Momma Kazuo, Executive Economist, Mizuho Research & Technologies   Unattainable 2% inflation target On April 4, 2013, the Bank of Japan (BoJ) introduced “quantitative and qualitative monetary easing” (QQE). Appointed only a month before, Governor Kuroda Haruhiko explained the BoJ’s stance at a press conference as “monetary easing measures of an unprecedented scale.” Ever since then, the BoJ’s policy, which remains in place today, is referred to as “unprecedented monetary easing.” The unprecedented monetary easing had just one objective and that was to reach a target of 2% year-on-year growth in consumer prices (price stability target of 2 percent, hereinafter “2% inflation target”). It will soon be 10 years since introduction of the policy and the 2% inflation target has yet to be reached. Of course, Japan recently experienced inflation for the first time in 40 years, with consumer inflation rising to around 4% and so my assessment ... ... [Read more]

  Hamaguchi Keiichiro, Research Director General, the Japan Institute for Labour Policy and Training   In recent years, the question “Why are Japanese wages not rising?” has become a hot topic. Five years have already passed since a book with the very title Hitodebusoku nanoni naze chingin ga agara nai no ka (Why Haven’t Wages Been Raised Even With a Labor Shortage?) (Genda Yuji ed., 2017) came out. The analysis from various economic perspectives developed there may seem like it makes sense, but it really doesn’t sound right. In the past, during the period of high economic growth, Japanese wages rose sharply, spurred on by the “income-doubling plan.” Prices also rose, but wage growth was even larger. When did that change? Let’s look back at history. The oil crisis success backfired The first change came with the wage suppression in the spring wage negotiations ... ... [Read more]

  What is the essence of Inamori Kazuo’s Management Philosophy? Prof. Nonaka Ikujiro, a global authority in organizational management and a research advisor at the Ritsumeikan Inamori Philosophy Research Center, shares his perspective.   Nonaka Ikujiro, Professor Emeritus, Hitotsubashi University A manager who recognized the importance of “empathy” Japan’s knowledge power used to be unsurpassed in the world. However, it has become sluggish, especially in the last 30 years. I believe that the key to its revival lies in a “humanizing strategy,” meaning a “humanity-centric” strategy based on empathy, and this was something brilliantly put into practice in the management philosophy of Inamori Kazuo (1932–2022), who regrettably passed away on August 24, 2022. One typical theory of strategy is Michael Porter’s theory of competitive strategy. The method starts by analyzing the structure of the market to compose corporate strategy. This scientific and analytical strategy ... ... [Read more]

  Hayakawa Hideo, Senior Fellow, Tokyo Foundation for Policy Research   Some three years ago, much of the developed world had joined Japan, succumbing to Japanification, a term used to describe a combination of low growth, low inflation, and low interest rates. However, the COVID pandemic completely transformed the global economic landscape. Now, the biggest economic challenge facing the world is rising inflation, and central banks around the world are rushing to tighten monetary policy to quell inflation, with the Federal Reserve Board (FRB) leading the charge. Japan has also seen growing discontent with the rising cost of living, as consumer inflation (the rate of increase in the consumer price index [CPI]) hit 3 percent for the first time in three decades and the yen weakened dramatically. Calls for the Bank of Japan (BOJ) to raise interest rates are also not uncommon.    However, the important ... ... [Read more]

    Kikkawa Takeo, Vice President, International University of Japan   Key points Electricity providers show no signs of working with next-generation advanced reactors Old nuclear reactors to be dismantled when building next-generation advanced reactors Extension of operating period for existing nuclear power plants is unsuitable   Prime Minister Kishida Fumio and the Minister of Economy, Trade and Industry Nishimura Yasutoshi spoke about nuclear energy at the GX (Green Transformation) Implementation Council in August 2022, and some media outlets made a big deal of it and called it a “changed nuclear energy policy.” The Kishida administration listed the following two items for which political decisions are needed before the end of 2022 in order to resolve the delays in nuclear energy policy: (1) development and construction of next-generation advanced reactors and (2) maximizing the use of existing nuclear power plants, including an extension of ... ... [Read more]

