A recent JETRO survey shows that a majority of Japanese firms planning to build new manufacturing operations in Europe consider central and eastern parts of the region as candidate sites, Masakazu Tachikawa, director of the Europe Division of JETRO's Overseas Research Department, told the July 19 symposium.

The accession of eight former Soviet bloc nations into the European Union in 2004 has contributed to improved business infrastructure in those countries, where low-cost and highly educated labor remains an advantage over the so-called old EU members, Tachikawa said.

According to Tachikawa, the annual volume of foreign direct investment in Central and Eastern Europe, which stood at around 10 billion euros in the mid-1990s, began to pick up in 1997 as the process for the countries' entry into the EU accelerated, and topped 30 billion euros in 2004 and 2005.

Investment by Japanese firms in the region has also increased since the late 1990s and, despite ups and downs over the years, topped 50 billion yen in 2003, he said.

As of late 2005, the Czech Republic was the fourth-largest destination of Japanese manufacturing firms in Europe -- after Britain, Germany and France -- and two other Central and East European nations -- Hungary and Poland -- were among the top 10 countries, Tachikawa told the audience.

The number of local subsidiaries of Japanese manufacturers in the region has more than doubled during the past five years, he added.

In the 15 years since the end of communist rule, the region has become a major manufacturing base for European, Japanese and other Asian automakers, including Volkswagen, Renault, Fiat, Toyota, Suzuki, Hyundai and Daewoo.

Poland hosts production facilities of European, American and Asian manufacturers of household electrical goods such as refrigerators, washing machines and air conditioners. The Czech Republic has become a key production base for the world's computer industry while Hungary has attracted large amounts of investment from information technology firms, Tachikawa said.

In the run-up to their EU accession in 2004, the Central and East European countries offered incentives to foreign manufacturers to make them more attractive than their counterparts in the west, including establishment of special economic zones, reduction/exemption of corporate tax, and lower tariffs on imports of production facilities, he said.

The foreign manufacturers in turn were attracted by the low-cost, highly educated labor in the region, where wage levels were one-fifth to one-sixth of Western Europe, Tachikawa said.

Under the association agreements signed with the prospective members, the EU basically eliminated tariffs to imports from those countries in 1997, giving investors in the region tariff-free access to the EU market, he added.

How has the investment environment changed since their accession to the EU? As one of the positive changes, Tachikawa pointed to improved logistics efficiency due to simplified customs procedures, including border checks on cargo, between the new members and the rest of the union.

He also cited greater transparency of legal systems due to harmonization to EU standards, as well as infrastructure improvement with the use of EU funds for less developed members.

On the other hand, the accession has obliged the Central and East European countries to either scale down or abolish the investment incentives to conform to the framework of EU competition policy, Tachikawa said. For example, they have had to discontinue the exemption of customs tariffs on imports of production equipment.

Conformity to EU standards resulted in tightened regulations, including those on the environment, he said.

Tachikawa also pointed to the sharp rise in personnel costs in the Central and East European countries, with some estimates showing that wage levels in the region have doubled in the 10 years since 1995.

A JETRO survey shows that labor costs in Budapest, which were one-seventh of those in Dusseldorf, Germany, three years ago, have increased to one-fourth the level, he said. But the figures also show that the new EU members still retain a steep labor cost advantage over the old members, he added.

The rising costs put the new EU members at a comparative disadvantage against non-EU members in the area such as Romania and Ukraine, which has prompted them to shift the target of investment promotion from labor-intensive sectors to knowledge-intensive sectors such as service industries and research and development, Tachikawa said.

Foreign investment in the service sector is in fact on the rise, including the establishment of a shared service center of Philips in Poland, a British Telecom call center in Hungary and regional headquarters of Hewlett-Packard in the Czech Republic, he said.

Investment in automobile sectors has continued after the accession, including the recent new projects by Kia and PSA Peugeot Citroen in Slovakia and Hyundai in the Czech Republic.

Tachikawa also pointed to a series of investments by liquid crystal display TV makers and component manufacturers, many of them in the Czech Republic and Poland.

While labor costs in the Central and East European countries are higher than in China, they still retain an advantage in terms of their access to the European market because many of the products manufactured in the region are for consumption in Europe, Tachikawa said.

Overall, Tachikawa said Central and Eastern Europe will remain a promising region. The lingering huge economic gap with the old EU members to the west means that they have the potential for continued high growth, he said. Average growth rate in the region between 2005 and 2007 is estimated to be in the 4 percent range, compared to 2 percent in Western Europe, he added.

