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---------------------------------