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"The Dots and the Lines - What is Global Collaboration in the Age of Great Digital Competition?" ("Digital Technology and Economy/Finance" Study Group)

The Nakasone Peace Institute (NPI) held the web conference titled above with Dr. Teruo Kishi (President, Innovative Structural Materials Association, and Ex. Science and Technology Advisor to the Minister for Foreign Affairs) , Dr. Masato kamikubo (Professor, Ritsumeikan University), Dr. Atsuhiro Goto (President, Institute of Information Security (IISEC)), and other regular/visiting members, on February 2nd, 2021.



1  Speech "Strengthening Japan's Science and Technology Capabilities --Digital technology for materials development -- from the experience of the Science and Technology Advisor to the Minister of Foreign Affairs " (Dr. Kishi)


■The three roles of science and technology diplomacy


In 2015, this new post of Science and Technology Adviser was created in the Ministry of Foreign Affairs, and I was appointed as the first Science and Technology Adviser and continued my work for about four and a half years.
There are three roles in science and technology diplomacy.
The first is 'Science in Diplomacy', which focuses on providing advice and recommendations to Foreign Ministers. During my tenure, I have made recommendations on evidence-based policies in the fields of health and environment at the G7 and G20 conferences, and on human resource development, engineering education and social implementation of technology at TICAD 6 and TICAD 7 with African countries. With regard to the UN STI for SDGs, we recommended the preparation of a roadmap through international cooperation, and Michiharu Nakamura, an advisor to the Japan Science and Technology Agency (JST), is currently leading the role worldwide.

The second is "Diplomacy for Science", which aims to contribute to the future of science and technology in Japan by promoting diplomatic activities. During my tenure, I have promoted the promotion of Japanese science and technology both at home and abroad. In particular, in cooperation with Japanese embassies abroad and the Cabinet Office, I have introduced the state of Japan's innovation research and development through the "SIP (Strategic Innovation Programs) Caravan", which has been held in 12 countries to discuss future international cooperation.
The third is 'Science for Diplomacy', which aims to network with the heads of science and technology diplomacy in each country to explore the future contribution of science and technology to diplomacy through advising the UN and national governments. FMSTAN was launched in 2016 by the United States, the United Kingdom, New Zealand, and Japan, and holds biannual meetings to deepen collaboration. Now FMSTAN has 20 member countries.


The relationship between science and policy around COVID-19


In the midst of the global coronary crisis, the question arises as to how science and technology contribute to the "policy" of COVID-19.
The current approach to COVID-19 in Japan is only "Science in Policy" and lacks a support system for "Science for Policy" by bringing together academics. The Science Council of Japan should be responsible for this, and universities should also play a role, but it is worrying that there is little outreach from universities.
On the other hand, the Science Council of Japan has also revealed a serious problem with the appointment of its members. While the Japanese government's refusal to appoint members is unacceptable (even based on my experience as a vice president of the council), the Science Council of Japan also has a problem in that it has omitted prior consultation. In addition, the Council for Science, Technology and Innovation (CSTI) is a body within the Japanese government that formulates "policy for science", and the division of roles between the CSTI and the Science Council of Japan, which is outside the government and carries out "science for policy", is not clear.


■Challenges and Future of Science and Technology Diplomacy, and Strengthening Japan's Science and Technology Capabilities through Digitalization


During my tenure as the Science and Technology Advisor to the Minister of Foreign Affairs, the most important issue in science and technology diplomacy was how to promote cooperation with China. It is desirable to have exchanges that give due consideration to the diversion and outflow of technology and so-called "research integrity. At the same time, however, we should not forget the fact that many Japanese companies have advanced into China, that nearly ten thousand researchers stay in China for medium to long term, and that 30-40% of doctoral students in Japanese universities are Chinese.
Personally, while I understand the difficulty of separating science and technology, I would like to see deeper cooperation based on the premise that science has no borders, and exchange with an attitude that acknowledges that technology has borders. In the future, it is hoped that science and technology advisors will be appointed in each ministry, and that more policy decisions based on scientific knowledge will be adopted. The system in the U.K. may serve as a reference.
The greatest asset in Japan's science and technology diplomacy is its high level of scientific and technological capabilities. For the past decades, there have been concerns about the deterioration of Japan's science and technology capabilities, but I would like to examine how to catch up and overcome this problem through digitization.
The next era is expected to be an era of innovation through the fusion of physical things and information technology represented by AI and big data. This will lead to the SOCIETY 5.0 that Japan is aiming for. It can be said that this is the era of data science, but it is essential to break through by integrating product technology and IT technology, and digital transformation will make a significant contribution.
Materials development, one of the most important aspects of the physical world, is also becoming increasingly digital. The components of materials are processing, structure, properties, and performance. The key method of materials development is to set the final target performance, integrate the materials informatics that link each element, and use AI and big data methods to rapidly develop new materials, which can be called inverse problem analysis. This direction of research is already underway in the "Materials Revolution" project of the Cabinet Office SIP. It is expected that Japan's strong materials technology, including batteries, semiconductors, carbon materials, and weight reduction, will be promoted by strengthening the support of "digital technology" and various related resources.
Japan is expected to build a strategic science and technology policy through dialogue between science and politics, lead the coming "data science era" with innovation in "digital technology," overcome the recent challenges of "infectious diseases" and "climate change," and become a "science and technology nation" that contributes to the "STI for SDGs.



