The aim is to develop technologies and companies the world needs, earn income abroad, and restore the national strength that lets the next generation choose its own path. I want to turn the aspiration behind “Japan as No.1” into the ability to lead in today’s world.

What do you measure national power with?

This article considers the size of the economy, industries that global customers choose, and the ability to turn people, technology, and capital into future growth. GDP converted into dollars fluctuates with exchange rates and cannot, on its own, measure industrial or technological strength.

Therefore, in addition to real GDP growth and our share of the global economy, we must continue to monitor the global market shares of our key industries, profits and intellectual property income earned from overseas, and the research and development and added value that remain domestically. A company's global sales are different from Japan's GDP. The former includes intermediate inputs and overseas production, while the latter represents domestic added value. The destination to which income is attributed must also be checked separately. To restore national power, we need a pathway that connects business success around the world to the accumulation of Japan's technology, human resources, and income.

Understanding the ideas behind an economy, starting with Weber

Might Protestant values concerning work and education have contributed to America’s strength? This is a hypothesis worth examining: ideas can leave their mark on institutions through attitudes toward work, education, and accumulation. In The Protestant Ethic and the Spirit of Capitalism, Weber discussed “capital formation through the ascetic compulsion to save” (the author’s translation from the original). He did not, however, claim that the size of the effect could be quantified precisely.

The following comparison groups European countries by historical background, using Eurostat’s preliminary 2025 estimates published in March 2026. GDP per capita is adjusted for price differences, with the EU average set at 100. The grouping is not based on present-day religious affiliation, nor does the table measure the effect of religion while holding education, industry, and other conditions constant.

The Nordic countries rank highly, but some wealthy countries also have a strong Catholic history. Becker and Woessmann’s study of Prussia supports a pathway through literacy, while Cantoni’s study of German cities found no growth advantage attributable to denomination. The influence of ideas deserves examination, but religion alone has not been shown to explain America’s present advantage.

America's strength lies in making money not proportional to its population.

A comparison with resource-rich countries is useful. Among the Nordic countries, Norway’s provisional 2025 figures show that oil, gas, and related products accounted for about 57% of merchandise exports. These are official figures and do not describe the Nordic region as a whole. The relevant point is that Norway has a foundation for earning income abroad.

US IT has a similar kind of strength in a different form. Software can be provided to many customers once it is developed. Compared to commissioned work where people work on cases one by one, there is less need to double the headcount just to double sales. Having software, cloud services, and intellectual property used by customers worldwide and generating continuous revenue—"earning through servers" is likely an expression capturing this kind of business scalability.

Microsoft’s results for the fiscal year ended June 2026 reported worldwide consolidated revenue of approximately $331.8 billion and operating income of approximately $155.2 billion. Research and development expenses were about $35.6 billion, while cash spending on property, plant, and equipment was about $115.9 billion. The model involves investing in servers, electricity, and people, then selling repeatedly to customers around the world. One company’s profit does not explain the entire US economy.

Germany has depth in industry and skills

Germany’s economic weight is visible in the figures: its nominal GDP represented 23.8% of the EU total in 2025, the largest share. Alongside its broad base of machinery and equipment companies, it has a system for developing industrial skills through dual vocational training, combining work at a company with vocational schooling. The connection between the industries and skills supporting automation cannot be reproduced simply by purchasing machines.

According to the IFR’s figures for robot density in 2024, Germany ranked fourth worldwide, with 449 robots per 10,000 manufacturing workers. China had 567 and Japan 446, however, so this is not a uniquely German strength. Deployment density also differs from a country’s share of robot production.

Influence over the euro should be considered separately. Despite Germany’s economic weight, each voting member has one vote in the ECB’s ordinary monetary-policy decisions; Germany has no unilateral control. Yet the ESM rescue-lending framework allows Germany to block certain decisions, so its influence is not small either. Meanwhile, real growth in 2025 was only 0.2%. A deep industrial base and sustained growth across the economy are not the same thing.

China's strength cannot be explained by low wages alone.

