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Economy, No.32  Jun. 5, 2016

The Making of an Intellectual Property-based Nation

Japan’s latest Intellectual Property Promotion Plan spells out the government’s determination to promote the utilization of regional intellectual property to support SMEs and to reduce and more efficiently resolve rights disputes. In July 2002, the Japanese government drew up an Intellectual Property Policy Outline with a view to making Japan an “intellectual property-based nation.” The policy placed a strategic emphasis on innovation and “the creation of valuable information” such as technology, design and content. The following July, the newly established Intellectual Property Strategy Headquarters announced the first Strategic Program for the Creation, Protect ion and Exploitation of Intellectual Property, explaining the background to the Program as follows: There are various factors behind the significant decline recently in the international competitiveness of Japanese industry, which had held the top rank in the world until the beginning of the 1990s. One of these factors is that ... ... [Read more]

Economy, No.32  Jun. 5, 2016

Will Japan’s Labor Shortage Worsen?Overstaffing May Resurface If Problems Are Left Unaddressed

YAMADA Hisashi, Chief Economist, Head of Economics Department, the Japan Research Institute, Ltd.

An examination of the causes of Japan’s current labor shortage reveals that it is too early to conclude that a society with a shrinking population directly causes the problem to worsen. The shrinking population has been identified as an underlying factor to Japan’s rising labor shortage in recent years. However, Japan’s labor force population (the combined population of employed and unemployed people aged 15 or older actively seeking full-time work) reached its peak nearly fifteen years ago. This fact indicates that even though the labor supply is shrinking, a surplus of personnel was considered to be a problem up until a little more than a year ago. The quick turn in the labor situation is a direct result of changes in economic conditions. Until recently, the Japanese economy was still stagnant, the drop in the demand]]> ... [Read more]

Economy, No.32  Jun. 5, 2016

Investing in Japan

Incentivized by the economic policies of the Abe administration, the weaker yen and a sharp increase in the number of inbound tourists, investment in the Japanese real estate market is on the rise. A marked increase in investment in the Japanese real estate market first became apparent in the months following the election of Abe Shinzo as prime minister in December 2012. The Bank of Japan’s large-scale monetary easing in April 2013 arrested the steep rise of the previous months, as did the hike in the consumption tax in April 2014, but the general rising trend has continued through further monetary easing in October 2014 and the ruling coalition’s victory in the Lower House election of December last year. According to one private company, the turnover value of office building transactions by listed corporations and the Tokyo Stock Exchange (TSE) listed J-REITs (Japan Real ... ... [Read more]

Economy, No.33  Jun. 5, 2016

The Bank of Japan Can Continue Quantitative and Qualitative Monetary Easing for Only Two More Years: The Adoption of Negative Interest Rates Is Proposed – Eliminating the Zero Lower Bound is Crucial

IWATA Kazumasa, Japan Center for Economic Research (JCER) President

< Key Points > * Deflation and long-term stagnation continued in Japan for almost two decades. * QQE will reach its quantitative limit in the middle of 2017 at the earliest. * A structure based on negative interest rates that does not cause a flight to cash is proposed. The Bank of Japan (BOJ) decided to put off additional easing at a meeting held at the end of October 2015 for setting a monetary policy. In my opinion, whether or not the BOJ takes such a step depends on whether market participants’ inflation expectations fall sharply. The important thing here is the natural rate of interest. It is an equilibrium real interest rate that is neither stimulative nor tightening for the economy (in other words, neutral for the economy). According to analysis by the Financial Research Team of the Japan Center for Economic Research ... ... [Read more]

Economy, No.31  Jun. 5, 2016

Abenomics is Womenomics

“Creating a society in which all women shine” is one of the defining policies of Abenomics. Thanks to the measures introduced under the policy since the Abe administration’s establishment in December 2012, some one million women have newly entered the labor market and the number of female corporate board members has increased by approximately 30%.   Women’s social advancement is one of the most important challenges facing Japan today. Traditionally Japanese society has held the view that mothers should stay at home and take care of the family’s children rather than continue or seek employment, and even today about 60% of women quit their jobs when they get married or give birth to their first child. Women tend only to return to the labor market once their children have grown up and left home, a tendency revealed in the downward portion of the so-called ... ... [Read more]