2  Speech "The Compact Democracy" (Dr. Kamikubo)


What is "Compact Democracy"?


In August last year, I contributed an essay entitled "Compact Democracy" to the Japanese Ministry of Foreign Affairs' magazine, Gaiko, which received a variety of responses. The term "compact democracy" refers to a "small-scale, agile democracy in a global society," a trend that has come under increasing scrutiny amid the global corona disaster. It is characterized by the following two points: (1) using technology to respond to crises with a sense of speed, and (2) accurately grasping the situation on the ground and promptly taking the necessary actions to enhance its reputation.
This is an excellent system for dealing with global risks. In Europe, in Germany, the states took the lead in implementing flexible policies such as border closures, PCR inspections, and economic support to keep the death toll low and speed up the reopening of the economy. In Asia, Taiwan's overwhelmingly speedy policies utilizing digital technology have attracted attention, while in the Middle East, Israel's sense of speed is attracting attention. This kind of swift and unique leadership has also been seen in the corona measures taken by local governments in Japan.
With regard to characteristic (1) above, although there is some concern about human rights violations caused by the use of technology, it should not be overlooked that a certain check function has been established to prevent human rights violations through close democratic discussions between the government, administration, and citizens as another characteristic of a "compact democracy.


The Growth of Chinese Cities and the State through Compact Democracy


Under Deng Xiaoping's "reform and opening-up policy" that began in 1978, special economic zones were established in Shenzhen, Zhuhai, Shantou, and Xiamen, and in 1984, 14 cities were designated as "state-level economic and technological development zones," a number that has now increased to 54. China has given these cities a special legal status, brought in the so-called free market system, provided them with a large amount of investment and tax benefits, and increased the freedom of management within the area. In other words, so much "mini-America" were created within China.
As a result, foreign capital (first from overseas Chinese companies in Asia, then from Japanese companies, then from Western companies, etc.) and technology (more than 3 million engineers, also known as "sea turtles," who have studied in the United States and Europe and returned to their home countries after learning the most advanced technology) were intensively introduced to these regions for development, and the profits from these exports were distributed to the entire communist nation. This has led to today's high technology and military power.
These special economic zones have become a trend in many countries, where only a certain area is free to develop its own economy, and the profits are distributed to the entire country. This trend is due to the difficulty of achieving uniform development of a country, whether it is authoritarian, totalitarian, or just starting to become democratic. Mauritius, Dominica, Hong Kong, Singapore, Bangalore and Hyderabad in India, are just to name a few.


■Compact Democracy and the Future of Japan


Today, it is easy for Japan's regions and areas to be directly connected to the rest of the world. This is obvious in the increase in the number of international flights and destinations from local airports. The number of people and companies coming and going is on the rise. From a policy standpoint, it is important not to focus only on Tokyo, the capital of Japan, following the centralization of power and various regulations, but also to pay attention to the enthusiasm of Asia and other countries that are growing rapidly.
COVID-19, in particular, revealed a situation where the concept of "proximity" is changing drastically through digitalization, a situation that could be called super-globalization. Online video conferencing with people on the other side of the world is becoming easier, and information and money can easily transcend regional and national borders. It will become commonplace for local governments to use virtual currencies to raise funds, and for Chinese digital platformers to open their domestic sales channels to Japanese companies.
There is a renewed interest in the concept of an international financial city in Japan, but it would be preferable to have multiple cities with their own unique characteristics. For example, Tokyo will continue to serve North America and Europe, Osaka will promote the growth of small and medium-sized companies in Asia, and Fukuoka will strengthen its ties with Asian IT companies.
In this way, developing cities will be directly connected to each other on an international scale, which will be a global trend in the coming years.



