[comp.research.japan] Kahaner Report: MITI's Outlook for Japan's Info. Indus., Year 2000

rick@cs.arizona.edu (Rick Schlichting) (05/29/91)

  [Dr. David Kahaner is a numerical analyst visiting Japan for two-years
   under the auspices of the Office of Naval Research-Asia (ONR/Asia).  
   The following is the professional opinion of David Kahaner and in no 
   way has the blessing of the US Government or any agency of it.  All 
   information is dated and of limited life time.  This disclaimer should 
   be noted on ANY attribution.]

  [Copies of previous reports written by Kahaner can be obtained from
   host cs.arizona.edu using anonymous FTP.]

To: Distribution
From: David K. Kahaner, ONR Asia [kahaner@xroads.cc.u-tokyo.ac.jp]
Re: MITI's Outlook for Japan's Information Industry in the Year 2000
29 May 1991

ABSTRACT. MITI's  view of the issues confronting Japan's Information
Industry for the year 2000.

INTRODUCTION.
Japan's Ministry of International Trade and Industry is one of the main 
coordinating agencies for the growth of the Japanese computer industry. 
Their plans, while not always fully carried out, set the direction for
funding and other detailed implementations. The summary below, is a 
policy statement and is written in general terms. Nevertheless it 
estimates that by the year 2000 Japan's Information Industry will account 
for over 20% of the country's GNP. It emphasizes telecommunication and 
increasing domestic demand, fueled, as usual by personal consumer demand 
for information and associated services. 


                       SUMMARY OF
   "AN OUTLOOK FOR THE INFORMATION INDUSTRY FOR THE YEAR 2000"
        Takao Hirosawa
        Director, Electronics Policy Division
        Machinery and Information Industries Bureau
        MITI
        1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100
         Tel: +81 3 3501-2964, Fax: +81 3 3580-6403
                                    19 April 1991

I.  BACKGROUND AND PERSPECTIVES

The steady progress being made in informatization in Japan is bringing 
about a number of changes in the information industry.  
   (1) qualitative changes in the demands being levied on that industry; 
   (2) changes stemming from the industry's becoming more international; 
   (3) changes in the role the information industry is playing in 
       reforming the industrial structure of Japan; and 
   (4) structural changes taking place in the information industry itself 
       as a result of the liberalization of telecommunications laws and 
       the subsequent growth of the telecommunication services business 
       here.  
These various changes make it necessary to analyze the information 
industry in Japan from a semi-macro perspective in order to clarify the 
direction in which it is heading.  

II.  CHANGING DEMANDS AND THE INFORMATION INDUSTRY

Advances in informatization are giving rise to major changes in the 
demand structure of the information industry.  This industry will have to 
respond to these changes appropriately.  

1.  Demands Expected to Persist in the Future
The information industry will have to continue to respond to the existing 
demand for 
  1) enhancement of equipment performance and reduction of cost for 
     information processing; 
  2) skilled human resources; 
  3) improved software development techniques; and 
  4) more advanced, diversified information processing.  
To accomplish this, the industry must strive even harder to develop new 
technologies, to train more highly-skilled human resources, to make 
software production more efficient and to advance the state of the 
industry itself.  

2.  Changing Demands
The progress in industrial usage of information technique, the increased 
numbers of diversified users and the penetration of informatization into 
everyday life are changing the demands being levied on the information 
industry.  These changing demands include: 
  1) a rising demand to promote OSI and to provide "system integration 
     services" to cope with increased systematization and networking; 
  2) a demand to change the division of labor and responsibility between 
     computer manufacturers, users and software producers and to provide 
     "professional services" in order to deal with increasing and 
     expanding applications of information systems brought on by the 
     further advance of informatization in industry; 
  3) an increased demand for easier-to-operate, more "user-friendly" 
     systems to meet with the growing numbers of personal users of 
     information systems and services; 
  4) a growing demand for standardized open interfaces to make better use 
     of increasing information-related assets such as software and 
     databases; 
  5) an increasing demand to improve information system security measures 
     via technology development and the use of system auditing services 
     to deal with  the growing dependency on information systems in 
     Japanese economic and social endeavors; 
  6) a demand for improved information provision services to handle the 
     increased importance being placed on efficient information selection 
     and use; and 
  7) the demand to rectify the differences in long- and short-distance 
     telecommunications charges and to promote the informatization of 
     outlying regions of Japan in order to achieve well-balanced, 
     nationwide informatization as opposed to the informatization of 
     major metropolitan areas alone.  
These changing demands characterize the future direction of the 
development of the information industry in Japan.  As such, they will 
have to be appropriately dealt with by the information industry.  