The most remarkable example is Estonia, which created an institutional framework and built a much more flexible labor market, Steinherr noted.

Steinherr also lauded the new member countries for not imitating old Europe in trying to protect national industries, citing the example of Hungary, which decided to allow foreign institutions to take over its financial business as a way to quickly improve efficiency in the sector.

Such reforms would not have been imaginable in old EU members, he said, adding that Hungary and others that followed "got a reasonable, well-performing financial sector much quicker than if they had tried on their own."

What has changed in the EU as a whole as a result of the 2004 enlargement?

Belka noted that the economic impact was limited because despite the addition of countries with a combined population of 75 million, their combined gross domestic product accounted for only 5 percent of the total GDP of the EU.

But he emphasized that the enlargement has redefined the EU's foreign policy agenda.

"The eastward enlargement made countries like Russia, Belarus, Ukraine, and Turkey immediate neighbors of the European Union not just distant neighbors with whom we could discuss all sorts of partnership relations, but immediate neighbors with which we share borders," Belka said.

He pointed out that the Orange Revolution in Ukraine took place only a few months after the enlargement. "I think it was the Polish accession that prompted immediate EU involvement in an attempt to solve the crisis in Kiev," he said.

The second consequence of enlargement probably more important from an economic viewpoint is the change in policy discourse, Belka told the audience.

"Suddenly the accession of 10 rather tiny economies with divergent recent economic histories prompted discussion on issues like flat tax, pension reforms, labor market flexibility and so on. .EE We became more liberal in a sense," he said.

One of the major topics among the speakers was the so-called "enlargement fatigue" that has spread across Europe following the historic expansion.

Michael Reiterer, charge d'affaires of the delegation of the European Commission to Japan, said it is extremely important to recognize the strategic value of the process of enlargement "especially in the face of recent indications of 'enlargement fatigue' across Europe."

While he stressed that the enlargement that brought the 10 new members was a "success," resulting in positive economic effects to new and old EU members, Reiterer said it was "time to build a new consensus on the process of enlargement, which should enhance the EU's self-interest in extending the zone of peace and prosperity in Europe while at the same time ensuring the EU's capacity to function effectively."

He admitted that the EU "has become more cautious about taking on new commitments" for accession, although he emphasized that it is "absolutely willing to honor its existing commitments already in process" for Bulgaria and Romania.

The 2005 Accession Treaty says the two countries will join the EU in January 2007, although the European Council may decide to postpone the accession for a year.

Despite the growing wariness toward accepting more new members, Reiterer said it would be "unwise" for the EU not to use enlargement as its "most effective policy tool" to promote transformation of the countries involved.

Belka said that the 2004 enlargement was a "success that nobody was really well prepared in Western Europe to consume and digest."

"Many politicians started thinking, 'Well, we have to do something, we have to appease our electorate and we have to say what are the limits of Europe," he said.

Belka said an agreement at a recent Council of Europe meeting Ethat the absorptive capacity of the EU and public opinion will be considered when making decisions on future enlargement Ewill in fact put some brakes on the process.

"But I'm not that pessimistic because Europeans have to digest the two shocks that they have gone through recently the introduction of the euro and the enlargement."

Belka said that the new member countries themselves are also hit by "fatigue" following their accession a fatigue from reforms.

"We are tired, too. We have achieved a lot in 15 years and people think that the stakes are now lower in politics, that the political consensus that was behind the reform process throughout the whole transition period is now broken.

"For populist politicians it's a bonanza. You can say whatever you want, they're not going to kick us out of the EU," he said, suggesting that such sentiments are behind the results of recent elections in some new member states that marked setbacks for reformists.

But Belka said he believes that it is a temporary hiccup "because the positive effects of the (EU) membership will dominate, overwhelm fears and will civilize the most populist trends."

Japan should embrace transition to a postindustrial economy, which will require the nation to review its traditional way of doing business as well as its education system, professors from U.S. business schools told a recent symposium in Tokyo.

All advanced industrialized economies, rather than resist the trend, should recognize that their future is not in traditional manufacturing, they said. Meanwhile, emerging economies like China and India are not content with making low-end, labor-intensive products but are investing heavily in human capital to move up the value chain, they added.

Six professors from business schools in the United States took part in the July 14 symposium at Keidanren Kaikan, organized by Keizai Koho Center under the theme, "Management and innovation that increase corporate value."

