Personally, I agree, but on the other hand, Hideo Kojima has been quoted as saying that Japan has lost to western developers.
And here's a translation of the original article: http://translate.google.com/translate?hl=en&sl=ja&tl...
He seems to think it's a technological and budgetary issue, not a Japanese-ness issue.
"The engineering population in Japan may be in jeopardy. We should first review our education system here in Japan."