Japan’s Three D’s (Defense, Disaster Management, and Demographics)

Key Takeaways

• Prime Minister Ishiba’s favorite policy areas can be framed as the “three D’s” of Defense, Disaster management, and Demographics.
• The three D’s are promising focal points for industrial policy to develop new technologies and business areas, and to take Japan’s rapidly maturing startup ecosystem to its next level of development.
• Government procurement, if done well, is a powerful policy tool to shape technological trajectories and growth grow the startup ecosystem, augmenting the usual policy tools of investment funds and research subsidies.
• The three D’s are constructive areas for U.S.-Japan public-private collaboration, representing politically uncontroversial areas to strengthen the fabric of bilateral political economic ties.
• Some collaborations are already underway, and can be expanded relatively easily, especially when framed as pro-business collaborations that help both countries become stronger.
• The three D’s are also useful areas for multilateral and international cooperation.

Ishiba’s Three D’s (Defense, Disaster Management, and Demographics) as Economic Opportunities

Any list of Japan’s long-term challenges includes national security and the economy. Indeed, these are fundamental challenges for any nation.

In Japan’s case, in the security dimension, its neighbors, China, North Korea, and Russia, all pose serious challenges. Japan’s security solution has been rooted in the U.S.-Japan Security Alliance, placing Japan solidly under the U.S. defense and nuclear umbrella. However, U.S. President Donald Trump has repeatedly voiced displeasure at what he calls the “one-sided” security alliance. Defense is therefore a serious issue.

On the economic front, Japan faces several challenges, especially given the new U.S. administration’s disruption to global trade that affects Japan’s exports and many of its major industries’ supply chains that run through China, Mexico, and Southeast Asian countries. A fundamental long-term structural challenge for Japan’s economy is that of extreme demographics, with a rapidly aging and shrinking population. Confronting the slow-moving challenge of demographics was decades in the making, but acute effects are now starting to be felt.

The devastation brought by past natural disasters and the unpredictability of future ones, has developed a palpable atmosphere of anxiety in Japan. For those living in a Japanese media environment, there are almost daily reminders that the Japanese archipelago is prone to frequent natural disasters. Solemn memorials mark the dates of major earthquakes and tsunamis, and commemorations of the rebuilding of historic buildings following torrential rain and downpours abound. Media reports regularly include updates on the disrupted lives of victims of the 2011 Great Tohoku Disaster, the Great Hanshin Earthquake, and other major disasters. There are even occasional reminders that a major earthquake is likely to hit the metropolitan Tokyo areas before too long, and that volcanic activity, even including the eruption of Mount Fuji, are contingencies to prepare for. Disaster preparation and mitigation are part of the national dialogue, and one might argue even part of the national identity.

These three issues of defense, disaster management, and demographics happen to be Japanese Prime Minister Shigeru Ishiba’s favorite policy areas. Although the Ishiba administration, which began in a politically weak domestic position, has been preoccupied with issues such as domestic coalition building on an issue-by-issue basis and protracted negotiations to pass the budget, it faces a global landscape of global economic upheaval. The “three D’s” are important areas that will shape Japan’s economic future, even beyond the Ishiba administration.

Recently, Japan’s corporate profits reached historical highs between April and December 2024, and Japan’s economy grew somewhat in 2024, compared to a recession in Germany. However, the Japanese economy faces numerous structural challenges such as its demographic aging, and of course the prospect of tariffs by its largest export market, the United States. A sizable proportion of Japanese exports to China also end up in the United States and major parts of Japan’s supply chains in critical sectors such as automobiles rely on Mexico, so U.S. tariffs on China and Mexico will further affect Japan’s economy. Japanese companies that decoupled their supply chains to some degree from China into countries such as Thailand and Vietnam are facing the possibility of far higher tariffs on those countries than on Japan itself.

While they are policy areas that Ishiba has favored throughout his political career to get involved in and push for change, the importance of the three D’s of 1) Defense, 2) Disaster management, and 3) Demographics goes well beyond the current administration. These are critical areas in which the Japanese government can help drive Japan’s economic dynamism. However, especially given the Ishiba administration’s political weakness and his longstanding interest in these policy areas, now is an opportune time to begin actively shaping policy trajectories and strengthening public-private collaborations and international linkages in these areas.

