The Paradox Of A Service-Oriented Economy For Energy Efficiency: The Vicious Impact Of Network Externality Contrasted By Japan And China | Hiroyasu Horio & Chihiro Watanabe

The global environmental consequences of CO2 discharge resulting from energy use are causing mounting concern regarding the sustainability of our future development. This is not only the case in industrialized countries but also in industrializing countries, particularly China and India, pursuing sustainable development. Historically, Japan has shifted its industrial structure from primary industry to manufacturing industry and to service industry while endeavoring to improve energy efficiency in primary industry and manufacturing industry. Thus, Japan has been able to achieve notable energy efficiency improvement and, thereby, despite many handicaps, maintain sustainable economic development. However, if we carefully examine Japan’s energy consumption structure by sector, we note that contrary to its strategic goal of realizing reduced energy dependency, the energy consumption inducement in the service industry which Japan has been targeting has been dramatically increasing. Indeed, contrary to primary and secondary industries, Japan’s unit energy consumption inducement in the service industry is significantly higher than that of China. This paradox can be attributed to the indigenous propensity of the service industry to be active in inter-sector technology spillover. This paper, on the basis of a comparative empirical analysis of technology spillover dynamism in the service industry of Japan and China over the last decade by means of input-output analysis, attempts to demonstrate the foregoing hypothetical view.