3  Speech "Preparedness Beyond Digitization: National Security in the Digital Age" (Dr. Goto)


■Why "Security in the Digital Age"?


It is clear that the digitalization of society as a whole, from government to industry to citizen life, will grow rapidly in the future, and this in itself is a good thing. However, if viewed from a different perspective, it can be said that we have entered an era of "security for the digital age," a time to prepare for the increasing dependence of nations, societies, industries, and people's lives on digital technology (specifically, the Internet, cloud computing...).
Lloyd's of London's 2018 research report "Cloud Down - Impacts on the US economy" estimates that if the largest cloud providers in the U.S. (Amazon AWS, Microsoft Azure, IBM Cloud, etc.) were to suspend or close their services for the foreseeable future, it could result in a loss of $19 billion to the U.S. economy. Even if the outage lasts three to six days, the report estimates that the total loss would be between $6.9 billion and $14.7 billion, with a little more than half of that loss in manufacturing. This was already a report three years ago, and given the global increase in reliance on cloud services in government and industry since then, the numbers are undoubtedly even higher now.


■Cyber Technology, Digital Services, and Data - Three Areas of Digital Security


Let's take a look at three important elements that will make up the security of the digital age.
The first is "cyber technology security." In this area, it is necessary to look at what needs to be backed up by domestic technology (i.e., what should be maintained to a certain extent as domestic technology).
Cryptography has already been taken care of by CRYPTREC, a joint initiative of the Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade and Industry. Kernel software, which is the core of OSS (operating system software), should be domestically produced for the safety of Japan's supply chain and IoT (Internet of Things). In the recent corona scare, vaccine manufacturing companies were subjected to cyber-attacks. We live in an age where cyber security technology is directly related to the safety of life.
Furthermore, verification technology analysis is also an important part of this. This includes technologies to verify the safety of devices from both hardware and software, such as the existence of "backdoors," which was the focus of the Huawei issue. The U.S. and the U.K. have taken great pains to carry this out, but unfortunately, Japan is at a standstill. Another important aspect of cyber security is the detection of anomalies in hardware, software, and networks.
The second is "security of digital services. The shift to cloud services in industry is likely to be rapid, and the same is true for government. On the other hand, as the Lloyd's report shows, there is a need to have a partial workaround from dependence on the major global cloud providers. Even if it's just a small part of our infrastructure systems, even 5% of the total, we need to deliberately avoid dependence on the services of such providers. In addition, it is essential to keep people who can develop, build, and maintain such systems, and to continue to nurture them.
These are the "essentials" of the digital age, so to speak. In order to secure these parts, it is also important to draw up a blueprint of who is providing the foundation for the cloud service parts of the important digital services that support government and industry.
The third is "data security. As mentioned in the first summary of the Data Strategy Task Force that came out the other day, as a precondition for the "DFFT" (Data Free Flow with Trust) that Japan has presented to the world through the 2019 G20 Osaka Summit and other events, it is necessary to establish a system and tolerance to deal with emergencies in data distribution.
In particular, it is important to realize that data distribution can be stopped by physical disconnection of networks, restriction by international relations, and contamination (like water and sewage systems). It is also necessary to handle the situation where important data, which is legally difficult to handle in Japan, is taken overseas for analysis.



4 Discussion


■Main Topic 1: Cooperation between Science and Technology(S&T) and Diplomacy, Politics, Government, and Industry


○In Japan, strengthening horizontal collaboration on "Science for policy" is a major issue. Looking at the situation in other developed countries, there is a large dependence on the Academy of Sciences and the ministry's science advisors. In Japan, there are "policies for science" such as the Council for Science, Technology and Innovation and various councils, but independent "science for policy" is weak. This situation was revealed by the corona disaster.
One solution in Japan is to set up S&T advisors in each ministry and agency, and have them meet monthly to exchange opinions. In the UK, for example, each of the 20 ministries has its own technical advisor and monthly meetings are held. The UK is also a good example of how to achieve research results with little funding.
Regarding the balance between collaboration, cooperation, and competition, the greatest difficulty in Japan lies in industry-academia-government collaboration. While national projects try to achieve the goal of cooperation, industry is reluctant to provide data from the perspective of competition. How to fuse this cooperation and competition into a national project is the biggest challenge to be overcome in the world of S&T, especially industrial technology.