III.  INTERNATIONALIZATION AND THE INFORMATION INDUSTRY

As Japan's overall economy becomes more and more international in nature, 
the information industry, which is closely linked with 
internationalization, will be required to deal positively and effectively 
with this phenomenon.  Especially, the future expansion of the domestic 
market, which is open for foreign industries [note--DKK], may contribute 
to the internationalization of the Japanese economy by offering foreign 
industries and new markets.  

1.  Trend in Direct Investment of the Industry
Investments of foreign capital and overseas investments by Japanese 
capital in the electronics and information services industries will be 
increasing.  In line with this, a horizontal division of labor is 
manifesting itself with other industrialized countries, and a vertical 
division of labor is coming into being between Japan and the developing 
countries, thus internationalizing the industrial organization itself 
will be accomplished. These factors raise hopes that the trade-related 
earnings and expenditures of the information industry will achieve a 
state of balance. Japan will have to more actively cooperate with 
developing countries to support their efforts in informatization.  

2.  Information Industry Trade in Services
Traded with other countries in the form of information services is 
expected to increase in the future.  When this happens, information 
services imported into Japan will continue to exceed those services 
exported overseas.  In response to demands from a number of foreign 
countries, Japan  will have to strive to increase provision of Japanese 
databases to overseas users.  

3.  International Telecommunications 
Demand for international telecommunication services should continue to 
rise in the future, with the progress of internationalization of 
industries' activities.  Service menus and utilization charges that meet 
with the new role of telecommunications systems as transportation medium 
for service trade are required.  

IV.  INDUSTRIAL STRUCTURE CHANGES AND THE INFORMATION INDUSTRY

1.  Supporting Economic Growth
  1) As a Leading Industry
     The information industry continues to have potential for high 
     growth, and is one of the major sources of continued growth in the 
     Japanese  economy as a whole.  This industry also has the role of 
     fostering the switchover of the Japanese industrial structure to one 
     that is driven by domestic demand.  

                  Future growth of the information industry
                  based on a (nominal) 5% growth in GNP:

                  % of GNP : 1984 = 6.4%    2000 = 20.7%
                  Output value : 1984 = 20 trillion yen
                                 2000 = 140 trillion yen
                  Average growth rate : 1984 - 2000 = 13.3%

  2) Increasing Domestic Demand
     Increase of consumer demand for home and personal services is the 
     key to domestic-demand-driven growth of Japanese economy and 
     information industry.  The ratio of information industry demand 
     accounted for by this type of consumer demand is expected to grow.  
     Japan will therefore have to devise comprehensive measures aimed at 
     coping with "personalized" information.  

2.  Entrants to the Information Industry
Entry into the information industry has been quite lively in recent 
years.  This has been due in large part to firms moving their EDP 
divisions outside the company, marketing of software developed in-house, 
and providing in-house databases to outside users.  The informatization 
of traditional media industries like the newspaper and printing 
industries has also made progress.  

3.  Mutual Inter-industry Dependence
Rising interdependence of each sector in the information industry will 
result in a division of labor and close cooperation among the members of 
this industry.  The information industry will play a role of supporting 
the business operations of other industries as a multi-layered 
infrastructure.  

V.  INFORMATION INDUSTRY AS INFRASTRUCTURE

Informatization is an effective tool in attaining goals such as improved 
lifestyles and animated economic activity.  The information industry is 
therefore being looked to fulfill the role of an infrastructure in the 
Japanese economy.  In the light of this, the stress should be put on the 
some of the conditions such as listed below for the information industry 
in order to play the role of an infrastructure.  
  1) due protection of intellectual property rights;
  2) lifts of regulatory controls as a means of ensuring freedom of 
     private actions; and 
  3) to create better framework for offering wider telecommunication 
     services and for telecommunication rates.  

--------------------------END OF REPORT---------------------------------