# Section 1 ICT and Economic Growth

### 1. Economic growth in “the age of information and knowledge”

## (1) Advent of “the age of information and knowledge”

Economic growth seen from a super long-term perspective has come through “the age of agriculture” and “the age of industry.” In the early years of the 21st century, we are now expected to see the advent of “the age of information and knowledge.”

Each age saw a major change that had worked as a source of new economic growth. It was fertile vast land in “the age of agriculture” and capital equipment in “the age of industry.” In the coming “age of information and knowledge,” ICT is expected to bring about change, and information and knowledge will become a source of new economic growth.

In the age of information and knowledge, ICT and networks will make their way into various fields, bringing active exchanges of information and knowledge and creating various innovations based on new ideas and creativity. And how to utilize such diverse information and knowledge will come to have important implications.

## (2) Progress of ubiquitous networks and “the age of information and knowledge”

As of now, we have no objective macro-level indicators to show an overall picture of the progress of ubiquitous networks. We are only recognizing the progress from individual situations and various data. Therefore, in order to analyze the impact of the progress of ubiquitous networks on the society and economy, it is important to try to develop “ubiquitous index” to indicate the progress of ubiquitous networks objectively.

Below, we first develop ubiquitous index to show the progress of ubiquitous networks from the aspect of utilization and then analyze the impact of the progress of ubiquitous networks on economic growth, and lastly present the prospect for economic growth in 2010 that could be achieved if the potentials of ubiquitous networks were fully utilized.

## (3) Development of ubiquitous index

Since the progress of ubiquitous networks causes major changes in their utilization, ubiquitous index needs to fully reflect the characteristics of ubiquitous network utilizations. For this reason, we used “expansion of spread” and “increased use” as two criteria to measure the progress of ubiquitous networks, selected data showing the two criteria, and, based on them, calculated “ubiquitous index” with the score as of 2000 being 100. Changes in calculated ubiquitous index show that ubiquitous networks have made rapid progress in Japan in the last several years (Graph 1-1). The index began to rise sharply after 1995, when personal computers, the Internet and mobile phones began to spread in earnest. The year-to-year growth in the spread of ubiquitous networks hit a peak in 2001 buoyed by the global IT boom that began in the second half of the 1990s. Although the growth slackened slightly thereafter, it still remains at a high level.

Moreover, calculation of estimated ubiquitous index shows that year-to-year growth will begin to rise again after 2006. Ubiquitous networks made progress in the second half of the 1990s due to the “expansion of spread” and are expected to accelerate their progress toward 2010 on the strength of “increased use.”

Graph 1-1 Changes in Ubiquitous Index

1970 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 (year)

(Source) "Survey on Economic Growth by ICT"