Globalization and foreign direct investment of companies We can begin to think about this from the first step. Corporate activities are globalized in two ways: international trade and direct investment. Until the 1970s, the globalization of Japanese companies was overwhelmingly centered on international trade. Japan imported energy and raw materials, which it lacks, and manufactured industrial products and exported them. Production bases were located in Japan, and the imported products centered on those Japan cannot produce domestically. Therefore, hollowing was not a topic of discussion.... [Read more]

A messiah for users On October 5, 2011, Apple Inc. CEO Steve Jobs passed away. The news shocked the world, indicating just how big his global influence was. Jobs was indeed a messiah for people all over the world. Products he created revolutionized the cell phone and telecommunications industries and their users. In the early 2000s, long before the release of Apple’s iPhone smartphones, everyone in Japan was using cell phones that could... [Read more]

As society ages, childbirth declines, and the economy globalizes, the Japanese economy and its fiscal situation have continued to stagnate and worsen since the collapse of the bubble economy in 1990. Public debt is about to reach a figure that is about 200% of our gross domestic product (GDP). And when the Great East Japan Earthquake hit on March 11, the situation was exacerbated. While recovering from the quake is important, we must at the same time work on two reforms today to solve the medium- to long-term issues faced by Japan. One is a growth strategy to increase the potential growth rate of the Japanese economy, and the other is correcting the unfairness between the generations by reforming fiscal policy and social security. In terms of the latter, the politicians are currently split between being pro-tax increase and anti-tax increase, but this is ... ... [Read more]

In the Tohoku region, farmland has lost its levees in the aftermath of the Great East Japan Earthquake, and it will be very hard to restore its boundaries. It will also be difficult for older farmers to purchase new machinery and restart their farming operations. However, this is also an opportunity to change currently inefficient agriculture into a new form. Redevelopment of agricultural land into large-sized farm lots will increase work efficiency, open the way for introduction of new technologies for directly sowing on paddies and help reduce costs. The transition to next-generation farmers can be attained by allocating large farming lots to young farmers. Older farmers can earn land rent revenues by leasing their own farmland. Prior to the earthquake, the Japanese government was set to decide by June on whether to join the Trans-Pacific Partnership (TPP), also known as the Trans-... [Read more]

The Great East Japan Earthquake has renewed our awareness of the importance of food and energy, in addition to revealing the multitude of problems in Japan’s conventional policies. With respect to food, the myth about the safety of domestic agricultural products has collapsed, and there is now growing concern about the capacity of food supply. A large portion of the afflicted area comprises villages subsisting on agriculture and fisheries. While there is strong demand for rehabilitation centering on the agriculture, forestry and fishery businesses, doubts exist as to the viability of simply restoring the traditional form of agriculture with a poor production base and supply capacity. Now is the time to build a competitive and efficient agricultural framework. Following the examples of small European countries advanced in transitioning agriculture to an integrated industry is recommended. The Netherlands,... [Read more]

The Great East Japan Earthquake on March 11, 2011 severely damaged Japan’s food supply center, which accounts for 21% of nationwide agricultural production and 25% of rice production. According to the Ministry of Agriculture, Forestry and Fisheries (MAFF), damage related to agriculture, forestry and fisheries attributable to the earthquake amounted to near 1.5 trillion yen, of which damage from loss of farmland and farming facilities was 700 billion yen. Extensive farmland was immersed, flooded, or suffered liquefaction due to the quake and tsunami, and many producers were forced to postpone or give up on planting for this year due to restoration work. Before the quake, the Kan Administration was pursuing whether or not to begin negotiations on joining the Trans-Pacific Strategic Economic Partnership Agreement (TPP), a high-level, free trade agreement that nine countries including the United States were... [Read more]

The topic of revitalizing the areas affected by the Great East Japan Earthquake has been much debated, particularly in the government’s Reconstruction Design Council. Unlike the Great Hanshin Earthquake, there appears to be a consensus that this time we should not simply “restore” the original townscape, but instead aim for “reconstruction” a new type of urban development with a long-term vision. However, when it comes to specific ideas about what this should look like, there are all kinds of conflicting opinions and there is not necessarily a clear sense of direction. Should the reconstruction be led by local municipal governments that have a good knowledge of their local areas? Or should we be thinking about reconstruction strategies for a wide area, without being bound by the framework of municipal governments? How should we deal with the problem of striking a balance between the rights ... ... [Read more]

The massive earthquake and tsunami that struck the coast of Eastern Japan this past March 11 is significantly impacting the nation’s economy as a whole. This is the largest economic shock to hit Japan’s economy since World War II. The full picture is not yet clear, but I will present what is visible at this stage, including the courses and order through which the disaster’s effects will ripple, and the responses that will become necessary given our experiences in events such as the Great Hanshin-Awaji Earthquake in 1995. I will not, however, refer to loss of human life, injuries or harm, to people themselves. This is not because it is not economically important but because it is a huge challenge that extends beyond the economic impact. When considering the effects of a catastrophe such as what we are facing here, it is important to ... ... [Read more]

February brought a shocking piece of news to Japanese people. They learned that their country has become a net importer of consumer electronics–the very goods it had once exported to every corner of the globe. It had already become clear previously that Japan had become an importer of large household appliances, such as washing machines and refrigerators, but statistics for 2010 show that Japan has also become a net importer of digital consumer goods, such as flat-screen TVs. This is not due simply to an increase in imports of goods from overseas. A major underlying factor is that Japanese consumer electronics makers have shifted their production offshore. One manifestation of this can be seen in the electronics megastores in Tokyo’s Akihabara district. Many among the increasing number of Chinese tourists to Japan look forward to shopping at stores in this district. But since last ... ... [Read more]

Change may finally have begun. In the third quarter of 2010, capital investment grew above the level a year earlier for the first time in three and a half years. Shipments of machine tools expanded strongly during the second half of 2010. Early in 2011 Hitachi, Ltd., which has been one of the slowest of Japan’s major corporations to shake up its management, announced that it was reorganizing its operations and reforming its research setup. And even Japan Airlines (JAL), which appeared to be having a hard time restructuring to head off bankruptcy, now seems poised to fly into clear skies. Signs of a business revival are turning up here and there. To be sure, it is still too early to determine whether these scattered developments are indications of a broad-based recovery from the corporate malaise that appears to be the root cause of ... ... [Read more]