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No.22
No.22 ,Economy  May 18, 2014

The 21st Century Public Policy Institute Research Project
Effective Measures to Halt Birthrate Decline
-Responding to the declining birthrate and aging society is Japan’s mission in world history -

KOMINE Takao, professor at the Graduate School of Regional Policy Design at Hosei University; Project Leader at the 21st Century Public Policy Institute

The future is filled with uncertainty and yet, amid this uncertainty, there is quite a high level of certainty regarding the population outlook. In this sense, the population can be said to represent a “certain future.” Any attempt to forecast the future of Japan’s society and economy through its population raises many serious issues, including “constraints on economic growth,” the “social security crisis” and “regional depopulation,” so much so that these issues can be collectively referred to as the “population crisis.” This population crisis is the “certain crisis” in the certain future. The causes of the certain crisis include the aging of the population and the decrease in the working-age population, but the real root of the problem lies in the declining birthrate. However, currently, despite government efforts to implement measure against birthrate decline,... [Read more]

No.21
No.21 ,Economy  Apr 21, 2014

Japan’s Response to the TPP in Question: Preventing a Slowdown of World Trade and Investment

URATA Shujiro, Professor, Waseda University / Faculty Fellow, RIETI

The Ministerial Meeting of the Trans-Pacific Partnership (TPP) negotiations, held on February 22-25, 2014 in Singapore, postponed a decision, having given up on reaching a general framework agreement. The failure of negotiations to come to an agreement follows a similar outcome from the Ministerial Meeting in December 2013. Negotiations are expected to continue, but the fact that no date has been set for the next round is among the reasons why the process seems to have stagnated. As it is, the negotiations quite possibly could lose momentum and begin drifting, much like the Doha Round of talks for multilateral trade liberalization under the World Trade Organization (WTO). Behind the abandonment of a general framework agreement were the disputes between developed nations such as the United States and emerging countries such as Malaysia and Vietnam. The disagreements included issues such as the protection of intellectual property rights, preferential treatment for state-owned enterprises, and environmental regulations. The greatest obstacle, however, was the conflict over tariffs between Japan and the United States, who, by far, have the largest economies of the 12 nations involved in the talks.... [Read more]

No.21
No.21 ,Economy  Apr 21, 2014

Make the Decision to Abolish Tariffs on Agricultural Products

KIMURA Fukunari Ph.D., Professor, Keio University

Negotiating the Trans-Pacific Strategic Economic Partnership Agreement (TPP) is not an easy task. Negotiations are even more difficult as the TPP now covers countries that have an inexperienced level of freedom and a new exposure to international rulemaking. The density of negotiations is extremely high. Japan, who joined talks later on in the process, participates in a meeting practically every week. The speed of these negotiations is also remarkably faster than those of ordinary free trade agreements (FTA). At present, topics with a large gap among the participating countries are reported to be: Tariffs, the protection of intellectual property rights, competition policies (over preferential treatment of state-owned companies), and the environment. In other areas, negotiations are coming close to an agreement. Given that tariffs, which are the crux of trade negotiations... [Read more]

No.20
No.20 ,Economy  Mar 27, 2014

Japan Center for Economic Research – Medium-Term Economic Forecast
A 19% Consumption Tax Will Turn the Primary Balance Positive
— Japan Will Fail on the Price Stability Target.
— Improve the export environment through the TPP.

Kuwahara Susumu, Principal Economist, JapanCenter for Economic Research

The economic outlook has been improving, but that does not mean that longstanding problems have been addressed. Challenges of fiscal consolidation and the ending of the deflationary economy remain incomplete. This report will examine what kind of scenarios Japan can design to achieve steady economic growth while focusing on achieving a steady fiscal situation on a priority basis, what issues need to be dealt with to achieve those scenarios, and the outlook of the Japanese economy to fiscal 2025. (Refer to the table.) The consumption tax rate will be raised to 8% in April 2014. However, even if the consumption tax rate is raised again to 10% in October 2015, it will not be nearly enough to reconstruct Japan’s fiscal situation. The central and local governments’ primary balance is likely to remain in deficit at around 3% of nominal gross domestic product (GDP).... [Read more]

No.20
No.20 ,Economy  Mar 27, 2014

Japan Will Find Its Way for Economic Resurgence through Abenolympics
— With an economic impact that will reach seven times larger than the existing forecast, the Japanese economy will continue to grow until 2020.