The Three D’s for Japan’s Startup Ecosystem and Strategic Industrial Policy

The three D’s provide useful focal points for driving Japan’s startup ecosystem to its next level and for strategic industrial policy to strengthen Japan’s international technological competitiveness.

Japan’s startup ecosystem has matured rapidly over the past decade and is poised to grow as an important source of economic dynamism for Japan. While large Japanese firms have been constrained by their organizational structures and long-term employment obligations to adjust rapidly to a world of information-technology, the startup ecosystem provides opportunities to rapidly build out new competencies. The three D’s are all in areas in which new technologies, particularly utilizing information technology (IT), can have an impact. Startups can facilitate the commercialization of new technologies and new business models that large incumbent firms cannot easily accomplish on their own. The startup ecosystem also plays an important role in Japan by increasing human capital mobility, injecting much-needed fluidity into Japan’s hitherto rigid labor markets for top tier employees who had been historically locked into long-term employment arrangements at large elite firms.

As will be discussed in more depth later, government procurement in these areas can be an extremely useful policy tool to add to existing mechanisms of government support. If crafted well, government procurement can spark the growth of startups that can propel the entire ecosystem to the next level of development.

The second set of opportunities for the three D’s centers on strategic industrial policy. Increased defense spending is an opportunity to build stronger industrial capabilities, both in traditional defense industries as well as new areas such as space and other areas related to economic security. Disaster prevention and resilience as a technology and business strategy not only has the potential to directly mitigate the economic damage from natural disasters—of which Japan, sitting on multiple fault lines, faces no shortage of—but they can also accelerate the development and deployment of technologies that transform industries and the nature of work. And lastly, Japan’s extreme demographic shrinking and aging have already galvanized an array of private sector efforts, with government and political support, to address specific pain-points. In all three D’s, Japan’s solutions for upskilling low-skilled labor and automating tasks for which labor shortages are severe can position it as a global leader.

More details of the three D’s will follow below, after we turn to the potential of government procurement and contests. 

The Potential of Government Procurement and Contests

Governments have an array of tools at their disposal to promote industries and startup ecosystems, such as investment funds, grants, subsidies, tax breaks, and various other regulatory measures. In addition to these, there are two relatively under-appreciated policy tools that can be particularly useful for Japan’s three D’s: government procurement and contests.

Silicon Valley’s experience with these tools illustrate their potential impact. However, while the U.S. case was driven by national security concerns and the Department of Defense, the other two D’s of Disaster mitigation and Demographics can also benefit substantially by procurement and contests as well.

How Government Procurement Accelerated the IT Revolution and Made Silicon Valley

Historically, the U.S. government has strongly shaped the IT revolution that drove industrial transformations of the latter twentieth century and beyond. The advent of semiconductors was a critical driver of the revolution, radically increasing the processing power available to humanity; computational power, in dollar term improvements over manual calculations, increased by roughly 2 trillion times in the twentieth century—mostly after 1945.

It is well known that the U.S. government’s massive research and development funding, spearheaded by the Department of Defense, played a leading role in developing the semiconductor industry. During the Cold War, as both the United States and Soviet Union (USSR) rushed to develop and build up terrifyingly large arsenals of nuclear weapons, the United States faced a major crisis when the USSR’s Sputnik satellite initially beat the United States in the so-called space race. This precipitated massive U.S. government spending on scientific research and was a boon for research universities and university-industry relations. Most notably, Stanford University, which was a regional caliber institution facing serious financial pressure after World War II, was transformed into a leading research university by leaning heavily into government-funded research and emulating the industry-university collaboration model pioneered by MIT. Advances in solid state physics and other areas drove the development of the Silicon Valley economic ecosystem as successive waves of theoretical breakthroughs led to industry opportunities.

But just as importantly as funding research, the U.S. government acted as a lead buyer of cutting-edge products and services offered by new companies. The Department of Defense was willing to procure semiconductors and other advanced products it urgently needed even if the suppliers were new companies. Defense procurement enabled a wave of new companies such as Hewlett Packard and Varian Labs to grow from small spinouts by Stanford University researchers and graduates in the 1930s and 40s, to become major corporations. The explosive growth of the semiconductor industry, which defined the region as Silicon Valley, was also driven by defense procurement as the Cold War arms race in ballistic missiles and the space race led to an insatiable demand for ever higher preforming, lower priced semiconductor chips. Fairchild Semiconductor ignited the dynamism of the semiconductor industry, becoming a source of talent that went on to establish numerous other companies that became central to the Silicon Valley startup ecosystem such as Intel and Advanced Micro Devices (AMD), as well as venture capitalists Kleiner Perkins, and law firm Wilson Sonsini.