○Regarding industry-academia-government collaboration, it is true that the place where the pool of technical human resources that can be used for social good has become thin. The only way to achieve this is for someone to show compelling leadership. In particular, national security related to technology needs to be further developed in this direction.


○Japan's excessive obsession with things and the strength of manufacturing may have, in fact, stalled the recent use of digital technology, whether in science, politics, or diplomacy.


○In terms of S&T diplomacy, Europe seems to be an easy-to-engage partner compared to China, where research integrity is a very big issue, and the U.S., where dual-use technology needs to be firmly established.
However, it must be noted that the differences among individual countries, including the UK, France, and Germany, are significant, and if not understood well, this can turn into a difficulty. For example, the position of national laboratories in France is highly centralized and controlled; in Germany, the originality of laboratories is dominant; and in the UK, national laboratories are almost non-existent.
Also, in Europe, many countries have the same problems as Japan in terms of digital technology research and development. Particularly in the area of 5G, there are individual consultations from countries where their own telecom operators and manufacturers cannot take the lead alone, and it is important to make allies through these consultations.
On the other hand, in terms of S&T diplomacy for developing countries, human resource development is undisputedly important. In addition, emerging countries have little or no concept of engineering, so it is important to contribute to them by emphasizing the importance of this field.
Both emerging and developing countries are interested in how to be at the forefront of science and technology all at once, while playing good catch-up and making improvements like Japan, rather than advancing science and technology through a series of basic/applied/developmental steps like Western countries. This is something that Japan should keep in mind in its dealings with them.



■Main Topic 2: Regional and urban autonomy, international cooperation, and freedom from constraints for the future in Japan


○When compared to the German states or the city-state of Singapore, there are some constraints in Japan in terms of diplomatic and commercial authority, budget, and human resources. Special Economic Zones (SEZs), which are popular in emerging countries, are an attempt to remove similar constraints. The best example of this may be China, which has reformed and opened up its socialist market economy.
In Japan as well, it is a good sign that the major cities are taking the lead in enhancing regional autonomy, for example by strengthening prefectural-city cooperation in Osaka. The government needs to loosen the centralization of power and transfer all relevant authority and financial resources from the central government to the local governments in order to support these autonomous movements of the local governments. Otherwise, Japan will be left behind in the development of the digital age.


○There are two issues regarding SEZs in Japan.
(1) It is important to maximize the effects of SEZs by trial and error, leaving the operations within the zones free and clear in terms of money, people, goods, and rules. However, in the case of Japan, the focus tends to be on how to optimize regulations and how to identify problems, resulting in a "SEZs under bureaucracy.
(2) Unlike emerging countries, individual vested rights, including centralized authority and legal systems for data, are entrenched, and there is a tendency not to allow (or resist) these rights to be broken down by SEZs.


○On the topic of compact democracy:
The leadership of the local government in question should be able to bring politics closer to the people and citizens, and at the same time be able to respond to them in a detailed manner. Therefore, it encourages the participation of the people and citizens.
The independence of local governments can also lead to a widening of economic disparity and a divergence of perceptions of values, but on the other hand, it can also lead to a reduction in poverty by addressing social security and welfare issues that match local conditions.


○About creativity education, venture development, etc., which will be the basis for next-generation innovation:
Israel immediately comes to mind as an example from other countries. Thorough co-creation between the military, industry and academia, and education focused on information during military service. Here, Israel has succeeded in establishing ventures in the manufacturing industry, including IoT, and are also good at intellectual property strategy. Switzerland and the Netherlands are other interesting countries that have narrowed their focus and are betting on ventures.
These are all small countries. However, as Japan is a small country compared to China, its future is in jeopardy if it does not succeed in narrowing down its focus without assuming itself to be a superpower. Moreover, SEZs and five-year plans for science and technology are not helpful in establishing and fostering ventures.
What is important in Japan is to invest in people. First of all, graduate students should be paid a reasonable salary, encouraged to write doctoral theses and establish ventures, and allowed to explore freely.


○Discussions on issues such as decentralization, Doshu-System, and international financial cities have been going on for the past 20 or 30 years, but never really got off the ground.
This is partly due to the repetition of player turnover, where the person who was in charge at the time fails, disappears, and the next person comes along to discuss the issue...
The major difference between the past and the present in these discussions is that the past was caused by the domestic situation in Japan, while the present is caused by the expansion of digital technology and super globalization, and Japan has not been able to keep up with it. It is necessary to reanalyze this point properly.


