Figure 3-10 Effects of ICT education on labor productivity (Estimated results based on regression analysis)

Dependent variable: labor productivity = (operating income + labor costs + depreciation) / number of employees

Explained variable: expected sign	Factor	[Standard Error]	P Value
Capital (small = 1 to large = 8) +	2.0807	[0.2143]	0.0000	***
Percentage of terminal deployment -	-0.8885	[0.2491]	0.0000	***
ASP, SaaS utilization (yes = 1, no = 2) -	-1.1194	[0.9738]	0.2510
Electronic tag introduction (yes = 1, no = 3) -	1.0733	[1.3173]	0.4150
Non-touch IC card introduction (yes = 1, no = 3) -	-1.3218	[0.6265]	0.0350	**
Introduction of devices with new network functions (yes = 1, no = 3) -	0.2362	[0.7523]	0.7540
Introduction of GPS, etc. (yes = 1, no = 3) -	0.2811	[0.9450]	0.7660
Net procurement (yes = 0, no = 1) -	-1.4876	[0.7982]	0.0630	*
BtoB Net sales (yes = 0, no = 1) -	-1.6930	[1.6076]	0.2920
BtoC Net sales (yes = 0, no = 1) -	-0.4046	[1.0689]	0.7050
Telework (yes = 1, no = 2) -	1.7470	[1.3346]	0.1910
ICT education implementation (points for principal components) +	0.7015	[0.2943]	0.0170	**
CIO establishment (yes = 1 to no = 4) -	-0.9247	[0.5587]	0.0980	*
Constant terms	3.3236	[6.1350]	0.5880
Freely adjusted coefficient of determination = 0.1387Sample size = 1,414

$ ^{*} $ : 1 % significant : 5% significant : 10% significant

(Source) Ministry of Internal Affairs and Communications "Survey of International Comparative Analyses of ICT capital Contributions in Industry Growth" (2010) and "Communications Usage Trend Survey" (2009)

## (4) Simulation of ICT utilization promotion and accelerated investment in digitalization scenario

This simulation includes $ [1] $ a baseline scenario applying the 1995 – 2005 growth rates for various factors to the 10-year period ending in 2020, and $ [2] $ an accelerated ICT investment scenario where ICT investment is doubled and ICT utilization promoted through education and other measures (the amount of ICT investment from the baseline scenario is doubled, and improvements in labor quality due to ICT education, etc. are taken into account), and was conducted by applying growth accounting analysis $ ^{23} $ to the 10 years ending in 2020 $ ^{24} $ . The outcome of quantitative estimates of the contribution of ICT capital growth (based on the EU KLEMS database) on industrial growth through total factor productivity, and estimates of the impact of ICT utilization on labor productivity (based on the MIC Survey on ICT Utilization) were used in the simulation.

Figure 3-11 shows the results of the simulation. According to these results, the annualized growth rate of total real added value, by industry (real GDP) in 2020 stands at about 1.7% with the baseline scenario, and about 2.5% for the ICT utilization promotion and accelerated investment in digitalization scenario. When the two scenarios are compared, the ICT utilization promotion and accelerated investment in digitalization scenario shows a 0.8% higher rate of growth than the baseline scenario, indicating that promotion of accelerated ICT investment and utilization acts to stimulate growth in a range of industries. For Japan, which will continue to face a decline in the working-age population due to the low birth rate, it is clear that ICT investment can be an effective economic growth strategy.