Stable and massive miliary demand enabled semiconductor companies to scale production and advance technologically, leading to dramatic price decreases; the initial prototype for the Apollo mission guidance computer fell from $1,000 to $20 by the time they entered production, and microchips for the Minuteman missiles dropped from $50 in 1962 to $2 by 1968.

The government still shapes important technological trajectories through procurement contracts in the contemporary era as well. SpaceX’s procurement contracts from NASA and the Department of Defense, when the company was still a startup with no track record of successful launches, enabled SpaceX to grow rapidly and become the dominant launch partner for the United States. By 2024, SpaceX singlehandedly accounted for over half of the world’s rocket launches (134 out of 259), and an astonishing 134 out of 158 launched by U.S. companies.

Government financial support programs for startups, such as those from the Defense Advanced Research Projects Agency (DARPA), most famous for creating the network that eventually became the Internet, are focused along a pipeline toward procurement. Each financial support measure, often utilizing larger government programs, is aimed at startups at different stages of researching, developing, and commercializing technologies. The Small Business Innovation Research (SBIR) program, which is part of the U.S. government’s Small Business Administration (SBA), issues grants for early-stage development of technology aimed at commercialization. The Small Business Technology Transfer (STTR) grants, also administered by the SBA, are for subsequent stage of support. Then, to help achieve procurement, programs such as the Transition and Commercialization Support Program (TCSP) within DARPA are fully focused on achieving procurement.

Contests and Competitions are Shaping Technological Trajectories

Contests sponsored by government entities are also an important and under-appreciated mechanism for shaping technological trajectories. In the history of U.S. technology development, DARPA sponsored some of the most influential contests. These contests bring together private companies, research labs, and university research groups competing to accomplish particular tasks. There is usually a cash prize for the winners, but the actual impact is not the prize money. It is in the galvanization of efforts that bring together researchers and entrepreneurs, a demonstration of the technological possibilities that can be achieved and providing a focal point for startups and venture capital investors to spark the growth of a new segment in the startup ecosystem.

The paradigmatic and arguably most impactful contest was the DARPA Grand Challenge of 2004 and 2005 that focused on autonomous driving. The contest not only led to the rapid technological advancement in autonomous driving, but also produced a group of researchers and entrepreneurs that went on to lead efforts at companies such as Google and a variety of autonomous driving startups. Venture capital firms became interested in autonomous driving once its technological potential was revealed, leading to a boom in startup investments. As breakthroughs in machine learning through neurological networks led to dramatic improvements in the performance of Artificial Intelligence, Silicon Valley’s combination of human capital, venture capital investments, and interest from various automotive and transportation firms accelerated the technological development of autonomous driving. As is the case with most new technological paradigms in the Silicon Valley ecosystem, billions of dollars are invested in a large number of companies that eventually led to consolidation, acquisitions, and the failure of many startups. However, as is usually the case, the best human capital resources end up with the winners, and from 2023 onward, Waymo (Google subsidiary) driverless vehicles have been taking paying customers and navigating the difficult streets of San Francisco without causing major accidents. As of early 2025, Waymo’s operations have begun to expand to various other regions, and other startups such as Nuro and Aurora Innovation are preparing commercial deployments of autonomous vehicles.

Thus, while the DARPA Grand Challenge on its own did not spawn the entire industry, it was a critical catalyst shaping technological trajectories by bringing together motivated individuals and sparking interest of the venture capital investment community and Silicon Valley ecosystem. Other important contests included technology development for facial recognition technology, crowdsourcing, robotics, and cybersecurity.

Japan’s Three D’s: Defense, Disaster Management, and Demographics

Defense

Japan’s commitment to substantially increase its defense budget over the next few years is an opportunity for strategic industrial policy and growing the startup ecosystem.

Japan has committed to doubling its defense expenditure from its historical 1 percent of GDP level to 2 percent of GDP by 2027. These are large dollar amounts, especially in an international comparative perspective. Japan’s defense budget in 2022 was approximately 5.4 trillion yen (approximately $41 billion in 2022 exchange rates). By 2027, the plan is for Japan to spend roughly 11 trillion yen. (Given exchange rate fluctuations, at 2025 dollar/yen exchange rate, this is roughly $74 billion—although if interest rates converge to some degree, the yen is likely to get stronger, making the dollar amount higher.)

