Japan’s back. After nearly a decade of economic stagnation, this country is getting its act together.

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A key part of this new business landscape is the country’s belated embrace of the digital economy. Andrew Shipley, economist at Schroders, a British investment bank, noted in his most recent report that growth of IT production is way ahead of that of the economy as a whole. In the July-Sept. quarter, more than half of output growth in the entire economy came from IT. Employment in IT services rose 3.9 percent in July-Sept; overall, employment dropped 0.5 percent during the same period. Shipley concludes that “IT production is the driving force in the domestic economy.”

Shipley’s language is sober, but the market is pretty giddy. Valuations of Internet and telecommunications companies in Japan are reaching heights that would make Silicon Valley drool. Softbank has climbed over 500 percent this year, Hikari Tsushin is up almost 1,000 percent. BusinessWeek reports that the market value of small high-tech companies has soared 250 percent this year.

For me, the key sign that this new economy is reaching critical mass is the growing number of products and services designed to help people figure it out. For example, those IT production numbers are from the Digital Economy Quarterly, a publication Schroders launched last week.

Last month, LINC Media published the first issue of J@pan Inc., which puts a business spin on its former publication, Computing Japan. Editor Daniel Scuka says the magazine aspires to be the Red Herring of Japan.

For readers hungry for information and too stingy to pay 800 yen per issue, LINC also produces Computing Japan News Network, a weekly e-mail newsletter that features news focusing on Japan, but includes international developments. It’s especially good for providing snippets from Japanese-language industry journals.

My sense is that these folks have timed things pretty well. Just as multimedia was the buzzword a few years ago, “venture capital” is on everybody’s lips today. The Ministry of International Trade and Industry has set up a 10 billion yen VC fund that is going to target IT and e-commerce firms. Although Softbank and Hikari Tsushin started as providers of software and services, they are best known now as venture firms; Softbank has 12.3 billion yen to invest, while Hikari Tsushin Capital has 30 billion yen in its kitty.

Their success has triggered the beginning of a boom in Internet-related venture capital. It promises to be a slog. In 1997, a total of 200 billion yen in venture capital found its way into Japan, bringing the accumulated balance of venture capital up to 839 billion yen. But Schroders’ Shipley points out that not only is that a fraction of the venture capital in the U.S., it’s also invested differently. According to his calculations, over 50 percent of U.S. venture funds go to IT-related businesses; in Japan, its about 11 percent. In a recent paper for the MIT-Japan program, Seth Hurwitz of Enron Corporation writes that the Japanese venture capital industry “is highly concentrated and dominated by corporate-related firms that are unwilling for the most part to invest in new or risky businesses.”

That should change as laws change, opportunities arise and greed grows. An influx of foreign funds will push things along. The infrastructure is already being established. Softbank is helping set up Japan-Nasdaq to help young companies get off the ground. The Tokyo Stock Exchange has opened Mothers, short for “Market for high-growth and emerging stocks,” to compete with the upstart.

Just as important are the networking groups that are sprouting. Every assessment of Silicon Valley attributes its success to proximity. Putting so many smart, similarly inclined people in the same physical space, rubbing shoulders and exchanging ideas, is the best way to nurture creativity and new businesses. Tokyo’s venture capitalists are doing their best to re-create that environment here.

The most obvious imitator is Bit Valley. The name is actually a takeoff on the Japanese reading of Shibuya, where many of Japan’s most dynamic startups are located. Its public gatherings are, well, intense.

Another node in the network is the International Computer Association’s New Ventures Group, designed to provide support for technology-related startups. TKI, the group that publishes the Japan Internet Report, also hosts get-togethers.

Before we explode from all this gushing, let’s get real for a minute.

As in the U.S., Japan’s e-boom is equal parts energy and excess. For every wannabe e-mogul, there is another soul who just wants to make as much money as possible as quickly as possible. New Japan — the shorthand for this brave new world of opportunity — can look a lot like old Japan.

Alexander Kinmont, equities strategist at Morgan Stanley Dean Witter, highlighted a comment by Softbank head Masayoshi Son in a recent report. Son said, “It is not business results but the ability to expand the market capitalization of the whole group that will become the future standard for valuing companies.” Kinmont said that thinking “comes as close to a restatement of the case for ‘fukumi keiei’ — management focus on hidden assets — as anyone ever made during the bubble. It should caution investors against believing anything about New Japan is really that new.”

You’ve been warned.

(Brad Glosserman)