Traditionally much of Japan’s investment in robotics has been export-orientated, especially in automotive and electronics. Very little investment has been made by the much-larger services sector which accounts for almost three-quarters of the economy.
The lack of technology investment by the service sector likely contributes to the sizeable productivity gap between that industry and manufacturing.
There has been very little productivity growth in the services sector over past couple of decades. This lack of investment may partly reflect the fragmented state of many service-based industries and the lack of competitive domestic pressure.
Productivity in the services sector has also lagged that of other main advanced economies. Notably the labour productivity of the non-manufacturing sector in Japan is about 60 per cent of that of the United States.
There would seem room for both a catch-up and an organic improvement in the underlying productivity of the service sector. This should yield substantial dividends to gross domestic product growth given the service sector accounts for nearly three quarters of Japan’s economy.
Under a successful Society 5.0, Japan will be a super-smart society where technologies such as big data, Internet of Things (IoT), AI and robots are present in every industry and across all social segments. Everyday life will be more comfortable, efficient and sustainable.
As part of this integrated strategy the government has produced a number of detailed and ambitious reports, including: IT Strategy for Data Utilisation, Robot Strategy and an Artificial Intelligence Technology Strategy.
Recent surveys highlight a lift in both actual and planned capex spending on new technology. This trend is notable for small and medium enterprises that need to compensate for scarce labour and stay competitive.