Edward Leamer, a professor at the UCLA Anderson School of Management, said the transition from an industrial economy powered by manufacturing sectors to a postindustrial economy started in the U.S. in the 1970s, when the share of manufacturing in total American jobs began to sharply decline. Today, the share is down to about 11 percent.

In the U.S., contribution to GDP of the sectors that represented the traditional work of high-school graduates -- manufacturing as well as agriculture, forestry, fisheries, transportation and warehousing, etc. -- fell from roughly 40 percent right after the end of World War II to about 15 percent in 2002, he said.

The decline, he noted, has been offset by the growth of postindustrial, intellectual service activities like finance, insurance, real estate, rental and leasing, education services, health care, information and so forth.

"So we're not a society that builds things any more," Leamer said. The question, he added, is how to change business organizations and societies from a focus on manufacturing "as a source of wealth creation."

Leamer emphasized that the trend is not just limited to the U.S. but common to most other OECD economies -- albeit to widely varying degrees -- as measured by the share of manufacturing in total employment.

Unlike the U.S., the share of manufacturing in total jobs in Japan was relatively stable during the 1970s and '80s but began steadily declining in the early 1990s, Leamer pointed out.

"That's the point where Japan started to enter the postindustrial period. . . . That's the point from which Japan has to solve a new economic problem" of how to create value in the intellectual services, he observed.

So far, the U.S. is the only country that appears to have made a successful transition to a postindustrial economy, Leamer said, citing labor productivity data as evidence.

During the period between the end of World War II and 1970 -- when employment in manufacturing was rising -- U.S. productivity or business output per hour was growing by 3.1 percent a year on average, he said.

Between 1970 and 1998, the annual productivity growth slowed to 1.7 percent because the transition to a postindustrial economy required difficult business, educational and social adjustments that took time, he said.

But U.S. productivity has since started picking up again and is growing at 3.4 percent a year -- due largely to progress in information technology that pushed up the productivity of workers in intellectual service activities, he noted.

Leamer said one key feature of a postindustrial society is that it can create much greater income inequality among workers than during the 20th century industrialization, which tended to eliminate the gap between individuals.

That may partly be illustrated by the nature of a key tool in the postindustrial economy -- personal computers -- he said, as he posed a question, "Is a personal computer like a forklift or a microphone?

"A forklift allows you and me -- no matter how strong you are -- to lift the same amount with a little bit of training, so we get paid the same, because we're equally good at operating the equipment," he said. "That's the metaphor for innovations in an industrial age. Most of the equipment in manufacturing had that character -- it adds to productivity but tends to eliminate differences between individuals."

On the other hand, a microphone does not help a man sing well if he cannot sing, Leamer said. But if the equipment is given to a talented singer, it could help the person record CDs and make a fortune, he added.

"It does not matter who drives the forklift, but it matters a lot who sings on the microphone, and it matters greatly who types on a computer keyboard. . . . The personal computer, which enhances everyone's productivity, has a tremendous productivity improvement effect on the most talented individuals.

"The 20th century was a period of economic improvements at every level of income distribution, but the postindustrial economies of the 21st century will inevitably have much greater income inequality," he said.

What does all this mean for Japan? Leamer argued that Japan should recognize that its future growth is not in manufacturing -- although Japan will retain important manufacturing sectors in its global operations.

"You've got to start to create value in the postindustrial intellectual service activities. And as long as you cling to that myth that the 1990s was a macroeconomic disturbance, and now that macroeconomic policy is back to normal, that you're going to get growth again, that's denying the fact that fundamental adjustments have to be made," he said.

Companies need to review the traditional way of doing business, he said.

"The hierarchical command-and-control enterprises work well in manufacturing, but not in postindustrial intellectual activities," he said. "There's a difference between Detroit and Hollywood. Detroit is a top-down, hierarchical command-and-control type of a community. Hollywood, where they create content, is a bottom-up relationship-based entrepreneur-type community."

And most importantly, Leamer said, Japan and the U.S. need to recognize that the sources of wealth in the postindustrial age "are not the factories and equipment that they used to be, but they are human problem-solving abilities." Therefore, he said, Japan will need an education system that shifts away from rote-learning to creation of graduates who can solve problems.

Roger Noll, a professor at the Stanford Graduate School of Business, pointed out that emerging economies like China and India have invested heavily in building human capital as a key component of their development strategy to move up the value chain.

"They see that education, research and development, and technology can be just as important for them as it's been for (the advanced industrialized economies)," Noll told the symposium.

