Since 1985, Japan had been always ranked at the top level in the ranking of competitiveness. The report also introduces the concept of a competitive society. Because companies, not countries, compete on the economic athletic field, the issue of competitiveness has heretofore largely focused on the microeconomic competitiveness of companies. However, with the end of the cold war and the dizzying pace of technological development, the transnational movement of capital, technology, information, and people has blossomed. Competitiveness can now be had by crossing borders.
Companies now move in pursuit of the most appropriate location, however far from the home country.
In effect, they now choose countries at will. It is thus very much in the interests of both the nation and its citizens to improve their standard of living while avoiding this phenomenon of hollowing out. If a country or a society can continue to produce companies, industries, and technologies that keep activities within the country and that still maintain competitiveness, it is a competitive society. In this sense, Japan faces some serious competitive challenges. Institutional reforms are urgently required.