Japan’s international rating has been declining lately. Heard overseas are suggestions that Japan is about to enter its third “lost decade,” or that Japan has disappeared off the world’s radar screen. Its share of global GDP, 14.3 percent in 1990, slipped to 8.9 percent in 2008 and is expected to sink below China’s this year.

Japan has long boasted of high-level manufacturing technology. But in recent years, it has lost its top positions in the production of traditional industrial goods to China, one after another. With regard to LED, 3D and other high-tech products, Japanese makers lag behind South Korean and Taiwanese rivals.

The academic standards of Japan’s young people have declined; their level of English proficiency is the lowest in Asia. Not nearly as many Japanese students desire to study abroad as do Chinese and South Korean students.

So, why has Japan, with its excellent technological foundation for a diligent, safe society, fallen into this dismal state?

It’s because, in the runup to the bubble economy of the late 1980s, enterprises failed to allow for innovation due to an arrogant mentality, while Japanese politicians relied on populism that weakened their policymaking capacity. A slumping Japan now faces the question of how to regain vitality:

First, it is necessary to regenerate a social structure in which efforts are rewarded. In a system in which politicians would decide all, as the administration of the Democratic Party of Japan advocates, it is hardly conceivable for society to recover its vitality. Market functions should be used as much as possible.

To strengthen the vitality of enterprises, it is indispensable to improve the corporate environment by reducing taxes and relaxing regulations. If industrial sectors in which growth can be expected are specified, as in the government’s growth strategy announced in June, a tendency to rely on the government could arise among enterprises, thus decreasing their vitality.

True to the proverb that the protruding nail gets pounded down, the Japanese have a habit of envying other people’s success and dragging them down. This trend is particularly conspicuous in the political world. Unless the idea of praising successful achievers takes root in society, it is not guaranteed that people will be rewarded for their efforts.

Yoshida Shouin, a spiritual leader of the Meiji Restoration, preached that aspiration is all that matters. In a society of envy, it is difficult for a person to nurture aspirations let alone achieve success. If the tendency to praise others’ success spreads among people, political parties will naturally see the futility of merely spreading pork-barrel budgetary handouts and will step up farsighted discussions about policy matters.

Second, it is necessary to cultivate a new generation of talented specialists who work well on the world stage. Other Japanese will draw encouragement from those who make great strides in politics, business, science, technology, education, culture, art, fashion and sports. How can we improve the environment for bringing up such globally capable people?

Higher education needs comprehensive reform. The management of Japanese colleges and universities is traditionally conservative. Its management functions should be rationalized to enhance efficiency and competitiveness. To expand students’ perspective, let’s conduct half of the classes in English, admit many more foreign students and invite in a large number of foreign teachers.

Third, it is advisable to expand international exchanges to introduce the experiences and values of other peoples. Japan is a homogenous society. If it remains a mere assembly of people with the same values, fresh knowledge will not grow. If foreign enterprises advance into Japan’s markets and take root, Japanese enterprises will be stimulated through competition, surely raising Japanese people’s venture spirit. To encourage Japanese enterprises to change their thinking, it is necessary to invite in eminent foreign business managers.

Japan’s population is in decline. Within the next 10 years its workforce will decrease by 8 million. To fill the gap, it is necessary to promote a program to invite foreigners equipped with certain skills. The view that Japanese enterprises have glass ceilings preventing the promotion of foreigners is spreading among Asian young people. If they cannot expect to get promoted at Japanese enterprises, capable young people abroad will hesitate to study and find jobs in Japan.

In fourth place, the fusion of industry and culture is needed. Volume and price are of vital importance in the age of global mega-competition, as are the quality, charm, inspiration and elegance of products. Japanese culture is highly valued abroad, an advantage for Japan.

For example, Japanese popular culture and fashion are winning the hearts of the world’s young people and Japanese cuisine is booming around the globe. Advances in digital information technology have enabled us to step up the fusion of industry and culture and that of technology and art.

Advanced technology leads to a variety of cultural expressions, while fresh cultural desires encourage innovations in high technology.

In Japanese culture, the idea of respect for nature and the “mottainai (What a waste!)” awareness of the need to avoid wasting things are so prevalent that Japan has made advances in energy- saving technology and created a number of eco-related products. There exists in Japan a cultural infrastructure that can contribute to improving the global environment in years to come.

In this century, globalization will keep progressing while expanding a sense of respect for human value. The society that Japanese have long nurtured has the potential to advance developments in this direction. The question is whether Japanese people can succeed at this.

Shinji Fukukawa, former vice minister of the Ministry of International Trade and Industry and president of Dentsu Research Institute, is now chairman of the Machine Industry Memorial Foundation.

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