COVERLEADDigital Society－Issues & Challenges

By Naoyuki Haraoka

We need economic growth. Without economic growth, wecannot be well prepared for an aging society throughenhanced social welfare programs. We cannot deal with
global climate change. We cannot mitigate increasing income
inequality. We will need public expenditure to meet all thosechallenges. Increased tax revenues supported by economic
growth will be the only way of overcoming them.
Today, however, without new sources of growth created byinnovation, it seems to be difficult to achieve sustainableeconomic expansion. Developed nations will find only a thinpossibility of growth as their economies have alreadyreached maturity, while developing nations will find
impediments to growth in the lack of a middle class that
could increase its consumption due to insufficient structural
economic reforms. Developed nations, mostly due to a lackof growth, tend to be occupied with protectionist thoughts
and thus developing nations’ growth is hampered and theycannot achieve sufficient structural reform of their domestic
economies.
This vicious cycle in the world economy will make usexpect new technology to play a pivotal role in achieving higheconomic growth. It is true that traditional economic theory
always has a high regard for the role of disruptive innovationin raising productivity and eventually economic growth.
Digital technology, the new technology of our age, could
help rescue the world from the economic vicious cycle. Newtechnology, however, always brings concerns as well as
merits. Concerns about jobs being lost to new technology
are well known, but digital technology raises many otherissues such as the growing need for privacy protection, its
possible impact upon democracy, competition, management,income gaps, and so on. In other words, the impacts of newtechnology are diverse and not limited to the economy, butreach into society as a whole.
It may be a little premature to say clearly what social
impacts of digital technology must be addressed and how to
mitigate them. But it is true that we are now at a stage where
we should think about possible new rules and regulations to
2 Japan SPOTLIGHT • November / December 2018

meet these concerns and encourage the positive aspects ofdigital technology. This is surely the way to maximize thebenefits of innovation for economic growth.
In this light, our outline of this issue highlights six articles
and four interviews. The articles begin with one written by
Marc Rotenberg, a distinguished expert on the privacy
protection issue, followed by an introduction to recent OECD
research on digital technology’s socioeconomic impact by
Dr. Dirk Pilat & Dr. Mariagrazia Squicciarini. A view of its
impact on democracy is then presented by Jillian C. York, anNGO representative. We then reprint an article published inthe Nikkei on March 12, 2018 by Prof. Noriyuki Yanagawa, adistinguished economist at the University of Tokyo, on
institutional reforms to create relevant rules in the digitaleconomy. Blockchain technologies, a core concept of ourdigital society, are introduced and their future discussed byDr. Shahid Yusuf, an economist at George Washington
University, and Takeshi Mori, a business economist at theNomura School of Advanced Management, introduces thelatest Nomura research results on the digital economy inJapan.
Following these articles, we have four interviews. First, Dr.
Hiroshi Ohashi of the University of Tokyo talks about his
concerns about the platform economy, with particular regard
to competition policy. Then Dr. Tsuyoshi Abe, an eminentengineer and businessman at Yokogawa Electric Corporation,summarizes a digital society as a VUCA (Volatility,Uncertainty, Complexity and Ambiguity) world. Anotherwell-known IT expert, Joichi Ito, director at MIT Media Lab,emphasizes the importance of balance between privacy,
competitiveness and happiness, and Slava Orekhov, a young
executive of the SAP Asia Pte Ltd., a large software
company, talks about the key to surviving in a VUCA world.
Overall, we conclude that we should compile appropriate
rules for the game to achieve a balance between efficiency
and happiness in a digital society. To do so, as Dr. Abe says,
we will need business and social leaders who are
multi-disciplinary experts in social and natural science.
https://www.jef.or.jp/journal/

COVERLEAD(Brief Introductions)
COVER STORY 1
The Digital Economy & Privacy Protection: the Challenges AheadBy Marc Rotenberg

For solutions to the challenges of a digital society, we willneed wise public policies as a means of regulating thetechnologies we have created.
COVER STORY 2
Transformative Technologies & Jobs of the Future
By Dirk Pilat & Mariagrazia Squicciarini

Facilitation of worker redeployment, investing in skills,
strengthening social protection, future-proofing labor market
regulations and promoting social dialogue are the OECD’s
proposed remedies for the challenges of a digital society.
COVER STORY 3
The Impact of Digital Technology Upon Democracy
By Jillian C. York

COVER STORY 7Interview with Dr. Hiroshi Ohashi, Professor of Economics, University of Tokyo

The Digital Economy & Competition Policy
By Japan SPOTLIGHT

In order to reduce information asymmetry between platform
operators and SMEs, it may be better for Japan to introduce
a European-type regulation such as the GDPR.
COVER STORY 8Interview with Dr. Tsuyoshi Abe, Senior Vice President & General Manager of theMarketing Headquarters, Yokogawa Electric Corporation

A VUCA World in Digital Society
By Japan SPOTLIGHT

Income inequality will most likely expand in our digitalsociety, but there is no need for pessimism, since themanagements of large enterprises are today moving from“egocentric” to “ecocentric”.

Governments and corporations involved in the developmentof digital technologies such as e-voting will need to ensure
all individuals are involved in every step of the process.

COVER STORY 9

COVER STORY 4
Examining “Multiple Rules” in a Country
By Noriyuki Yanagawa

The concern about the GDPR is that big companies like
Google and Facebook will be able to adapt to it and lobby toturn it into something they can work with, though it is agood basic law.

“Multiple Rules” in a country must be relevant to meeting avariety of human needs in our digital society where diversity
is being pursued in working styles and lifestyles under
rapidly progressing innovation.
COVER STORY 5
Blockchain/Distributed Ledger Technologies:
Where They Came From, Where They Are Heading
By Shahid Yusuf

The impact of blockchain technology is not limited to thefinance industry but spread across a wide range of sectors
including the agriculture, retail and public sectors.

Interview with Joichi Ito, Director of the MIT Media Lab

Will Digital Technology Make Human Beings Happy?
By Japan SPOTLIGHT

COVER STORY 10Interview with Slava Orekhov, Senior Vice President of Industries and Digital
Leadership, Asia Pacific Japan (APJ), SAP Asia Pte Ltd.

How We Can Benefit From New Technology?
By Japan SPOTLIGHT

There are three key factors to surviving the VUCA world as abusiness – analyzing processes, creating new businessmodels and changing the way the workforce operates.

COVER STORY 6
Digital Capitalism & Japan
By Takeshi Mori

Japanese consumers are highly receptive to digitaltechnology and thus Japan may play the global role oftesting ground for new digital services.

Naoyuki Haraoka is editor-in-chief of Japan SPOTLIGHT & executive
managing director of the Japan Economic Foundation (JEF).
Japan SPOTLIGHT • November / December 20183