At 2 percent spending of GDP, Japan’s $75-80 billion military budget would be larger than those of the UK ($69 billion), Germany ($61 billion), and France ($57 billion) military expenditures in 2023. To put it into context, the U.S. military budget exceeded $900 billion in 2023 and the world’s second and third largest military spenders, China and Russia, spent $300 billion and $110 billion, respectively. Japan’s spending at 2 percent of its GDP would be comparable to the world’s fourth largest military spender, India, with $84 billion at 2.4 percent of its GDP.

Japan’s plan to drastically increase defense spending is an opportunity to explore new technological areas rather than simply scaling up existing expenditures proportionately from existing suppliers. Even some small portion of the new funds allocated to new technological areas can have a major impact on these fields. In particular, for Japan’s startup ecosystem, the areas of defense tech, cybersecurity, and defense procurement are promising.

The Japanese government’s defense apparatus is beginning to focus on new technology development and innovation. The Acquisition, Technology, and Logistics Agency (ATLA) within Japan’s Ministry of Defense (MoD) announced the creation of a Defense Innovation Science & Technology Institute (DISTI) in October 2024. The mission of DISTI includes facilitating the development and deployment of breakthrough technologies for defense and rapidly utilizing outside talent.

Within Japan, linkages between government ministries, policy think tanks, and the startup ecosystem are just starting to be forged. MoD and METI, with the latter interested in industrial policy to develop and promote dual use technology and grow the startup ecosystem, began a joint study group in 2024 examining the use of startups to the defense industry. The group invited various parts of both ministries and startups as guest speakers with several meetings taking place. The connection between policy think tanks and the startup ecosystem is being proactively built through events like the Policy Entrepreneur’s Platform, that held a symposium in Tokyo in December 2024 to raise awareness of defense tech for Japan’s startup ecosystem.

While the larger bargains surrounding the U.S.-Japan alliance are up to the political leadership, at the operational level, the two countries’ governments are deepening their cooperation.

A memorandum of understanding was signed between ATLA and the U.S. Defense Innovation Unit (DIU) in 2024, with a “Forum on Defense Industrial Cooperation” between the two holding three meetings that year. So far, these agreements have not been scrapped by the Trump administration and joint activities have continued, despite Trump expressing skepticism about the overall security agreement with Japan. A visit by Defense Secretary Hegseth to Japan in March 2025 was designed to reassure Japan that defense collaborations would continue.

The DIU and ATLA also announced plans for a joint prize challenge focused on detecting and diagnosing biological threats, and judging the accuracy of information and countering disinformation. A pitch event, the “US-Japan Global Innovation Challenge Pitch Event,” was held in March 2025 in Tokyo, which included six startups in each category. Geodesic Capital, a venture capital firm based in Silicon Valley and Tokyo, founded by former U.S. ambassador John Roos, is one of the players involved in investing into startups engaging in Japan’s defense tech and building an ecosystem of defense-oriented Japanese startups.

U.S.-Japan cooperation is also beginning outside Japan, including the private sector and both governments. In March 2025, an event held in Silicon Valley focused on dual use technology was co-sponsored by the Japanese Chamber of Commerce of Northern California and the Consulate General of Japan in collaboration with the DIU. A fireside chat included representatives of both governments, and pitch sessions featuring both public and private sector participants; U.S. startups with dual use technologies such as autonomous flying robot firm Skyways, and Japanese companies including Innovation Core SEI, an R&D subsidiary of Sumitomo Electric, and Tokyo-based startup BitBiome. The event was held at the Japanese government-sponsored Japan Innovation Campus, located in Palo Alto, tasked with incubating promising Japanese startups and acting as a hub for linking Japan’s startup ecosystem with that of Silicon Valley.

There is still substantial learning and adjustment required for MoD to effectively procure from startups. As can be imagined, existing processes are optimized for reliable large Japanese corporate counterparts with longer time horizons and slower speeds of business and development. Yet there is enough interest on all sides to build upon, and even if the current steps are incremental, bringing attention to the issue can accelerate developments.

