The majority of the economy, though, doesn't nearly match up. The productivity of Japan's banks, brokerages, retailers, and other services is two-thirds, on average, of their counterparts in the U.S., according to the McKinsey Global Institute. These sectors have scarcely started the transition to the Information Age, where flexibility and speed matter. One reason is that they tend to be heavily regulated, subsidized, and protected from the forces of a cost-competitive global economy. Moreover, fostering startups in leading-edge businesses has only recently become a priority in Japan.
Bureaucrats can readily cite the latest statistics for car production or silk-cocoon yields.
But there's precious little tracking or promotion of the entrepreneurial sector. Only now, with high tech fueling impressive growth in the U.S., are Japanese policymakers and economists starting to take notice. Aoki and MITI officials are pressing for tax revisions to enable holding companies to write off losses from money-losing ventures. The government recently took another step in the right direction by smoothing the way for companies to offer stock options as a means of attracting talented staff. Japan had discouraged options in the past by taxing individuals on the value of their stock options even if they were unrealized paper gains.