What this comes down to is simply economics and incentives, and how those economics and incentives are changed within and from outside by other forces. That is

What this comes down to is simply economics and incentives, and how those economics and incentives are changed within and from outside by other forces. That is it. even the concept of "Galapagos effect"is easily explained by government created market distortions. 1. Japan was a closed country for~250 years, until the US "Gunboats of democracy" opened up Japan under Commodore Perry threatening to flatten Japanese cities. Prior to that there was restricted trade/trading posts with the Dutch, Portuguese, and then Germans. 2. With the US military threats, Japan side the treaty with the US and realized pandora's box was open, they say the Western operations, war and colonies and said, time to get moving. Thus, German and Prussia in particular suited Japan well culturally and in many aspects - so this tight tie up, creating or promoting trading companies or families (Zaibatsu) & forming their own colonies, China, Taiwan, Korea, etc. 3. There are many other factors within the run up to WWII and after but Japan was a major innovator, especially after WWII as central control imploded - think Honda, Sony, etc. the issue is that as PCs came into play Japan was highly centralized again & there were numerous issues of lacking vc or risk capital, social risks, financial risk, labor mobility ,etc. And even today most software devs cannot hardcore sell - imagine 1970, 1980, 1990s. 4. The native ERP market was highly customized (mostly SAP) using SIer's and they wanted it specific to their unique workflows - the old 80% of what I want is not enough - funny enough that is a competitive advantage again. 5. At same time, most of foreign program work was either L10N or integration ,sintalls, support/maintenance for the foreign software vendor - Oracle, SAP, MSFT, etc. 6. Btw the time we got to 1990s, Japan had many innovations in software, BUT this ran into a wall - it had a horrible startup ecosystem and so it was occupied by ossified rent-seeking incumbents like Sony, who fought their own engineers. Sony was the original Apple, Akio Morita the original Steve Jobs, including taking the most important case, Sony vs Universal Studios to the US supreme court and winning. Ipod, imac, etc. are simply the 2.0 or 3.0 version of the sony innovation products. I have interviewed a dozen of these engineers and managers going back to 2006. And also other interviews state side of how products like Slingbox/Slingmedia were just sony products and so on. 7. At this point the social risk, the financial risk, the career risks and labor mobility of joining a startup or high grow firm in nascent industry are greatly reduced, more programming resources than ever, smart hard workers, it is just the opportunities -- opportunities that were artificially restricted by ossified rent seeking incumbents using regulator capture.