Authors' Words

Toward a Service-oriented Country: Opening a new frontier of the mature economy

Author's Introduction

This book examines the challenges Japan faces as a mature economy by focusing on a transition to a service-oriented economy, considering how it can maintain and improve its vitality at a time when a further shrinking, aging population and globalization of economic activities are anticipated.

Improving productivity in service industries is crucial to increasing Japan's growth potential, and the productivity enhancement of service industries has been defined as a priority area in the government's growth strategy and economic policy. However, an accumulation of empirical research in the area of service industries remains limited. Based on relevant statistical data and a range of studies in Japan and abroad, including those of myself, this book attempts to correct various misperceptions concerning services industries and explore desirable policy measures in the era of a service-oriented economy.

The key message throughout this book is that service industries will be playing a major role as a driving force of the Japanese economy, and there is ample room to improve productivity in service industries, for instance, by utilizing economies of scale, promoting innovation, improving the quality of management, and facilitating business reallocation. Also, the book points to the simultaneity of production and consumption and the difficulty of evaluating the quality of services as unique features characterizing many service industries as compared to manufacturing industries. Then it shows that because of such nature, productivity in service industries is significantly affected by the geographical distribution of the population and businesses as well as by the patterns of time use and lifestyles of individuals. Accordingly, it concludes that designing appropriate economic and social institutions—i.e., land-use and city planning, labor market regulations, taxation, business laws and regulations, and social regulations—is the key to creating highly efficient service companies and improving the productivity of Japan's service sector as a whole, and that the success or failure of this endeavor will determine the performance of Japan as a service-oriented economy.

I hope that this book will provide useful insights to government officials in charge of planning and formulating economic policy and corporate managers.