By their own admission, the Japanese are better imitators than innovators, but they have shown themselves to be as creative as the best when working abroad. Four of the country's five Nobel prizes were won by Japanese scientists doing research in the United States or Europe. English culture has had a strong influence in America, Canada, Australia, New Zealand and even Hong Kong as well as in the British Isles themselves. Clearly the political and economic climate plays an important role as well. That is encouraging, because it means that thoughtful policies to promote innovation can pay dividends.
Recent experience suggests that deregulation is the best investment by far.
Sweeping away binfuls of rules that prevented American companies from sharing know-how at an early stage of development has had an invigorating effect on the country's industrial competitiveness. The biggest pay-off from the loosening of bureaucratic restrictions has been the wave of change now under way as the telecoms industry converges with the computer and entertainment industries. This flow of new products, processes, opportunities and jobs which started in America a decade ago is now turning into a full-scale industrial revolution. In the long run, they penalise efficient firms that can manage without them. Because innovation requires patience, commitment and risk way beyond any ordinary sort of investment, a case can be made for easing tax rates on capital gains that accrue from getting innovative ideas and ventures into the marketplace.