Takenaka Heizo, Professor, KeioUniversity

Tokyo will host the 2020 Summer Olympics and Paralympics. Since Tokyo was selected as the host city I have been using the term “Abenolympics.” This implies that Abenomics, the economic policy advocated by the Abe administration, is now bolstered by a tailwind, the Olympics. The Tokyo Metropolitan Government (TMG) estimates that the production-inducing effects of the Olympics will be 3 trillion yen over the next seven years. However, the actual effects are expected to be much larger than that. The Olympics are expected to bring about three economic effects: (1) the effect on construction and building work and other ordinary activities, (2) attraction power, and (3) saving face. A preliminary calculation (by the Institute for Urban Strategies, the Mori Memorial Foundation) shows that as long as appropriate policies are adopted, economic effects from... [Read more]

No.19
No.19 ,Economy  Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

FUKAO Kyoji, Director General, Institute of Economic Research, Hitotsubashi University

The rise in non-regular employment not only increases the number of individuals with wages fixed at a low level and widens income disparity, but it also stand in the way of economic growth. This is some empirical research that I participated in. When we compared contributions to production (degree of contribution) among regular employees and non-regular employees in the manufacturing industry, we found that productivity among non-regular employees was lower than the wage gap would suggest. In short, even though it is claimed that non-regular employees are generally hired and exploited for low wages, in fact, it is possible that corporations are paying non-regular employees wages above their productivity in order to hire workers that make it easy to shuffle personnel around.... [Read more]

No.19
No.19 ,Economy  Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

OHASHI Hiroshi, Professor, University of Tokyo

Q: What are the criteria for the government to rescue a corporation? A: When market failure is greater than failure by the governmentThere are pros and cons to the government rescue of TEPCO and JAL. It is time to explain the economics behind the permissible scope for public rescue of private corporations. There is mounting concern in Japan and abroad about the rights and wrongs of governments contributing to corporate turnarounds. Overseas, the turnaround of General Motors (GM), the U.S. corporation that was temporarily nationalized in the wake of the collapse of Lehman Brothers, has attracted attention. Recently, we have also seen rising concern about state-owned corporations in China and other emerging countries buying and selling Western corporations, or dumping exports. In Japan, opinion is divided about the measures taken to support the process of turning around JAL, which relisted on the stock market ... ... [Read more]

No.19
No.19 ,Economy  Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

TAKAHASHI Nobuaki, Professor, Ritsumeikan University

Q: How poor will Japan become? A: It’s already sufficiently wealthy; it won’t become poor even at zero growth.Japan faces a declining population and a rapidly aging society. A look at the future of Japan that Abenomics cannot forecast. The reason why the Japanese public is worried that the nation could start to decline without growth is because past administrations have historically indicated that a recovery in the growth rate would reverse Japan’s economic depression and solve the problem of its aging society. But as the Japanese people already earn an average per capita gross domestic product (GDP) of close to 40,000 U.S. dollars despite still being worried about further growth to avoid becoming poor, from a historical and global perspective they are really quite unusual. To avoid any misunderstanding, I must add that I am by no means saying that in the long ... ... [Read more]

No.19
No.19 ,Economy  Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

KODAMA Yuichi, Chief Economist, Meiji Yasuda Life Insurance Company

Q: Will Japan end up a loser if the trade gap widens? A: There are no winners or losers in trade, but attention is needed on an increase in the current account deficit.Japan’s widening trade deficit: the presence of Japan, an exporting country, continues to fade, but the current account balance, rather than the trade balance, is what requires attention. The problem surrounding the country’s imbalance, such as the trade balance or the current account balance, is old and yet a new theme. After a period of rapid economic growth, the ensuing era for Japan that persisted for a long time was one in which its massive trade surplus was deemed problematic in the course of international negotiations, resulting in numerous types of trade friction with the United States, be it in textiles, automobiles or semiconductors. At the Plaza Accord of 1985, major countries ... ... [Read more]

No.19
No.19 ,Economy  Mar 24, 2014

The First Year of Abenomics – Part 3
The impact of monetary easing has been limited
— The actual role of monetary easing has been to assist in fiscal policies.
— The economy has expanded on the back of public investment.

IKEO Kazuhito, Professor, Keio University

< Key Points > – Despite the correction of the strong yen, export volumes have not increased. – With monetary easing, long-term interest rates have declined, facilitating smooth sales of government bonds. – The profitability of bank lending has deteriorated due to falling long-term interest rates. It’s been a year since the inauguration of the administration of Prime Minister Abe Shinzo. During this period, the economy has been staging a very steady recovery. However, this latest economic recovery is believed to be slightly different due to the fact that it has mainly been led by domestic demand, whereas most of the previous economic recoveries in recent years were driven by external demand. That is to say, despite the approximate 20% correction in the strong yen since the start of the Abe administration, there have been almost no increases in export volumes. The instruments that ... ... [Read more]

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