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Manufacturing Policy Portal [beta]

Hosted by the Centre for Science, Technology & Innovation Policy (CSTI)

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Key Policies

Key Policies

New policy approach to effect industrial change

Japanese policy since the turn of the century has evolved towards an increased emphasis on cross-cutting policies over sector-specific approaches.

The intention is to support a shift from a ‘mono-pole’ structure based on automotive and electronics, towards a sustainable ‘multi-pole’ one, enabled by the development of five ‘strategic industrial fields’: infrastructure-related industries (e.g. nuclear, water, and railroad); next-generation energy solutions (e.g. smart communities and next-generation automobiles); creative industries; health-related industries; and frontier fields (e.g. robots and space).

This proposed shift in emphasis has been coupled with a growing recognition of the need for a more active role of the state in strengthening industrial competitiveness in the face of mounting challenges faced by Japanese firms. A new policy agenda has emerged, which seeks to facilitate a reorganisation of the domestic industrial structure and promote a more active participation of Japanese firms in global markets. In 2010, the government announced an economic growth strategy (updated in 2012) called the “Rebirth of Japan”, setting out economic goals for 2020. Taking advantage of Japan’s strengths in manufacturing and technology, the strategy targets the development of over US $1 trillion of new industries and the creation of 4.7 million jobs by 2020, along with sundry other goals.

Overall, this new policy agenda has driven the establishment of a range of measures. To improve Japan’s overall competitiveness as a manufacturing hub, measures have included: a tax reform that seeks to take Japan’s corporate taxes closer to international levels; new incentives to attract high-added-value corporate functions to Japan; and increased investment in logistics infrastructure. In order to support the deployment of Japan’s technologies and products into the world market, the government has promoted the move from the sale of individual products with advanced functions to the provision of integral solutions combining manufacturing and service components in areas where Japan is perceived to have a competitive edge. Emphasis has also been placed on the deployment of low-carbon energy generation and distribution technologies in high-growth, mainly Asian economies. Furthermore, since Japan depends on imports to satisfy more than 90 per cent of its energy demand, a guiding objective has been ensuring a stable energy supply from overseas. Bilateral collaborative frameworks with resource-rich nations have been expanded — typically involving infrastructure development projects with the participation of Japanese firms — and the supply of risk money for resource exploitation and development projects has been enhanced.

A number of measures have also been put into place to address the perceived inward looking tendency of the traditional ‘pyramid’ structures of Japanese industries and encourage SMEs to compete in global markets. Examples include the creation of an SMEs’ overseas expansion support programme, extended guaranty insurances on overseas expansion, as well as new technical advisory services. Other key drivers in influencing industrial policy in Japan include the economic pressures that were a legacy of the financial crisis in the late 1990s, labour population decline, and awareness of calls for stronger innovation policies relating to manufacturing coming from economic competitors such as the US, China and Korea.


Government Initiatives

There have been several major industry-relevant policy initiatives since 2000.

Law on Special Measures on Industrial Revitalisation

Introduced in 2001 with the aim of alleviating excess debt and capacity, this law promotes company restructuring by providing tax incentives and financial assistance. It has been applied to over 400 firms as of October 2013.

Growth Strategies

These strategies are driven by the Prime Minister and offer guidelines for budget allocation across government. At least five growth strategies have been published since 2000. Drafting these strategies has been important part of METI’s (Ministry of Economy, Trade and Industry) work.

Energy conservation: Top runner program

Introduced in 1998, it focuses on tackling climate change by setting future energy efficiency goals for 26 products, based upon high-performance market benchmarks.

Innovation Network Corporation of Japan (INCJ)

Launched in 2001, this semi-public investment company aims to promote the creation of next-generation businesses through ‘open innovation’. It has invested over 360 bn yen in around 40 companies.

Eco-point Program and Eco-car Subsidy

Launched in 2009, this programme is aimed at boosting consumption of energy-efficient products and transitioning to a low carbon society. Around 1.6 trillion yen, or over £10 bn, has been spent, benefiting the electronics and automobile industry.


New cutting-edge ‘world-class R&D centres’, with the participation of industry, academia, and government, have also been announced to promote industrial agglomeration and the commercialization of joint research. These centres are expected to contribute to further R&D investment in the private sector and contribute to achieving the national R&D investment goal of 4 per cent of GDP by 2020.