Japan’s 2023 Digital Competitiveness Ranking, Explained
Japan came in 32nd place in the World Digital Competitiveness Ranking for 2023, a slide of 10 placements from their best finish in 2018 in 22nd place.
We take a look at how the global digital competitiveness ranking is calculated, the factors that contributed to Japan’s digital competitiveness ranking, what the government is doing in response, and the subsequent opportunities for businesses looking to shift to virtual.
What is the IMD World Digital Competitiveness Ranking?
For the past 30 years, the International Institute for Management Development (IMD) has analyzed how nations lay the groundwork for future growth, with the Digital Competitiveness Ranking, an offshoot of their annual World Competitiveness report.
The Digital Competitiveness Ranking assesses the ability of 64 economies to adopt and explore digital technologies to create economic transformation within business, government, and across all societal sectors.
Now in its seventh year, the Digital Competitiveness report examines the readiness of countries to adapt to advancing trends throughout the world, as well as attitudes toward globalization and e-government.
Countries are ranked by how they fare in the following 3 categories:
Knowledge
Technology
Future readiness
Image source: IMD World Digital Competitiveness Ranking
Each of the factors is further divided into subfactors to create 54 criteria by which each country earns a score and a total overall rank.
Criteria include hard data (e.g., Internet bandwidth speed) and soft data (e.g., company agility). Hard criteria represent 2/3 weight, and survey data represent 1/3 weight.
2023 rankings: Japan’s 32nd placement
A total of 64 countries were ranked in 2023’s World Digital Competitiveness Ranking.
Of the 64 countries examined, Japan ranked 32nd in 2023, falling three placements from their 29th place finish in 2022. Their best showing came in 2018, with a 22nd-place finish. Other Asian countries finishing ahead of Japan include Singapore in 3rd, Korea in 6th, and Taiwan in 9th.
Image source: IMD World Digital Competitiveness Ranking 2023
Of the 14 Asia-Pacific countries ranked, Japan scored 8th overall in Asia, which is a drop of 1 placement from their best Asia-Pacific ranking of 7th in 2018 and 2016.
Image source: IMD World Digital Competitiveness Ranking 2023
Looking at individual score components, Japan ranked last (64 of 64) in the following categories:
64th in Talent: International experience
64th in Business agility: Agility of companies
64th in Business agility: Use of big data
There were a few bright spots: Japan ranked 3rd in pupil-teacher ratio (training and education), 2nd for wireless broadband, 2nd in world robots distribution (business agility), and 2nd in software piracy.
Image source: IMD World Digital Competitiveness Ranking 2023
Japan’s technology factor and future readiness categories declined. However, subfactor categories compared to the previous year’s ranking. However, it's knowledge factor has improved.
The knowledge factor is comprised of talent, training and education, and scientific concentration, with both talent and training and education subfactors showing an improvement from the previous year.
Current initiatives to push digital competitiveness forward in Japan
Japan’s Digital Agency is focused on digitizing government processes and doing away with obsolete technology. For example, the government plans to abolish the hanko (personal seals) and streamline Japan’s notorious paper-based requirements, which earned Japan a 106th placement in the “starting a business” category of World Bank’s Ease of Doing Business rankings.
Additionally, the Digital Agency has been tasked with paving the way for digital measures, such as the expanded use of the My Number (Individual Number) system, including integration with driver’s licenses in 2024.
Other initiatives include government-funded business subsidies over the last several years to nurture this necessary digital evolution.
Businesses looking to shed weight by transitioning some or all of their operations to virtual can apply to the following government subsidies.
IT subsidy. This program focuses on subsidizing software and IT solutions that improve office employee productivity, operations efficiency, and new customer acquisition. E.g., improving labor management systems and inventory management systems and software that promote business automation. The program subsidizes the cost of software and tools that cover any of these aims. Subsidy amount: up to 1/2 of costs with a limit of 4.5 million yen.
Manufacturing subsidy. Among other aims, this program supplements the cost of capital investment for changes to work style, management innovation costs, improvement of production processes, productivity process improvements, etc. Subsidy amount: based on business size categories (up to 1/2 of investment for SME businesses; 2/3 of investment of small businesses, also dependent on further sub-categories that one applies under).
Frequently asked questions
What is the IMD World Digital Competitiveness Ranking?
The IMD Digital Competitiveness Ranking assesses the ability of 64 economies to adopt and explore digital technologies to create economic transformation within business, government, and across all societal sectors.
What is Japan's IMD technology ranking?
Japan's technology ranking in 2023 is 32nd place out of 64 countries as evaluated by the International Institute for Management Development (IMD).
In closing
Japan’s current digital rank is unimpressive, but what’s for certain—ready opportunities exist for foreign talent and digital-centered businesses that can help pull Japan into a better global digital competitiveness position.
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