ABSTRACT
Science and technology are each areas of human activity where the gains from specialization have been immense. Effective science and technology policies are not separable from economic policies that have the effect of raising the payoff to investments in the improvement of scientific and technological capabilities. A lesson that has been learned from economic history is that economists have been making use of overly simple conceptualizations of the innovation process. The Japanese historical experience is of particular relevance to the Asian Newly industrialized countries for a number of reasons. It is widely agreed that one of the most distinctive aspects of American industrialization was the extraordinary richness of the natural resource environment within which it took place. The ability and the financial incentive to exploit waste materials depended upon, in addition to the availability of scientific knowledge, a central trend in the process of industrial development: the growth in scale of production operations.
