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Is America Falling Behind in the High-Tech Race?

July 25, 2017

One of the countless attributes on which America prides itself is having the most powerful economy in the history of the world. In many ways, this pride is hardly ill-placed—the numbers speak for themselves. The International Monetary Fund lists the 2016 U.S. nominal GDP at over $18.5 trillion, exceeding China (in second place) by over $7 trillion [1]

Perhaps more pertinent to the subject of this piece is the obvious strength of the U.S. tech industry. According to Forbes, 49 of the 118 largest tech companies on Earth are American. The numbers are even more impressive near the top of the list, with eight of the ten largest tech companies in the world calling the United States their home [2]. So, what’s up with the title of this article?

Well, despite the current (and for the foreseeable future, continuing) U.S. dominance in the high-tech industry, other nations have recently taken actions that the U.S. would do well to note, should it desire to continue its reign of unchallenged tech superiority. Various authoritarian governments—from China to Singapore to the United Arab Emirates—have utilized their centralized command structures to pour money and resources into developing their high-tech sectors. Meanwhile, India recently launched a rocket carrying 31 small satellites—from 15 different nations—into space, positioning the South Asian country as the go-to source for low-cost space endeavors [3]. This article will specifically look at the case of Japan, a historically high-tech nation that is actively seeking to secure itself a pivotal role in the futuristic world many believe will soon be upon us.

It can seem difficult to imagine the high-tech world in which we will all be living in the near future. That said, the Japanese government is proactively rising to the challenge, and in doing so, securing Japan a significant head start in outlining the reality of tomorrow. Japan is actively working to become the central nation in designing the international order of the future. This endeavor is twofold. First, both the private and public Japanese sectors are pouring money into various high-tech fields in order to turn Japan into a premier source of and destination for high-tech investment. Second, the Japanese government is promoting several initiatives with the express goal of creating a ‘rulebook’ to govern certain crucial emerging technologies. Both of these efforts are significant, and both call for further examination.

Japan has long commanded a position of strength in the high-tech realm, helped along in no small part by its world-renowned automobile industry. However, more recently the nation has played host to investment endeavors in a wide range of high-tech fields. One private Japanese enterprise that is leading the charge is the SoftBank Group. SoftBank, the third largest public company in Japan, has long been a household name in its home country. In 2014, the investment group made international headlines following the release of Pepper, a humanoid robot that SoftBank co-designed. More recently, SoftBank emerged as the principal controller of one of the largest tech investment funds in history. The SoftBank Vision Fund, which counts among its investors Apple, Foxconn, and the government of Saudi Arabia, commands a purse of $93 billion, earmarked for emerging sectors such as artificial intelligence (AI), robotics, and the Internet of Things (IoT) [4]. Softbank has made explicit its goal of standing at the forefront of these—and other—high-tech fields.

Image: Softbank Pepper Robot. Source: Wikimedia Commons.Image: Softbank Pepper Robot. Source: Wikimedia Commons.

Meanwhile, the Japanese government is also proactively targeting promising tech endeavors. The Cool Japan Fund, a $630 million fund of which the Japanese government provides 85%, largely focuses on investing in Japanese businesses. A recent investment in a San Francisco-based venture capital firm, however, marks a new willingness to engage with the high-tech efforts of other nations [5]. Both the SoftBank Vision Fund and the Cool Japan Fund demonstrate Japan’s eagerness to assume an invaluable role in the emerging high-tech world.

Perhaps even more interesting than Japan’s high-tech investing strategy are the nation’s efforts to regulate several emerging technologies. In 2015, the Headquarters for Japan’s Economic Revitalization, a government initiative headed by Prime Minister Shinzo Abe, released Japan’s “New Robot Strategy” [6]. The 90-page document covers everything from high-tech development projects to the creation of a Robot Olympics, but perhaps most interesting is the section entitled “Policy on the Global Standardization of Robotics”. Here, and elsewhere in the paper, the Japanese government outlines its plans to spearhead the global movement towards regulating high-tech developments. These plans hold massive implications, for Japan, the United States, and the entire world.

As high-tech becomes more commonplace, as AI, robotics, and the IoT begin to permeate our everyday lives, questions that are currently nascent will ascend to the forefront of every mind. What body will regulate the safety of robots for civilian use? Who will draft the rules under which AI must operate? How will we ensure that global standards are maintained as these emerging technologies continue to break down walls and cross new thresholds? It is these questions, among others, that Japan is seeking to be the first to answer.

While the United States continues to lead global high-tech investment and has shown some readiness to address certain questions pertaining to these emerging technologies—foremost among them self-driving cars, which numerous U.S. states already regulate—the nation of Apple and Google and Microsoft runs the risk of yielding influence to proactive nations such as Japan. If the United States cedes ground to other nations, both in terms of high-tech investment and technological regulation, it will undoubtedly suffer significant repercussions—economically, politically, and militarily. The country would do well to avoid complacency in its current technological superiority, leading the charge into the future, as is the prerogative of the most powerful nation in history.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

 

References

  [1] bit.ly/2uSBWXy

  [2] https://www.forbes.com/sites/kristinstoller/2017/05/24/the-worlds-largest-tech-companies-2017-apple-and-samsung-lead-facebook-rises/#5a758f6bd140’ 

  [3] https://www.reuters.com/article/us-space-launch-india-idUSKBN19E0JF

  [4] http://asia.nikkei.com/Features/Company-in-focus/Maybe-Masayoshi-Son-s-successor-will-be-AI 

  [5] https://www.bloomberg.com/news/articles/2017-06-14/japan-government-fund-backs-500-startups-seeks-vc-investment

  [6] http://www.meti.go.jp/english/press/2015/pdf/0123_01b.pdf

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