  How do differences in political regime, such as between authoritarianism and democracy, affect a country’s economic prosperity and people’s health? I will use an econometric approach to political phenomena to address this question as I consider the reason why democracy should be defended.   Annaka Susumu, Assistant Professor, Hirosaki University 1. Political regime and economic affluence A political regime is defined as “the set of basic formal and informal rules that determine who influences the choice of leaders—including rules that identify the group from which leaders can be selected—and policies” (Geddes, Wright and Frantz 2014, p. 327).[1] It is a concept used to classify different political characteristics from country to country, such as democracy, authoritarianism, and autocratic regime.[2] How do differences in political regime affect economic affluence and people’s health? That is the question that this paper seeks to address. Looking at North ... ... [Read more]

    Yamanouchi Kenta, Associate Professor, Kagawa University   Key points Japan’s FTA networks are nearing completion The weaker the relationship with the partner country, the greater the effectiveness of the FTA Diversification of supply chains through active internationalization   Some believe that trade policy is at a turning point. The government is working on toughening supply chains for semiconductors and other products and has been implementing a project to encourage their return to Japan since 2020. Furthermore, the launch of the “Indo-Pacific Economic Framework” (IPEF), a new economic zone initiative centered on the United States, was announced in May 2022. Recently, some policies that are seemingly protectionist have appeared in Japan as well. On the other hand, Japan has concluded a series of region-wide FTAs and other agreements in recent years, and the FTA networks covering supply chains are generally nearing completion. In ... ... [Read more]

    Matsushima Hitoshi, Professor, University of Tokyo   Key points Utilizing Uzawa Hirofumi’s “social common capital” concept Redesigning negotiation rules to guide active cooperation among countries Changing citizens’ attitude of wanting to avoid carbon taxes also necessary   The world has become interested in thinking about economic development in relation to the global environment and social issues. How can we lead affluent lives, develop excellent culture, and make a humanly attractive society sustainable? Humanity has begun to explore a shift change from capitalism to address this important issue. As social responsibilities, commercial enterprises need to reduce the social costs of their own economic activities. Adding hazardous substances to food or discarding plastics causes negative externalities. This cannot be resolved unless the parties concerned eliminate the causes by themselves. The role of government capable of enforcement is important in resolving externalities, with environmental tax ... ... [Read more]

  Nakazato Toru, Associate Professor, Sophia University   Abenomics came to an abrupt end without sufficient evaluation or summation. Its general form has continued in the economic policy of the Kishida Fumio administration, and it can be said that Abenomics is still ongoing, but there is no guarantee that this drama will continue as it has in the past without its leading actor. Concerns about a weak yen and high prices have also raised calls for a review of monetary easing. It will take considerable time to take a step back and position Abenomics in history from an objective standpoint, but it would still be meaningful to record its trajectory so far together with the contemporary mood before memory fades. In this paper, as a small attempt toward this work, I look back on its development over the past 10 years or so. 1. ... ... [Read more]

    Honda Yuzo, Professor, Osaka Gakuin University   Key points Japanese products easy to sell despite deteriorating terms of trade Positive impact of weak yen on GDP and income balance Capitalize on the opportunity to put the Japanese economy on a growth trajectory   When examining the merits and demerits of the rapidly depreciating yen, we should note that other factors than the exchange rate are sneaking into the discussion. It is wrong to blame the current Japanese inflation solely for the weaker yen. Prices in Japan are rising as a result of the soaring prices of global resources and foods at the same time as the yen is depreciating. According to some commentators, the weak yen causes only losses due to the deteriorating terms of trade (the prices of exports divided by the prices of imports) and that no tangible benefits are ... ... [Read more]