Disaster Management

Disaster management, which can be divided into components of preparation, mitigation, and recovery, are major concerns for Japan, with the archipelago subject to typhoons, earthquakes, (Tokyo sits on the intersection of three tectonic plates), tsunamis, and volcanoes. Add the recent trauma of man-made disasters such as the 2011 Fukushima nuclear accident, which was triggered by the fourth largest earthquake in recorded history, and a once-in-a-thousand-year tsunami. The estimated death toll from the entire Tohoku earthquake and tsunami disaster was approximately 20,000.

Even smaller-scale disasters capture national attention in Japan for prolonged periods. For example, an earthquake, tsunami, and fire that hit the Noto Peninsula in the North-facing coast of Japan on New Years Day of 2023 has been covered extensively in Japan’s media ever since. Coverage grew again when the region was hit by record rainfall and floods nine months later just as the areas had begun rebuilding, and news on New Years Day, for years to come, will likely feature stories of how residents are coping and recovering, keeping disasters at the forefront of Japan’s collective psyche.

Disaster preparation plans seem to be everywhere. In late March, a Japanese government panel publicized four levels of severity for ashfall from a possible eruption of Mount Fuji. Although Mount Fuji has not erupted for approximately 300 years, various scenarios were laid out, with economic damage estimated at 2.5 trillion yen ($17 billion) in the event that wind carries ash to central Tokyo. Companies such as the Tokyo Power Electric Company, telecom carrier NTT, Tokyo’s water works bureau, railways, and airlines contributed their contingency plans, with evacuation for greater Tokyo and years of cleanup. One of the lessons that Japan took away from the 2011 Tohoku disaster was that disaster preparation should be taken seriously.

“Bosai,” typically translated as disaster management, has long been one of Prime Minister Ishiba’s favorite policy issues. The Japanese term is actually somewhat broader than disaster management, literally translatable as both “disaster prevention” and “defense against disasters.” One of Ishiba’s early actions was to prepare for the establishment of a Disaster Management Agency as a pathway to create a ministry-level organization, the Ministry of Disaster Management. The process to create an agency is now underway, and Ishiba was able to earmark approximately 7.2 trillion yen ($47 billion) for “public security and safety,” much of which can be allocated to this purpose as part of a 13.9 trillion yen ($92 billion) supplemental budget for the fiscal year ending in March 2025.

Disaster prevention and mitigation are particularly compelling areas for industrial policy and startup ecosystem development. The very paradigm deployed for investments into disaster prevention and mitigation are conducive to investing into new technologies, forging new avenues of procurement, and contests, because they are not inherently about immediate efficiency of capital and assets deployed. For capital investments in disaster preparedness, the best-case scenario is to be well prepared, but to never have to use much of the assets because disaster does not hit. Therefore, the baseline comparison for the effectiveness to capital and asset utilization is not whether it could have been deployed more efficiently elsewhere—the whole point of disaster preparedness is that society is better off if they do not need to be called upon. Therefore, an analogue to dual-use technologies or assets, which refer to military and civilian, could be applied to disaster management as both useful “in case,” but also helpful during normal, non-disaster times.

For example, backup large-scale battery deployments as backup power to remote hamlets and mission-critical buildings such as hospitals and municipal buildings could be useful for balancing electricity demand and supply during peak times, generating small streams of revenue. Compared to standard diesel-powered backup generators that require routine maintenance and periodic fuel burning and replenishing and have zero revenue-generating potential during normal times, the new technologies could have useful “dual-use” properties.

WOTA, a startup created by University of Tokyo graduates, developed an advanced water filtration system for water recycling system that are small and portable. This makes the offerings useful for areas struck by disaster, but also in water systems for sparsely populated or isolated hamlets where municipal water infrastructure is becoming too costly to maintain. Government procurement for such systems as part of disaster preparation could spur further technological advancements that enable non-disaster utilization in various forms.

An annual Bosai tech startup conference began in 2021, with introductions from political leadership in the Cabinet Office responsible for disaster preparedness and a variety of startups involved in related areas. Startups featured in the first year included companies such as Spectee, which uses AI to visualize disasters such as floods and predict risks, Terra Labo, which develops specialized unmanned aerial drones and data platforms to assist with disaster recovery. In the 2022 conference, the Cabinet Office introduced the “Disaster Prevention x Technology Public-Private Collaboration Platform” that was launched in 2022, with approximately 200 local governments and 600 companies signed up to match the needs of municipalities and the private sector. The 2024 summit included a panel with the former vice governor of Ishikawa Prefecture, which was hit with a major earthquake and tsunami in 2024, with a representative from Deloitte Tohmatsu Venture Support, a subsidiary of the accounting firm Deloitte Tohmatsu focused on developing Japan’s startup ecosystem.