China retains an advantage in relatively low wages. In JBIC’s fiscal 2025 survey, Japanese companies responding to the survey rated factory-worker wages in China at an average of 5.79, taking wages at their Japanese parent plants as 10. This is not a national average hourly wage, and the average responses for Vietnam and India were lower than for China.

Scale and supply chains also matter to China’s manufacturing competitiveness. According to the IEA’s 2026 report, China accounted for 70% of global electric passenger-car production and more than 80% of battery-cell production in 2025. Supply chains are concentrated there, from mineral refining through components and batteries to finished vehicles. Stanford HAI’s AI Index 2026 also reports that the US–China gap has narrowed for some leading AI models. China competes on much more than inexpensive labor.

Factory output and the health of the whole economy are different matters. The IMF’s review of China published in 2026 also highlights weak domestic demand, debt, and excess supply associated with extensive industrial-policy support. The lesson for Japan is likely to lie in the mechanisms that connect technology with mass production and sales, rather than wholesale imitation of policy.

About a 56-fold difference between Japan and the US in funds to foster national power

One figure deserves attention as Japan seeks to build businesses that earn worldwide. According to METI’s startup survey, funding raised in 2025 totaled $337.6 billion in the United States and $6 billion in Japan—a difference of about 56 times. This broad measure includes angel investment and grants, and is not adjusted for economic size.

The scale of funding to nurture global companies Startup funding amount - 2025 (USD 100 million) About 56 times United States 3,376 Japan 60 The bar lengths are on the same scale. 3,376 ÷ 60 ≒ 56.3. Not adjusted for economic scale. Source: Ministry of Economy, Trade and Industry, "Startup Ecosystem Survey 2026", page 54 PitchBook aggregation. This includes angel investments, grants, etc., and is not a comparison of pure VC investments alone.

Even if you can create technology through AI and robotics, you cannot grow into a global company unless you can invest in mass production facilities, human resources, and overseas sales. The ability to connect funding from invention to commercialization, and further to global expansion, should be emphasized as a condition of national power. However, this funding gap alone does not prove that promising Japanese projects are suffering from a lack of capital. In addition to supplying funds, those who create businesses and markets in which investors can anticipate growth are also being tested.

Japan also has assets that generate income globally.

Japan also has companies taking intellectual property to world markets. In Nintendo’s results for the fiscal year ended March 2026, overseas sales accounted for 76.9% of consolidated revenue of approximately 2.3131 trillion yen. Digital sales for dedicated gaming platforms totaled 407.6 billion yen. Manufacturing and distributing hardware makes Nintendo different from a pure software company, but businesses selling Japanese creations and technology to customers worldwide already exist.

Japan’s overall digital-services trade also shows weakness. A METI report published in 2025 calculated a digital-related deficit of 6.85 trillion yen for 2024. This combines five categories, including computer services, copyright and related royalties, and management and consulting services. It includes non-digital transactions; it is neither a cloud-services-only deficit nor entirely payments to the United States.

Buying superior overseas services can sometimes increase the productivity of domestic companies. Rather than making the reduction of imports an end in itself, we should ask how much Japanese companies can earn from the world by using them. Can we combine software, maintenance, and recurring revenue with existing products and on-site knowledge? Can we accumulate development results and customer relationships within our own company? While this can be considered a promising direction, it is not a proven answer that guarantees success in every industry.

Even with a declining population, earning power can be transformed

With its declining population, Japan needs business models that do not depend solely on adding workers. Yet a falling population and falling employment are different things. According to the Ministry of Internal Affairs and Communications’ Labour Force Survey, between 2015 and 2025 the labor force grew from 66.25 million to 70.04 million, and employment grew from 64.02 million to 68.28 million.

Labor force / Number of employed persons (10,000 persons) Source: Ministry of Internal Affairs and Communications, "Labour Force Survey," Tables I-1 and I-3 Calendar year average. The labor force is the sum of employed persons and unemployed persons. The vertical axis starts from 62 million. 6,200 6,400 6,600 6,800 7,000 7,200 2015 2017 2019 2021 2023 2025 labor force Number of employed persons

The increase in working women and the elderly has compensated for the impact of the population decline. However, this increase in the number of workers does not negate the downward pressure compared to a scenario without population decline. The number of people alone does not reveal the total working hours, nor is there any guarantee that the rise in the participation rate will continue at the same pace indefinitely.

