Toshiyuki Ueyama, Director of Chiba University of Commerce Research Center for Economics

Looking at the breakdown of Japan's gross domestic product, we can see that the information and communications industry has been supporting the economy even during periods of economic stagnation up until the Lehman Shock in 2008. However, it cannot be said that this industry has produced good results in terms of job creation. The trend in job creation over the past seven or eight years has been flat or declining. It would be good if the information and communications industry was in the process of transitioning from a labor-intensive industry to a capital-intensive industry, but this has not been verified.

The history of Japan's information and communications industry has been one in which Japan has followed in the footsteps of the United States, and unfortunately, this has not changed to the present day. There are various theories about the invention of the computer, but in any case, there is no doubt that the center of computer development was the United States. Due to the great influence of this history, the software used in Japanese organizations and homes today is overwhelmingly designed in the United States. The most familiar example is Microsoft's Word. There was a time when JustSystems' domestic word processing software, Ichitaro, was widely used, but at a certain point it was rapidly replaced by Microsoft's Word, and now it has lost its position as the de facto standard in Japan, and Ichitaro is hardly used except in a few organizations. The reality is that Japan does not have many information and communications industry fields that are at a world-leading level. Within the information and communications industry, even the game field, where Japan has been at the forefront, is losing its position.

Up until now, not only operating systems such as Windows and UNIX, but also database management systems, which are indispensable for information systems, were not developed in Japan. Furthermore, with the exception of a few, programming languages, from traditional programming languages such as COBOL and FORTRAN to currently widely used programming languages such as C and Java, were born and spread in the United States. Programming languages born in Japan did not take root. In fact, programming languages were created in Japan, but it was difficult for Japanese-based programming languages to spread around the world. However, Ruby, developed by Matsumoto Yukihiro, attracted attention as the first programming language born in Japan to be approved as a standard by ISO/IEC (International Organization for Standardization/International Electrotechnical Commission). Nevertheless, because it is a foundation of programming languages, it must be said that it is extremely weak in terms of its impact on the economy.

The situation is the same when we turn our attention to Internet businesses. Global companies such as Amazon, Salesforce.com, Google, and Facebook, which immediately come to mind when we think of the Internet, were all born in the U.S. As is well known, Rakuten was also born in Japan, but was forced to withdraw from China.

On the other hand, if we look at information-related companies historically, IBM, once known as a global giant, had a solid organization and repeat customers that it acquired as a resource in its heyday, and it was thought at the time that no one could threaten its stronghold. However, contrary to expectations, the giants that dominated the world were heavily damaged by Microsoft and Intel. Microsoft, which was also thought to have taken the world by storm, is also being threatened by Google. Google is also being challenged by new companies such as Facebook.

Looking at the history of the information and communications industry in this way, we can see that even companies that dominate the market, enjoy high valuations, and appear stable are subject to major changes in their environment. Apple, which is currently highly valued on the stock market, is also destined to continue to innovate and provide new products and services.

This reaffirms the self-evident logic that markets are constantly changing, which creates opportunities for every company. Moreover, if we remember that many of the companies that have taken the world by storm have succeeded in transforming the information and communications industry by incubating the ideas of one or a few people, there is no need to assume or give up that new companies that will lead industries will not emerge outside the United States, and of course in Japan as well. In fact, IT-related venture companies are also starting up in Japan.

The Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade and Industry also feel a sense of crisis about the future of Japan's information and communications industry, and have taken various measures to date. Sometimes they have been able to achieve their goals successfully, but sometimes they have not. For example, recognizing that human resource development is one of the most important issues for the growth of Japan's information and communications industry, the Ministry of Economy, Trade and Industry developed ITSS (IT Skills Standard) and linked it to the Information Processing Engineer Examination to promote its dissemination. However, there are few companies that are actively trying to introduce it, and there are still concerns about a decline in the technical level of the entire information and communications industry, and ultimately the decline of this industry. Creating jobs as the industry progresses is also a top priority. For companies, especially those that are trying to expand globally, it doesn't matter if the human resources are not Japanese, but when considering the future of the country and domestic employment, this is not enough.

The Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade and Industry have allocated budgets, are suggesting the future direction of the information and communications industry both domestically and internationally, and are trying to lead the economy, but the effects are unlikely to be immediate. The environment is no longer one in which the public sector can lead the private sector in nurturing the industry, aiming for major development in the information and communications industry. It is necessary for the government to draw up a grand design and formulate a strategy for the national economy, but in the implementation stage, it will have to focus on establishing the foundations, including laws and education. Direct and active subsidies will foster a fragile information and communications industry, which will undoubtedly result in the stagnation of the industry and a future economic downturn.

2011 was said to be the first year of e-books in Japan, but it is well known that progress has been slow so far. I am aware that there are various issues, but from the user's point of view, although it is good that there are many bookstores online where e-book content can be purchased, the situation is extremely poor in usability, with individuals' digital bookshelves being fragmented and data formats not being standardized, which has led to the stagnation of e-books as a system in Japan. Moreover, the fact that there is very little content that users want to read is a crucial factor in preventing the system from closing the gap with users.

Amazon's arrival in Japan may remind us of IBM's arrival in Japan. On the surface, the investment in Digital Publishing Organization, Inc. via the Innovation Network Corporation of Japan, seems to be an indirect, diluted, and gradual investment from the government. However, a closer look reveals that the government's investment in Innovation Network Corporation of Japan is overwhelmingly large. It is an amount that can be said to be almost entirely invested by the government. It makes us worry that Japan's e-books will not be able to establish a system unless they go that far. What process will e-books in Japan go through to gain the support of users, can the government provide a method of not interfering with the e-books while providing funds, or will Amazon still dominate the e-book market? It will be necessary to keep a close eye on this in order to predict the future of Japan's information and communications industry.

Finally, I would like to add that, more than ever, we need an environment and mindset that allows us to invest more in promising ventures started by a small number of people, rather than in companies like Digital Publishing Organization Inc., which is promoted by several major companies in Japan.