This is just the beginning of a useful focus on Bosai technology and the startup ecosystem.

Accidents and smaller disasters can also provide unexpected opportunities (while not minimizing solemn recognition of the human toll incurred) for technological development and deployment when political attention gravitates towards these events. For example, a recent unexpected sinkhole that swallowed a truck and its driver in Saitama Prefecture, most likely caused by a damaged underground sewer line, led to a multi-month rescue effort. News in Japan covered the rescue effort daily for the first couple weeks, and localities around the nation suddenly faced pressure from residents to conduct inspections of the integrity of the ground below paved roads. As a result, a company using radar to detect air pockets below the pavement accelerated its deployment of the technology by partnering with municipalities. In March, the Ministry of Land, Infrastructure, Transport and Tourism announced that it would conduct nationwide inspections of Japan’s 5,000 kilometers of sewer lines to determine their integrity. Given Japan’s labor shortages, new technological solutions can play an important role.

In February and March of 2025, record wildfires swept through the Northern and Western areas of Japan. A fire in Iwate Prefecture swept along by strong winds and unusually dry conditions burned approximately 7,000 acres in Ofunato City, about one tenth of the land in the city, leading to evacuations of over 4,500 people and the destruction of numerous buildings. The Ofunato fire began in February, but even as it was finally brought under control, wildfires broke out in Ehime, Okayama, and Miyazaki prefectures in March. Potential technological solutions are not only offered by startups, but by incumbent large firms as well. Construction equipment company Komatsu displayed a future vision video clip at the New Japan Summit in Tokyo in November 2024 that included a heat-shielded bulldozer typically deployed in steel mills and other extremely high heat environments, fitted with remote operation capabilities, combating forest fires by rapidly digging fire break trenches as a raging wildfire approached. While this technology is not fully developed yet, their concrete future vision can animate policymakers in high-risk areas who may support such capabilities. A different Japanese company is also developing non-toxic fire suppressant chemicals, since existing pink flame retardants, as are used in California, are known to be highly toxic.

A major point in these domestic Japanese technology deployment for disaster prevention and mitigation is that the challenges are not uniquely Japanese; there are major possibilities for Japanese solutions—whether by Japanese companies or non-Japanese companies using Japan as a platform—to have a positive impact elsewhere in the world. 

Demographics (and regional economic development)

Japan’s extreme demographics of an aging and shrinking population, combined with depopulation of rural areas, is one of the country’s most serious challenges in the coming decades. For example, the already mostly rural Akita Prefecture is projected to lose 42 percent of its population by 2050, with 40 to 50 percent of the remaining population predicted to be over the age of sixty-five. Here too, the deep challenges facing Japan present potential areas of opportunity for Japan’s domestic solutions to address similar challenges elsewhere. And just like in other areas, government procurement and contests can be powerful policy tools.

In a wide variety of sectors, ranging from agriculture to transportation, construction, healthcare, eldercare, and beyond, Japan faces deep labor shortages. These labor shortages are catalyzing in a wide range of private sector efforts, mostly with strong government support, to address various facets of the challenges. Various technologies that replace people (automation, artificial intelligence), as well as those that enable up-skilling (intelligence augmentation), with a focus on resolving pain points from aging demographics can be grouped under the label “demographic tech.”

Startup and business pitch competitions can bring together select governors and municipal leaders who are particularly animated by the prospect of working with startups and new technologies by incumbent firms. These efforts can also fit into regional economic revitalization strategies as well—areas that typically attract substantial budget allocations to localities from the central government.

There are strong political linkages between demographic tech and regional economic growth strategies. Especially as someone whose political home district is Tottori Prefecture, the least populated of Japan’s prefectures, one of Ishiba’s policy interests is to revitalize regional economies.¹ In his public statements, he asserts that the nation’s overall economic growth cannot happen without the growth of regional economies. In small groups of government officials, he has been known to makes serious inquiries into why regional economies are not growing and why metropolitan areas, particularly Tokyo, continue to attract more people and economic activity while regional areas face accelerating depopulation. Japanese political leaders have long proposed regional economic revitalization as a policy platform, often seemingly driven by the electoral logic of promising and delivering redistribution to regional areas in exchange for dependable votes that constitute a core constituency for the Liberal Democratic Party (LDP). Ishiba’s interests seem to go beyond lip service to gather votes from regional and rural voters. Unfortunately, there is no panacea that can realistically stem or reverse the flow of economic activity from regional areas to urban areas. Still, demographic tech can help.

