world is a global village where access to information is formalized via the internet. Indeed, the Indian government doesn’t have any specific National Innovation System program, but all the components are inculcated through several executive channels working Ministry and Department wise. From the Japanese example, this separation of thought processes can be brought down by aligning the innovation objectives in localized formats.

The lessons which India can draw from the most tech sought country will be as follows –

  1. Government technology or industrial policy to be more efficient by the inclusion of complementarities in the existing system of execution. It will reduce coordination problems, equilibria in executory bodies, and intervention by overarching authorities.
  2. An informal mode of continuous consultation remains the key to success in this sphere. The fundamental to MITI’s success in restructuring the Japanese economy and orienting the leading firms to a desired course was realigned multiple times in the due process.
  3. Joint interactive steering committees. The companies’ agreements to promote in the given industrial sector require a higher level of trust. It can only be achieved if all stakeholders’ steering committees have a common platform to put their side without any status classification.
  4. The adoption of new technologies is espoused enthusiastically by young technocrats/techplomats. Their role in charting and promoting the adoption of advanced techs to work in sync with industrial responses, not to do it alone.
  5. Regional policies have consistently strengthened technological capability throughout the country, particularly in small and medium-sized firms. For the same purpose, every district in States must have research and training advisory service centers which can be serviced through digital means by a single specialized trainer from headquarters. It will serve as a means to restructure the needs of local industries.
  6. Modernization needs financing as a core component where growing industries will fulfill the languishing industrial sectors. This resource sharing among the innovative sectors will reciprocate modernization inter-alia. The shortage of foreign exchange for tech MSMEs can be fulfilled via active trade liberalization.
  7. The Japanese’ system of diffusion‘ in patents must be exercised rather than the western ‘system of exclusion’ in the Indian case. As the adaption of universal technologies and practices required local patenting support, India has to create a pool of green licensing in all essential technologies with enhanced versions.
  8. Closer the university-industry linkage, the better the progress of innovations & implementations in the field. The complexity between the latter two can be checked through academic means, where legal tussle remains low compared to industrial competitors. Universalization is pretty comfortable there.
  9. Financial support for R&D was very vital. The policy of the tax credit system encouraged the R&D expenditure of firms vehemently. NIS for India must adapt with some XYZ deductions from tax payments in a fixed proportion for R&D spending.


NIS is utmost for the India of 2047, where the most populated country’s demand will be at record high, and only the ‘innovations done in coming two decades’ will have the capacity to fulfill their needs. It is noteworthy here that the increase in productivity is the key to economic growth in any economy, but it is impossible to achieve without increased R&D spending.

NIS performance can only be analyzed through the manufacturing outputs of key industries. India’s future adaptive management system and structure must effectively flow tacit knowledge embodied in its culture and social needs.

The government innovation system also needs a new approach these days. The traditional Japanese experience will not fetch the required results for India in this digital age. At this moment, in my opinion, a change in technological paradigm boosted by scientific revolution can drive incremental innovation in the finest trajectories.

The need is to normalize scientific innovations in generalized formats for the masses to prepare for the Developed India of 2047. Dream 2047 is nothing but a Self-Reliant, Innovative India of 2047.

  • Shashank S. Patel is a Ph.D. Researcher/Candidate at the Department of East Asian Studies, University of Delhi, working on the technological cooperation between India & Japan. 
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