This report is a review of two basic research programs funded by the Research Development Corporation of Japan (JRDC). The primary focus of the report is on the Exploratory Research for Advanced Technology (ERATO) program, as an update of a 1988 JTEC report on the same subject. The current panel found that the ERATO program has been quite successful as a catalyst for changing the Japanese system of supporting and performing research, and that research performed under ERATO is of high quality, with several projects leading to the development of world-class research. At least in one case, an ERATO project created a new scientific field. The panel also concluded that the ERATO process has unique characteristics that can be applied in the United States, particularly in encouraging the development of closer ties between academic, national laboratory, and industrial researchers. The report also briefly reviews a newer JRDC program entitled Precursory Research for Embryonic Science and Technology (PRESTO). Its process and mode of funding are more like traditional U.S. procedures than is the case with ERATO, although its objective is more focused and designed to help researchers embark upon new lines of work. The panel found that, while PRESTO is too new to be fully evaluated, early indications suggest good results. Information sources for this study included a literature review, visits to JRDC-funded laboratories, and interviews with numerous past and present ERATO and PRESTO researchers.