Economy, No.33  Jun. 5, 2016

Interview: Intermediary Functions of Banks Have Declined ― Limits of Monetary Policies Have Been Exposed

IKEO Kazuhito, Professor, Keio University

--- The Bank of Japan (BOJ), which had maintained that it would “do anything possible” to achieve the target year-on-year consumer price index increase rate of 2%, decided to adopt a negative interest rate policy.
Ikeo: As BOJ Governor Kuroda Haruhiko said, there are still things the BOJ can do in the area of monetary policies. But that does not mean there are “effective measures” remaining. When I say “effective measures,” I am referring to policy measures that produce results which surpass adverse reactions in their own way and change the economy for the better. Whether the negative interest rate policy falls under this category is open to question. I think the latest BOJ decision actually revealed the limits of monetary policies]]> ... [Read more]

Economy, No.33  May. 30, 2016

Issues Presented in the Paris Agreement

ARIMA Jun, Professor at the University of Tokyo’s Graduate School of Public Policy

--- The parties to the United Nations Framework Convention on Climate Change adopted a new international framework for measures against global warming called the Paris Agreement at their 21st meeting (COP21) held in Paris, France in December 2015. Why is global warming a problem in the first place?
ARIMA Jun: The greenhouse gas (GHG) emissions are continuously increasing, which is causing gradual increase of global average temperature. While there are still some skepticism about global warming, the majority of scientists gathering at the Intergovernmental Panel on Climate Change (IPCC) are of the view that anthropogenic GHG emissions are the cause of global warming.]]> ... [Read more]

Economy, No.33  May. 18, 2016

The Good and the Bad of a Negative Interest Rate Policy:Zero Interest Rate on Cash Constrains the Policy’s Effectiveness Fears of currency weakness inviting competition ― Market senses limits to monetary policy

UEDA Kazuo, Professor, University of Tokyo

<Key points> The real economy’s limited response to monetary policy Views also exist that quantitative easing has limited room for further expansion Agony deepens among central banks as unstable market conditions continue The Bank of Japan blindsided most forecasts and decided to adopt a negative interest rate policy (a policy that sets the interest rate at below zero on current account deposits that banks keep with the BOJ) at its Monetary Policy Meeting on January 29. The context that can be suspected here is the concern, among others, that the economy would struggle further as a result of the great market volatility that has been occurring since the beginning of the year, as the inflation rate did not rise as intended despite the unprecedented quantitative and qualitative monetary easings that were implemented over a period of three years. In fact, expectations of inflation that ... ... [Read more]

Economy, No.32  May. 3, 2016

Mr. Governor, when will we finally be free from deflation? An 80-minute exclusive where we discuss everything from Abenomics to the his bazookas and his reading history

Mr. Kuroda, it was 20 March 2013 when you were appointed as the 31st Governor of the Bank of Japan (BOJ). Almost three whole years have passed since then. Today I’d like to have you reflect back over your time as governor since your appointment, and to hear about your outlook for the future. Firstly, could you please tell us about the way in which Prime Minister Abe Shinzo approached you with regard to your appointment to the role of Governor? Kuroda: At the time, I was working as president of the Asian Development Bank (ADB). I received a direct call from Prime Minister Abe at the ADB headquarters in Manila, in the Philippines. I’d prefer not to elaborate on the details of exactly what was said to me; but if I tell you my own feelings, it’s a fact that I was extremely ... ... [Read more]

Economy, No.31  Apr. 24, 2016

Makeup Brushes, Kendama, and Sakata Seed… Products Made-in-Japan and Recognized by the World— Global Hits Offer an Uncompromising Quality

There are products made in Japan that win in the field of global competition, are recognized as international brands, and are praised by consumers around the world. How are hit products from Japan created? And why are they loved by people in other countries? We have visited six companies that are constantly devoted to creating products that make the most of Japan’s good quality.   Juki Corporation is a leading manufacturer of industrial sewing machines and holds a 30% global market share. With sales offices in eighty locations around the world, it began a full-fledged overseas expansion in 1970. “High quality and after-sale services are important since industrial sewing machines are production machinery. This is a weakness of Western companies. We stock other companies’ products and also provide consulting services. If we can establish connections through replacement parts and repair, chances are they’ll buy ... ... [Read more]