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Commentary: In search of the pandemic-inspired innovation curve

  • May 5, 2020
  • , The Japan Times
  • English Press



WASHINGTON – With the infection rate inching up and the government not imposing a complete social lockdown seen in many other parts of the world, Japan’s strategy to deal with the COVID-19 outbreak has had mixed responses internationally. But wounded national pride aside, it’s the results that matter, rather than the process.


Japan’s way of declaring a national emergency at a time of a pandemic may not be one that other governments would find effective. What ultimately matters isn’t how Japan’s approach is regarded by the global community. Instead, it is whether Japan’s strategy will lead to the results that all governments want, namely to prevent infections from spreading further and to get the country back on a path to economic recovery.


The pandemic’s impact on the global economy to date would have been unimaginable only a few months ago. Will this be the biggest downturn in a decade or in a lifetime? Will this be a long-term recession or an outright depression?


With the most infections in the world by far, and unemployment already projected at over 20 percent, the economic repercussions of COVID-19 in the United States may well far outlast the health crisis itself.


At the same time, the divide within the U.S. based on income has become all too apparent as well, with those in higher-paying jobs that also provide good health care coverage being able to adapt to the necessary social distancing measures without sacrificing their livelihoods. Those with lower-paying jobs have also often been without health care, and are unable to work from home or find affordable child care when they need to continue to work while much of the country is shut down.


As a result, COVID-19 has hit American lower-income, minority households disproportionately, and the longer the lockdown continues, the harder it will be for low-wage workers to recover financially.


The relatively low infection rate, coupled with the fact that there is no extreme economic shutdown measures in place in Japan as there are in the U.S. or Europe, means that the Japanese economy could well be spared a great deal of the pain that is likely to be felt elsewhere.


An immediate V-shaped recovery won’t be possible, given that the global economy itself will be contracting this year. But with its strong social safety net and generous spending policies prioritizing stability, Japan may be able to weather the social disruptions and political unrest that will invariably be felt elsewhere in the world. At the very least, it may succeed in simply pushing back the cost of paying for stability to the next generation.


However, deflecting and postponing the pain of the coming economic storm may hurt Japan permanently in the longer term.


In the U.S., the pandemic has made all too painfully obvious the weaknesses of the gig economy, a high dependence on migrant workers who do not qualify for public support, an alarming technology access divide and the pitfalls of a federal system of governance, to name but a few.


At the same time, it has also given greater confidence about the strengths of the U.S. economy. No stay-at-home corporate executive is now unaware of the power of Silicon Valley-based Zoom and its teleconferencing system. Over the past week, FaceBook launched its own system to compete head-on with Zoom, while Cisco is promoting its Webex platform and Microsoft founder Bill Gates has not shied away from touting the Teams system when interviewed on issues unrelated to his company.


The pandemic has forced white-collar workers worldwide to work from home, and even when a vaccine is widely available to prevent infection in the future, the ways people work and how they connect with one another are unlikely to go back to how they had been. There will no doubt be less travel and more use of telecommunications networks, which currently are dominated by U.S. companies, with little prospect for a Japanese company to enter the market except to cater purely to a domestic audience.


The coronavirus outbreak has altered not just how people connect, but also how consumers shop. Online grocery shopping, for instance, had never really taken off, accounting for only a fraction of total sales. That trend, of course, has now reversed, with all supermarkets scrambling to meet the surge in online sales. Even Amazon, which had bought U.S. grocery group Whole Foods in 2017, was caught flat-footed in delivering fresh food amid the endless demand for home delivery.


Just how we will shop, eat, connect with one another and travel in the future remains to be seen. It may well be that a year or two after the health crisis, the world will resume interacting as it had before the pandemic. For Japan, though, this should be a golden opportunity to think outside the box and re-evaluate how to innovate to meet its changing needs and be a global leader in the services industries, including logistics as well as health care.


After all, enhancing the stay-at-home experience through improved connectivity and enhanced distribution mechanisms would be a boon to an aging society as well as to people who are hesitant to venture out as much as they once had. At the same time, discerning consumers can choose their online experiences from across the world, in which Japanese retailers’ attention to detail is particularly attractive.


One of Japan’s biggest strengths is that its detailed-oriented approach can be seen across the board, from small retailers and service providers to multinational corporations. For the former, a world that is still globally minded and yet more constrained can lead to unique business opportunities that could benefit from national policies that encourage innovation.


The past few months of upheaval have led the world to fundamentally re-evaluate not only how to connect and work, but also how to value how time is spent and with whom. Even if Japan is spared the worst of the disruption caused by the coronavirus, the world Japan will be a part of will have changed significantly.


Japan has much to offer a world that will be redefining how to reintegrate. The challenge will be to anticipate those changes, rather than to expect the pre-pandemic world to be restored.


Shihoko Goto is deputy director for geoeconomics and senior associate for Northeast Asia at the Wilson Center’s Asia Program.

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