Japan’s surprising decline in the digital world: here’s why!

Japan’s surprising decline in the digital world: here’s why!

Japan has faced a significant challenge in the global digital competitiveness landscape, as evidenced by its recent drop in the World Digital Competitiveness Ranking. This ranking, curated by the International Institute for Management Development based in Switzerland, assesses the ability of global economies to develop and implement digital technologies. Japan, falling to 32nd place out of 64 economies surveyed, recorded its worst result since the list’s debut in 2017, dropping three positions from the previous year.

This demotion highlights specific issues in the Japanese digital landscape. One of the most significant obstacles is the difficulty in nurturing internal talent and adequately funding technological progress. Despite its historical reputation as a technological leader, Japan now finds itself just ahead of nations like Malaysia and Kazakhstan, ranking 33rd and 34th, respectively.

In contrast, Japan’s Asian neighbors have shown much stronger performances. South Korea ranked sixth, Taiwan ninth, and China nineteenth. These countries have demonstrated a greater commitment to promoting advanced technologies and supporting innovative environments.

The IMD ranking considers three key factors: knowledge, technology, and future readiness. In the Japanese context, these areas have shown various weaknesses. For example, in the technological aspect, Japan has dropped to 32nd place, a decline from last year’s 30th position. This decline is attributed to a certain reluctance in welcoming foreign talent and challenges in financing technological development. In terms of future readiness, the country has shown deficiencies in adopting emerging technologies such as big data and advanced analytics, dropping four positions.

On the knowledge front, although Japan has maintained its 28th place, significant gaps persist. In particular, the country exhibits a lack of international experience and a shortage of digital skills among top-level executives. Naoshi Takatsu, a management partner at the institute for Northeast Asia, emphasized that Japan’s problems in this area remain structural and deeply rooted.

In contrast, the United States has emerged in first place, benefiting from its dominance in the generative artificial intelligence sector, with leading companies like OpenAI, Google, and Meta. This success has been supported by excellent performances in research and development and capital investments. South Korea and Taiwan have also gained ground, thanks to government efforts to improve digital services and the presence of multinational companies such as Samsung Electronics, Hyundai Motor, and Taiwan Semiconductor Manufacturing Co., which have shown great adaptability in a rapidly evolving digital environment.

At the same time, China has dropped two positions, influenced by strict zero-COVID policies and the recent crackdown on technology companies. This situation has created uncertainties in the Chinese technological landscape, leading to lower international competitiveness.

In conclusion, Japan’s decline in the digital competitiveness ranking reflects significant challenges. The need for structural reforms, innovation, and openness to international talent are critical aspects that the country will have to address to regain its leadership position in the global technological landscape.