## Chapter 1: ICT — Keystone of Economic Growth Strategy, and Its Expansion into the Global Market

From the view point that ICT is an economic growth engine and as a GPT (General Purpose Technology) occupies the key-stone position in growth strategies and problem solving, Chapter 1 provides analysis of the situations and challenges of Japan’s ICT in two different aspects, the industry and the users of ICT.

### 1. Global Trends suggesting the Relation of ICT with Economic Growth

Even in the countries where the literacy rate is 50 to 80%, mobile phones or the Internet are widely used; it suggests that ICT is expected as a tool for escaping from poverty. (p.4)

● The world-wide ICT market has expanded at the annual-average growth rate of 5.2% (more than twice Japan’s rate), especially 7.2% in Asia-Pacific Region; the potential growth power of ICT is large.(p.5)

● Countries or regions, in order to take advantage of the potential growth power of ICT, have been promoting strategic activities focusing on the enhancement of broadband environments or utilization of ICT. (p.5)

### 2. Trends in the Countries surrounding Japan

● International ICT indices show a “sluggish Japan”, Japan is losing its advantages in telecommunication infrastructures and also falling behind in availability and utilization. (p.6)

On the other hand, Japan has advantages of having skilled and sophisticated domestic users and having mobile industries based on the widely-used mobile Internet. (p.7)

### 3. Economic Growth Driving Force and International Expansion of ICT Industries

Japan’s ICT industries have steady good performance in the software/service sector, but are sluggish in the hardware sector (particularly in exports); the industries are becoming domestically oriented. (p.8)

Japan’s ICT corporations are gradually sliding down in the corporate ranking measured by stock-market capitalization or sales growth rate. (p.9)

● While the worldwide telecom-service providers or ICT vendors are seeking growth by entering into overseas markets, including those in developing countries, the pace of overseas market cultivation by Japanese corporations is slow. (p.9)

In the current situation where Asia has become the world-workshop, U. S. ICT manufacturers have been successful by adopting business strategies based on international specialization, such as EMS, in their globalization. $ ^{(p.9)} $

### 4. Challenges for ICT User Sector Growth

In countries around the world, ICT has contributed to economic growth: the informatization factor of capital equipment provides positive impacts through the improvement of labor productivity. (p.10)

The growth in the information capital and TFP (Total Factor Productivity) has contributed to the GDP growth of Japan; ICT also has strongly contributed to TFP growth (p.10)

Readiness index for informatization in Japan shows great variation sector by sector. Compared with other developed countries, the level of variation is similar to the situation in the U.S. in the early 90's. (p.11)

The corporations that undertook corporate innovation-activities combined with ICT introduction have enjoyed larger ICT-effects; such combination is the key to realize ICT effects. (p.11)

ICT-effects have been proven by the education/medical organizations that have forwarded ICT programs. Particularly in the medical sector, ICT is expected to provide a wide variety of effects, including reducing the burden on the patient / medical organization side, the stable supply of local medical services, the improvement of medical services, and the optimization of medical expenditures. (p. 12)

As for ICT utilization in the public sector, the largest challenge is the improvement of the residents' recognition of the value and purpose of ICT introduction — in almost all the local governments, less than half of the residents recognize the purpose. (p. 13)

ICT utilization is highly expected to contribute to local community development — more than 70% of the local governments have responded affirmatively; however, they have pointed-out obstacles, such as lack of budget, few numerical data or implementation examples to prove ICT effects, or shortage of personnel resources to promote the introduction. (p.14)