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It's little wonder the country is seen by many as being at the frontiers of modern technology.

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But underneath the surface lies a Japan that is also fiercely traditional.

And in some places, that's holding back the economy.

Here's why Japan is falling behind.

Japan used to be the third largest economy in the world, but last year, it lost that title to Germany.

For decades, the country has grappled with slow economic growth and productivity.

Part of that reason is their dependence on older technology.

Hideki Arami started working for his father at this hanko, or stamp shop, in 1992, and took over the business 14 years later.

This is a hanko, and it's often used in Japan in place of a signature.

For example, on contracts or invoices or other official documents.

For centuries, the stamps have been required to prove one's identity.

Even today, they're often used in everyday situations like receiving a parcel or opening a bank account.

[Speaking in Japanese] For important things, I think it is better to use hanko even if the process takes longer and can be troublesome.

The scary thing about a digital world is that the world will get more cyber criminals.

However, these types of practices can make businesses less productive.

Japan's productivity is only about two-thirds of the U.S. level, about three-quarters of the level in Germany.

So it's quite low and has stayed that way for many years.

There's always a difficulty striking that balance between the most efficient, the most productive way of doing things, and the traditional and widely loved way of doing things.

The result? A country rich in culture, but resistant to change.

There's this old joke, how do you know that somebody is working for a Japanese company?

Well, when you look at the name card, it still has the fax number.

Jesper Kohl, an economist who has lived in Japan since 1986, says it's more than just the technology that's weighing Japan down.

The Japanese have become so pedantic, have become so stickless for precision, that you know, if the hanko, if the seal touches the line where it's on, then it's invalid and you have to redo the entire form all over again.

And that's ultimately what's so beautiful and so infuriating about the way Japan works, because it is so process-oriented.

In the years since the pandemic, the government has made it easier in some cases to go without hanko, perhaps a written signature or no signature at all.

But still, on official documents that we sign, for example, here at the Wall Street Journal, Dow Jones Japan's office, we still use hanko quite frequently.

And hanko is not the only old technology still used in Japan.

In some offices, people still use the fax machine instead of emails to send important documents.

Japan, you know, was very, very good at being an early adopter.

Because, you know, if you look at the 1970s, if you look at the early 1980s, you know, obviously you came up with the Walkman, which completely revolutionized, right? The way mankind, you know, experiences music, right?

But, you know, sort of from the analog to the digital, that transition never really happened.

In some ways, Japan has not changed much since the 1990s.

Many employees still work for one company for most of their careers.

Wages across Japan have stayed more or less the same for 30 years, although they are beginning to rise this year.

Many Japanese work long hours, especially in certain workplaces, such as elite government ministries.

Yet productivity is low.

Japan is incredibly labor intensive.

Do yourself a favor and go into a Japanese Starbucks and where in the United States, there is two people, you know, taking the order and doing the cafe latte with the extra shot, right?

Here in Japan, there's at least five people.

It's one of the simplest concepts in the world, right?

Because you just take output divided by the number of input, right?

And so obviously, you know, fewer people is better.

Japan's rigid work culture still often prioritizes conformity over efficiency.

But that may be about to change spearheaded by Japan's digital minister.

He wants the country to move on from obsolete technologies.

For some government procedures today, you're still required to submit application in floppy disk.

Floppy disk, yeah.

So I had to declare war on floppy disk in Japan.

Younger Japanese are more willing to rewrite the rules, work reasonable hours and take risks.

They are also more willing to adopt new technologies.

So there is a big generational element.

But even with the digital alternative, it's the pedantism of the form over content.

That's why Japan has great difficulty in being an early adopter or in adopting, you know, modern technology, digital technology, in a fast and speedy way.

Japan has always marched to the beat of its own drum, embracing modern technology but retaining its own culture and charms.

But for Japan to lift its economy, it may need to chisel away some parts of its history to keep growing in the future.