These countries have a "very long-term and farsighted" development policy of building higher education institutions "to make them world class in educating students and in doing basic research, creating national research centers that are oriented toward more practical applications of new knowledge in science and technology to business development," he said.

"China is not just sitting on, making low-end manufacturing products," he said, although labor-intensive manufacturing operations will continue to account for a large portion of employment growth in the country.

Noll said it is remarkable that growth in India, which has in fact not oriented itself much to exports of manufactured goods, is concentrated on businesses associated with medium to high-technology inputs.

"The Indian Institutes of Technology are world-class engineering education institutions. . . . (The U.S.) imports their graduates to run our Silicon Valley companies," he said, adding that it is not surprising that Indian cities like Bangalore keep the IIT graduates for their rapid growth in information technology sectors.

"The newly industrializing countries are not only going to be producing textiles and shoes. They are going to be producing everything, and they are going to have a major say in almost all manufacturing sectors" because they see that as part of their overall economic strategy, Noll said. "They have the beginnings of human capital to nurture and they are expanding and developing it by major investments in research and development and higher education."

This, he said, does not mean that advanced industrialized economies should pack their bags and let the emerging economies take over. While the industrialized countries should not resist the transition to a postindustrial period, they need to "make certain that aspects of what we are about that got us to where we are -- our innovativeness, knowledge, flexibility and creativity -- are nourished and supported so that they do not wither away," he noted.

Heather Haveman, a professor at the Columbia University Graduate School of Business, meanwhile expressed doubts that Japanese firms will ever converge on the North American model of corporate governance, employment relations, technological standards and values despite the growing pressures of globalization.

Globalization will certainly increase competitive pressures on Japanese firms, she said. "You have to run fast (to remain competitive). . . . You have to innovate more, develop better products and services, and improve your production and distribution systems."

But Haveman said that there is another type of pressure from globalization -- to conform to a single set of standards to fit the environment in which one's exchange partner companies, many of them foreign, operate -- that may elude Japanese firms.

This is partly because Japan's international trade network is simultaneously global and regional, she said. How can the North American model be the one on which Japanese firms will converge when Asia accounts for half of their global trade, she asked.

Another reason is that historically, the direction of influence between Japan and the U.S. in terms of corporate management has frequently changed -- depending on the relative economic performance of one over the other, Haveman said.

When Japanese firms outperformed their American counterparts during the 1980s, the Americans imitated the Japanese model -- as represented by such concepts as quality circles, just-in-time inventory control and a cooperative union-management relationship, she said. Then the direction of influence again changed when American firms started to outperform the Japanese during the 1990s, she added.

　携帯電話でTVを見るというと、ワンセグとどこが違うのかと思うだろう。実際、見た目ではさほど違いはない。だが、ワンセグが当面は無料で地上波デジタルと同じ内容を送信する、TV放送の携帯電話版であるのに対し、MediaFLOは当初から課金ベースであり、多チャネルでダウンロードが可能であるなど、CATVやCSに近いサービスを目指している。

　米国ではQualcommが事業主体となって、2006年10月からのサービス開始を目指している。周波数は716～722MHzをオークションにて入手済みであり、Qualcommが各地に放送用鉄塔を立て、最大50KWという大電力で放送する。鉄塔がTV放送用並みに高いこと、電波が大出力であることから米国全土を網羅するのに300から400基の基地局を用意すればよいという。

　サービスコンテンツやアプリケーションについては2005年7月にFLO Forumを設立して、標準化を進めている。FLO Forumには2006年6月時点で46社が加入しており、メンバーにはKDDI、京セラ、シャープ、三洋電機といった日本企業も参画している。小菅氏は「標準化によって日本企業の海外進出をうながし、（チップセットの）ロット数を増やすことで低価格化を実現したい」と述べた。

　日本では、クアルコムジャパンとKDDI、ソフトバンクなどが事業化に向けた企画会社を設立している。しかし、周波数が割り当てられるのかどうかといった点から、未知数の部分は大きい。

　TV動画配信という点で、どうしてもMediaFLOはワンセグのライバルとみなされがちだ。これに対し、2007年初頭にリリースが予定されている第2世代のFLOチップセットでは、ワンセグにも対応する。ワンチップでMediaFLOとワンセグを統合することでコストダウンを実現し、両者の共存と棲み分けを目指すという。また、小菅氏は既存のキャリアやコンテンツプロバイダなどの枠組みを壊さず、ユーザーの選択肢を広げるという方向をとっていることを強調した。