[Lessons For Africa] The Japanese Economy Runs On Electronics And Other Hi-Tech Areas

Japan is a leading nation in scientific research, particularly technology, machinery and biomedical research. Nearly 700,000 researchers share a US$130 billion research and development budget, the third largest in the world (McDonald, 2006). Japan is a world leader in fundamental scientific research  and she has a large industrial capacity, and is home to some of the largest and most technologically advanced producers of motor vehicles, electronics, machine tools, steel and nonferrous metals, ships, chemical substances, textiles, and processed foods (WikipediaJapan, 2011).

The success of Japanese manufacturing in the global marketplace has stimulated attempts to identify and understand the factors that have led to Japan’s competitive advantage. Efforts by North American manufacturers to close the perceived gap with Japan have often been frustrated because of the ability of Japanese corporations to implement new technologies and introduce new products within very short cycle times (Hannam, 1990; Weirmair, 1990; Clark & Takahiro, 1989).

Japan achieved sustained growth in per capita income between the 1880s and 1970 through industrialization driven by technological advancement. This trend continued till the year 1990. Moving along an income growth trajectory through expansion of manufacturing is hardly unique. Indeed Western Europe, Canada, Australia and the United States all attained high levels of income per capita by shifting from agrarian-based production to manufacturing and technologically sophisticated service sector activity (Mosk, 2004).

Japan experienced a miracle Growth as a result of a protracted historical process involving enhancing human capital, massive accumulation of physical capital including infrastructure and private manufacturing capacity, the importation and adaptation of foreign technology, and the creation of scale economies, which took decades and decades to realize (Mosk, 2004).

For three decades from 1960, Japan experienced rapid economic growth, which was referred to as the Japanese post-war economic miracle. With average growth rates of 10% in the 1960s, 5% in the 1970s, and 4% in the 1980s, Japan was able to establish and maintain itself as the world’s second largest economy from 1968 until 2010, when it was supplanted by the People’s Republic of China (Wikipediaeconomyofjapan, 2011).

On November 12, 2007, Tata Consultancy Services (TCS) (BSE: TCS.BO, NSE: TCS.NS), a leading IT services, business solutions and outsourcing organization,  announced a series of investments in the field of embedded Systems to help Japanese corporations innovate and remain globally competitive (TCS, 2007).

TCS will invest $10 million over the next 12 months for a dedicated Innovation Lab for embedded systems research in key verticals like automotive, consumer electronics, telecom, and office automation to fuel innovative solutions focused on the needs of the Japanese market (TCS, 2007). The new lab will be based in Pune, India along with a Center of Excellence in Embedded Systems in Yokohama, Japan. Girija Pande, EVP and Head TCS-APAC said that Japan, being the second largest market in terms of technology spends globally, is a key strategic market for TCS.

Also as a world-class Manufacturing and Hi-Tech hub, they have identified Embedded Systems as one of the key focus areas for their growth strategy in Japan (TCS, 2007). Masahiko Kaji, President of TCS Japan said that with a significant talent shortage facing the Japanese market, TCS is investing in Embedded Systems R&D and Japan specific Delivery Center, to help their customers in applied innovation and reducing their go-to-market cycle time. He added that these new investments underscore their commitment to Japan and eagerness to address the current market imperatives (TCS, 2007).

There is no doubt that this feat has been achieved by the people of Japan due to advancement in their technology as well as readiness to massively invest in development of newer technologies.

Editor’s Note: The complete paper will be posted and you can get all the references.