For the past three years since 2017, NRI has presented the findings of its research into the new economic system known as “digital capitalism” at the NRI Dream Up the Future Forum. These results were partly compiled into a book in 2018 entitled Digital Capitalism (DejitaruShihonshugi) (Toyo Keizai), and now a sequel to this volume has been put out called The Digital Wealth of Nations (Dejitaru Kokufuron) (ibid.). In addition to covering how digital capitalism will impact industry and society, and how corporate strategies and national policies will change as a result, this book also considers the issue from the perspective of how the progress of digital capitalism will enrich people’s lives.

Digital technology has a huge impact on life satisfaction

In our review of the NRI’s Financial Survey of 10,000 Consumers that NRI conducts every three years and our analyses of various internet public opinion polls, the results showed that levels of life satisfaction among Japanese people are more heavily influenced by the degree to which they use digital technology than by their incomes. Digital technology allows people to enjoy music, movies, and other media online for free, to get information through social connections over SNS, and to immediately obtain the things they want via EC. The benefits of digital technology have thus appeared in a variety of settings in our lives. While there are undoubtedly some negatives to digitalization as well, at this moment the positives vastly outweigh them.
In Europe as well, despite economic struggles people’s levels of life satisfaction have been on the rise since around 2015. Each year, the European Commission puts out “The Digital Economy and Society Index (DESI)”, which covers its member states and measures the degree of digitalization in their economies and societies. NRI looked into the correlation between the levels of life satisfaction in these countries and DESI, and found that the degree of correlation was even higher than that of per-capita GDP. This finding suggests that even in a mature society such as Europe, the digitalization of society is deeply involved in people’s levels of satisfaction, as is true in Japan.
Looking in particular at examples in Northern Europe, we see on the country level that the accumulation of digital social capital is vital for enriching the lives of citizens. In Denmark, personal data is a public asset managed by the government, and various startups have rolled out consumer-oriented services using such data. And in Estonia, data sovereignty has been established for each individual citizen, with people able to manage their personal data at their own portal sites. For instance, individuals can view data that has been inputted by their family doctor on the portal, and can consult with medical institutions upon personally verifying their past medical histories or medication histories. With this sort of robust digital social capital, Northern Europe boasts the highest level of life satisfaction within Europe.
In Japan as well, not only the proliferation of individual number cards, but also efforts to rapidly promote the establishment of individual number portals and the digitalization of administrative procedures using individual number IDs will likely be major prerequisites for bringing the benefits of digitalization, and in turn enrichment of life, to citizens all over the country.

The aim of digitalization should be not just economic growth, but also improving people’s happiness

In light of the reality in Japan, NRI has devised a “Digital Capability Index (DCI)”, a new type of index similar to DESI. DCI indexes “internet usage”, “digital public services”, “connectivity”, and “human capital”. Further, in addition to calculating the DCI for every prefecture, we also examined the correlations with life satisfaction levels on a prefecture-by-prefecture basis (found by retabulating the results in the NRI’s Financial Survey of 10,000 Consumers mentioned earlier) and with per-capita prefectural incomes. When we did this, it showed that there was practically no correlation between the DCI and per-capita prefectural incomes, whereas there was a high correlation with levels of life satisfaction. In other words, even at the regional level, digitalization is essential for raising people’s degrees of life satisfaction.
Nevertheless, there are difficulties involved in digitalization at the regional level. First of all, it’s difficult to get private capital involved because it isn’t very profitable. That being said, there are also limits to local public finance, and digital investments are hard to get with independent revenue sources alone. In addition, although local administrative organizations, medical institutions, universities, private companies and so on each have their own data, linking all of this data together requires complex consensus building. On top of this, individuals must be able to view their own data freely, as in Northern Europe.
NRI entered into a basic agreement in December 2019 with Tsuruoka City in Yamagata Prefecture, pertaining to collaborative activities under the banner of “structural reform work through digitalization”. Through this work, NRI is helping with the “Tsuruoka City Digitalization and Regional Revitalization”, which entails both smart city promotion and the construction of digital government. The former endeavor involves promoting bio-healthcare services and disaster prevention/mitigation measures, as well as measures for aiding those in agricultural and hilly and mountainous areas, while the latter aims at building an efficient digital government infrastructure. I’d like to see NRI also demonstrate its comprehensive capabilities and partner closely with government agencies there, so that Tsuruoka City can become a model for achieving regional revitalization through digitalization.
It seems that the first phase of digital capitalism, in which 4G and smartphones were the driving forces, was dominated by GAFA, but there are also examples such as in Northern Europe where the public and private sectors acted in concert to improve people’s well-being. The winners in digitalization won’t necessarily all look the same. Digital strategies are often spoken of in terms of growth strategies, that is, from the perspective of GDP growth, but I believe the aim of Japan should be doing is to examine to what extent digitalization has made people happier (the digital wealth of the nation).