Output can be understood as the product of employment, hours worked per person, and output per hour. The final factor is particularly important to restoring economic strength. Figure 4 of the OECD Economic Survey of Japan 2026 reports GDP per hour of 59.9 for Japan, 100.1 for the United States, and 100.7 for Germany. These are purchasing-power-parity dollars for 2024 or the latest available year, adjusted for differences in national price levels. They measure differences in outcomes involving industrial composition, equipment, price formation, and other factors—not how hard Japanese people work.

Investment increased, but what did it grow?

The claim that investment is insufficient also needs to be checked against the figures. Calculations using the Cabinet Office’s National Accounts show that private business investment rose from approximately 14.7% of nominal GDP in 2010 to approximately 18.9% in 2025.

Private sector capital investment as a percentage of GDP (%) Source: Cabinet Office, National Accounts, Nominal Calendar Year Calculated by dividing private business investment by nominal GDP and multiplying by 100. Series published on August 17, 2026. 0 5 10 15 20 25 1994 2000 2005 2010 2015 2020 2025 capital investment ratio

We cannot determine the actual increase in equipment or the sufficiency of investment based solely on this nominal ratio. However, it is also wrong to simply lump it together and say that "Japanese companies have been cutting investment all along." It is necessary to verify whether the increased investment has led to globally marketable products, intellectual property, or technologies that competitors cannot easily replace.

Whether stimulating demand would solve the problem should also be considered separately from supply capacity. Estimates of potential growth and output gaps from the Cabinet Office, Bank of Japan, and IMF differ with their periods and methods. The Cabinet Office’s GDP gap for April–June 2026 was +0.7%. This is a comparison with estimated normal supply capacity, not a ceiling on growth. Raising supply capacity itself through new technology and equipment remains a task.

Can we shift personnel and capital to the next business?

Traditional large companies, the so-called JTCs, should not be evaluated by their founding year alone. The real question is whether they can shift people and capital away from businesses with poor futures, and whether they can scale new businesses both inside and outside the company.

Caballero, Hoshi, and Kashyap’s paper “Zombie Lending and Depressed Restructuring in Japan” is relevant here. Studying Japan in the 1990s, it found that bank support for unprofitable firms impeded investment and employment at healthy firms. It did not establish that every large company or subsidy today has the same effect.

Toward a country where the next generation can lead the world

From a country competing on cheap labor, to a country that amplifies individual power with robotics and AI to earn globally. I would like to consider this as a strategy for Japan. Since our competitors will also use the same technology, we cannot win on the number of units introduced alone. The key to winning is leveraging on-site knowledge to improve quality, delivery times, and the total cost per product, making it a business that overseas customers will choose.

This paper emphasizes not merely making domestic operations slightly more efficient, but increasing the number of companies that continuously generate global revenue from Japan-originated products, technologies, and intellectual property. The drivers of this can be either startups or established companies. It is important not only to locate servers domestically, but also to determine who owns the technology and business operating on them, and where the fruits of investment are accumulated.

I would also like to prioritize policies based on this purpose. That means reviewing ineffective spending and systems that preserve existing businesses, and creating more room for private investment and new ventures. Sustained tax cuts are also an option for this purpose. On the other hand, weakening the foundations that support private-sector ventures—such as research, human resource development, and electricity and communications—could have the opposite effect. Success or failure should be judged not just by the amount of spending cut, but by what has grown in its place.

Success or failure will be examined by comparing whether our position in the global market, domestic value added, and investment in the next generation improve relative to a no-policy baseline or alternative measures. To avoid turning the "lost three decades" into four, we must transform our nostalgia for past successes into the determination to cultivate the businesses the world will demand next. We view the accumulation of these efforts as the pathway to restoring Japan's national power.