Making the most of digitalisation following COVID-19

New digital technologies and big data have created opportunities to address persistently sluggish productivity growth and mitigate the effect of an ageing and shrinking population on the economy amongst other challenges. The Japanese government has embarked on an ambitious plan of digital transformation and businesses are often at the forefront of new technologies. The pandemic accelerated the digital transformation as households, businesses and government switched to new technologies and ways of organising themselves in order to minimise health risks. But the pandemic also exposed shortcomings. Many were underprepared having not made needed investments to exploit these new technologies. While government is pursuing initiatives across a number of areas, weaknesses in linking databases hindered its ability to target support for those most affected by the pandemic. Investment by business is concentrated in larger firms and the dynamism offered by new firms entering the market is limited. Students and workers, while highly trained, can lack the skills needed to exploit fully new digital tools.