There is a widespread feeling that the Japanese government is unfairly acquiring for its economy the few really good tickets to prosperity in the twenty-first century. Foreign reactions to Japanese targeting have ranged from concern that such practices are unfair and inconsistent with the international economic system and that Japan should be forced to eliminate them, to intense admiration and a hope the other countries can somehow emulate Japan. Understanding Japanese practices, particularly as they relate to high technology industries, requires an analysis not only of the relationships between government and business in Japan, but also of the relationships between government and education and between education and business. From the perspective of an analysis of the interrelationships between these institutions, it is possible to understand the character of the market distortions and market failures with which Japanese policy has sought to cope. It should also then be possible to assess whether other countries face a similar set of problems requiring similar interventions. These analyses will proceed with particular focus on the development of the biotechnology industry in Japan and the United States.