There was one major common feature in the speeches given by top-class government leaders from 70 countries and regions who attended the World Economic Forum in Davos, Switzerland, this year. The leaders devoted a large portion of their speeches on their policy responses to the Fourth Industrial Revolution. An economic growth mechanism radically different from the old model is emerging through a greater use of artificial intelligence, robots and big data, and countries around the world are competing with one another to respond proactively to such radical changes in the economic environment. What possibilities exist for Japan under these circumstances? Japan needs to overcome two major challenges, but the nation also has two advantages.

The first challenge that needs to be overcome concerns the government's slow response. Japan is gradually awakening to the need to cope with the major wave of the Fourth Industrial Revolution. The government's response, however, lagged a bit behind other major industrialized countries. Germany is said to have used the term "Industry 4.0" at the 2011 Hannover Messe. Looking back, discussion about measures to facilitate the use of big data became active in the United States around 2012. That was the time, experts say, when there was a major breakthrough in artificial intelligence technology. The so-called deep learning technology was put to practical use, which accelerated the subsequent evolution in the economy's environment.

It was only in 2016 onward that comprehensive discussion about response to the Fourth Industrial Revolution began as the government updated its growth strategy each year. The growth strategy of 2017 featured concrete policy steps such as: 1) setting up a public-private sector command organization to facilitate the use of big data; 2) creation of a "regulatory sandbox" that beefs up the special district system to speed up regulatory reforms; and 3) launch a government subsidy for recurrent education to strengthen human resources development. A legislation has been submitted to the ongoing Diet session to establish the regulatory sandbox. It is a major task for the government to have the legislation enacted quickly and introduce effective deregulation.