Japan placed 31st in IMD’s 2024 World Digital Competitiveness Ranking, an improvement of one spot from last year in the annual survey by the Lausanne, Switzerland-based business school.

The country still struggles with a number of significant challenges that hamper its efforts to become a technological leader, especially in terms of the ability of companies to adapt and the lack of the workers with the right skills and experience, the survey found.

Japan lags far behind other Asian rivals, with Singapore being No. 1 in the 2024 ranking, South Korea No. 6 and Taiwan No. 9. China jumped five positions to 14th place.

In the World Digital Competitiveness Rankings, established in 2017 and now rating a total of 67 countries, evaluations are based on three factors: knowledge, technology and future readiness.

Japan’s overall position has been falling steadily in recent years, going from 27th to 32nd between 2020 to 2023.

In the 2024 survey, the trend was reversed with a slight move up to the 31st spot. There, it is just ahead of the Czech Republic and just behind Bahrain.

The United States is No. 4 in this year’s rankings, down from No. 1 last year. Switzerland is in second place, and Denmark is No. 3.

IMD’s report notes improvements in Japan in terms of its regulatory and technological frameworks. The country's IT infrastructure gets good marks, as Japan has high ratios of broadband and 5G subscribers.

Japan moved up six positions to 26th place in the technology category, but the ranking for future readiness fell to 38th from 28th last year mainly due to the lack of business agility. Japan ranked the lowest, at 67th, in terms of “the agility of companies.”

In the knowledge category, Japan dropped to 31st place from 28th, especially due to human resources challenges, such as a lack of people with international experience and digital skills.

The government has been keen to promote digitalization and is looking to invest in new and exciting technologies, such as artificial intelligence, but the country has been struggling to make itself known as a digital powerhouse.

Last year, Japan recorded a ¥5.5 trillion ($34 billion) deficit in digital services as huge sums were spent on cloud services, operating systems, email services, social media and internet-based transactions with firms based overseas.

Another weakness affecting global competitiveness was highlighted in a survey also recently released.

In the 2024 EF English Proficiency Index, Japan was ranked 92nd, down from 87th the previous year. It was its worst showing yet.

The ranking, which was announced on Wednesday by Zurich’s EF Education First, includes 116 countries and regions where English is a second language.

The international language education company points out that younger people in Japan were lagging their peers in other countries in terms of English-language proficiency.

The Netherlands retained its top spot in the rankings for the sixth consecutive year, while Singapore was in the No. 3 spot.

Other Asian countries that were ranked in the “high proficiency" category include the Philippines, in the 22nd spot, and Malaysia, at No. 26. South Korea ranked 50th and China was just ahead of Japan, at No. 91.