The cluster plan

In the early 2000s, Japan had still failed to fully recover from the economic doldrums. Unemployment rates had surpassed the US jobless by 1999 (Porter et al. 2000). In 2003, new business creation remained paltry. A 2003 study, the Gem 2003 Executive Report (2003) indicated that Japan was less entrepreneurial – on a variety of firm and individual level measures – than all of the advanced industrial countries, save Russia. Of the world's forty major economies, most were at three entrepreneurship levels (high, moderate, low) based on measures including new firm start-ups, innovative output, and the like. Highly entrepreneurial countries included Chile, Korea, and New Zealand. Most countries were moderately innovative, such as Canada, Finland, Singapore, the UK, and the USA. The least entrepreneurial countries were France, Japan, and Russia. Japan failed at both individual- and firm-level innovation and entrepreneurship, making it among the least entrepreneurial countries in the world (see figure 4.1 and table 4.1). (See also appendix 1: in the Gem 2003 Executive Report 2003; Porter 1990, 1998; Porter et al. 2000.)

The Ministry of Economy, Trade and Industry (METI) is spearheading the Japanese government's current efforts to fix its innovative and entrepreneurial problems. In 2001, METI launched its “Cluster Initiative,” culminating in 2002 in a package of policies called the “Cluster Plan.” The “Plan” has become the most ambitious and comprehensive METI plan since its 1960s bet on heavy industry (Inoue 2003).