One ingredient for regional economic growth is to raise the productivity of working-age people. Transforming the nature of work to increase employment opportunities, raising incomes, reducing unpaid work in eldercare, increasing the efficiency of healthcare management and delivery, and other aspects of depopulating regions are all areas where demographic technologies can be efficiently implemented. Alleviating the wide range of pain points, such as communications, mobility, societal infrastructure for daily needs, and healthcare, are all part of the agenda. In many of these areas, local governments at the mayor level, as well as the broader prefecture level, all have degrees of local autonomy over government spending and programs. Contests and events that bring together particularly motivated local political leaders and municipal governments with startups and large firms offering solutions can be useful.

A Virtuous Cycle of Change, Success, and Scaling

At some point, Ishiba will leave office, but this should not mean that the three D’s will become less important. Even in a post-Ishiba Japan, the three D’s can be a useful framing to focus the nation’s efforts. Defense innovation, demographic change, and disaster management are evergreen issues that need serious policy work, public-private collaborations, and market dynamics that can be shaped by the government. Political leaders engaged in this work to implement solutions could spark a virtuous cycle of change. The following political, economic, and technological mechanism of change that sparks a virtuous cycle of development is entirely plausible. First, some pioneering political leaders decide to adopt a particular solution in their jurisdictions and experience positive results. They enjoy electoral benefits from their voters and get reelected. During the process, they may have had to battle with their local administrative government apparatus whose employees were averse to change, considering something might go wrong. While local government employees may be worried about possible increased workloads from trying new things and taking blame if things go badly, the political leaders can step in by assuring them that they will take responsibility—unless the government employees actively work to slowdown or derail the implementation of new solutions. By committing political capital, local political leadership could push through the changes. Once that happens, the benefits of startups and technological solutions can translate into political benefits.

If one set of committed political leaders demonstrates how efforts to deploy these solutions can lead to more votes, other political leaders who may not have been as interested in the areas of demographic technologies would take note. Seeking electoral benefits, they would push hard to implement similar, if not the same, solutions. The political logic of adopting technological solutions would spark economic dynamics of increasing scale. With demand from multiple municipalities demonstrating potential for cultivating massive demand nationwide, private sector actors would attract greater investments into developing, deploying, and improving the solutions. Startups would compete against established companies, and some established companies would invest in, partner with, and acquire some of the promising startups. Venture capitalists taking note would invest in various companies, and new entrepreneurs would enter these areas, accelerating the development of demographic tech-related areas in the startup ecosystem.

With this cycle, tangible economic benefits to localities would include not only the direct provision of services and improvement in people’s lives, but also raise income levels by removing substantial time and effort currently used for non-market eldercare and healthcare activities.

As the level of severity of aging demographics hits other places outside Japan, the solutions developed and implemented within Japan can scale abroad.

Conclusion

Japan’s three D’s of Defense, Disaster management, and Demographics not only capture Ishiba’s favorite policy areas, but they are useful areas to focus efforts to drive Japan’s economic dynamism and the next phase of startup ecosystem development. The three D’s are a useful framing for Japan’s economic cooperation initiatives, as well as industrial policy efforts, where serious challenges facing Japan can be translated into international competitiveness.

The next step to create effective support for the three D’s are for the Japanese government to take steps to enable government procurement in these areas and to facilitate contests. These are often underappreciated tools for constructive industrial policy, which can accelerate innovation, shape technological trajectories, and foster the development of Japan’s startup ecosystem. Defense tech is emerging as an area of U.S.-Japan collaboration and cooperation, so the focus should be on identifying processes of government procurement that offer greater flexibility than today’s processes. The focal point for disaster management and demographics is to bring governors and mayors who have a fair amount of discretion over budget expenditures together with startups through contests. Startup ecosystem support actors, such as accelerators, incubators, media focused on startups, and local governments themselves, can facilitate public-private partnerships in the form of contests with think tanks and policy actors; the same ecosystem players can share know-how on how to best create and implement government procurement procedures suitable for startups.