○Japan's various regulatory issues and budgetary finance issues are still important constraints for the future of Japan.
However, the fact that the issue of SEZs is still under debate is a sign that the seriousness of Japan's future is being shared by both Kasumigaseki and the general public. So, this is rather an excellent opportunity.
Looking at the current budget for corona countermeasures, it seems that reforms can be carried out if they are truly necessary. In this sense, Japan may have its last chance now, even in the midst of severe financial difficulties.



■Main Topic 3: Enhancing the international status of Japan's manufacturing industry and S&T through the digitization of manufacturing


○In the development of S&T for manufacturing, including materials research and development, there has been a shift and progress in the direction of enhancement through digitalization for about 10 years. The following points can be considered as key points for the future.
(1) University education is of utmost importance. In particular, digital-related education should be taught well in other science departments besides engineering.
(2) Keep excellent science students in manufacturing companies and continue their digital education after they enter the workforce.
(3) To improve the situation of programming education and diversity due to the separation of humanities and sciences in high schools.
(4) In order to increase the synergy between research, development, and commercialization, an environment should be created where one researcher is in charge of all aspects of the project. Researchers should always pursue basic and applied themes together.
(5) In materials development, it is necessary to link the four elements of process, structure & organization, properties, and performance. Digital technology makes it possible to clarify the relationship between each element and quickly evaluate the final performance, and also to obtain the desired structure by inverse analysis from the target final performance. Furthermore, the overall integration and maturation of materials technology and digital technology is an issue for the future.


○The great success of Japan's post-war S&T is due to the accumulation of catch-up and improvements, and the Nobel Prizes that have been awarded since 2000 have shown the uniqueness of Japan's accumulated research, but it has consistently proceeded without the concept of risk hedging. Therefore, there was little room for universities or the electronics industry to think about the shift to information technology. This can be attributed to the absence of wars and the Great Depression. Paradoxically, COVID-19 is supposed to bring an opportunity. However, if the convergence of the real and the digital technologies fails now, it will only lead to a fall.



■Main Topic 4: S&T Security and Digital & Cyber Security


○As for digital and cyber security, the harmony with the law is important in conducting various trials, and there have been some cases where experiments have been conducted in state research institutes in the U.S., where the constraints are less strict than in Japan. Therefore, in order to ensure Japan's future digital economic growth and digital security, it is necessary to "pool technology and human resources, and prepare a set of places where trial and error can be run in a SEZs.
In addition, even if something as big as GAFA cannot be produced in Japan, it would be possible for Japan's young and talented engineers to stay in Japan and contribute to it, as long as it is secured domestically as a precautionary measure for Japan's security.
Compared to the U.S. and China, it is becoming more difficult for Japan to maintain an environment for next-generation development or innovation, where the society as a whole can maintain a kind of margin. It is time to think about it from a policy perspective, as there is a limit to what can be considered on a company-by-company basis.


○In order to make better use of data in a compact democracy led by 0 regions or city-states, it is important to clarify how politics should handle the relationship between privacy information and political power in an environment where transparency is guaranteed or check functions work.
In Taiwan, this democratic debate is based on a sense of urgency toward the mainland. Vaccination in Israel seems to be based on the same principle.


○Japan has been proposing DFFT (Data Free Flow with Trust) internationally, but the question is whether Japan is attractive enough to welcome the flow of data from around the world, or to bring in data from around the world. Japan's strength to attract and bring in data from around the world will improve the international distribution of data.


○The security issue in the digital age seems to be at the opposite end of the market mechanism. Given the increased dependence on the U.S., it is important from the perspective of Japan's own security to take on this issue, and it will cost money and people. However, if the U.S. imposes digital sanctions on Japan for some reason, such as in the midst of the U.S.-China conflict, Japan will not be able to use GPS, nor will it be able to use the cloud. In preparation for such a situation, it is important to secure human resources, funds, and platforms for national security in the digital age.


○In the U.S., under the Biden administration, there have been moves to enclose necessary items in each country, including the Buy American executive order, moves to maintain and improve international relations in the form of vaccine diplomacy, and moves that have become a tug-of-war between the U.S. and China, such as the TSMC semiconductor company in Taiwan. Such international movements on economic security in the digital age are becoming even more intense.
During 2021, Japan will probably be tested in its attitude toward the US, Europe, and China. In this sense, there is an increasing need for a place where discussions like today's can be expanded and include a variety of people.

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