Shiratori Junichiro, Associate Professor, The Open University of Japan   One of the characteristics of international politics in the 21st century is that the global interdependence of heterogenous states is becoming normalized. With the US-China conflict and the Russian invasion of Ukraine, there are indications of globalization coming to an end, but even if globalization were to stagnate, we still have to consider the current situation of this global interdependence of heterogenous states. EU countries and Japan are dependent on imported energy resources, and superpower Russia’s needs to export its natural resources to cover its war expenditures is a structural situation. Moreover, unlike oil, for which the global market is fairly organized, it is not easy to find new places for importing natural gas. Because of the Russian invasion of Ukraine, chaos in the energy markets is likely to persist for years. This ... ... [Read more]

  Kumagai Satoru, Director, Economic Geography Studies Group, Development Studies Center, Institute of Developing Economies, Japan External Trade Organization (JETRO)   Key points Without Chinese participation, the effectiveness of sanctions against Russia will be limited After the Cold War, supply chains expanded beyond the confines of East-West, North-South Questions raised about business partners’ aspects of economic security, environment, and ethics   Three months have passed since the Russian invasion of Ukraine began. While the North Atlantic Treaty Organization (NATO) camp has shown no signs of intervening militarily, Japan, the United States, and European countries have removed Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and frozen the assets of Russian dignitaries. They have imposed economic sanctions, including export bans on certain commodities to Russia. If economic sanctions against Russia are made more stringent, what will the impact be on Russia and ... ... [Read more]

  Kawaguchi Daiji, Faculty Fellow, Program Director, Research Institute of Economy, Trade and Industry (RIETI), Professor, Graduate School of Public Policy and Graduate School of Economics, University of Tokyo   At the May 20 meeting of the “Council for the Realization of the New Form of Capitalism,” it became clear that the direction of the proposal is to place investment in people at the core of its recommendations. Two points need to be further discussed in the compilation of concrete measures. The first point is how workers’ skills are formed. In particular, since workers’ skills are formed through both schooling and training in the workplace, it is necessary to examine how each plays a role in forming such skills. Let us take the example of the training of information technology (IT) engineers, who are in short supply. The meeting memo points out the need ... ... [Read more]

  Iida Yasuyuki, Professor, Meiji University Changing politics, society and security and the impact on the world economy What is the biggest economic risk that Japan will face as a consequence of Russia’s invasion of Ukraine? It is neither soaring energy prices nor inflation. It is the warping of decision-making on economic policy because of too much attention being paid to the huge changes in the international situation. News outlets file reports on devastated cities, countless victims and barbarous acts by the Russian military on a daily basis. The Ukrainian population is about 42 million (Russia about 147 million). The country’s GDP per capita is only about $3,700 (Russia’s is about $10,000), which really is not much at all, but the fact that a modern state in a corner of Europe has been hit with an all-out invasion will surely bring about large and ... ... [Read more]

Komine Takao, Professor, Taisho University   Key points Evaluating the value of the yen from an export sector and producer perspective Energy prices were stable when the yen depreciated in 2013 Aim to support yen appreciation on the back of enhanced economic strength   The depreciating yen together with the rise in imported energy prices has caused import prices to rise, with the ripple effect of a rise in domestic prices. In response, the “bad yen depreciation theory,” which holds that the weak yen will have a negative impact on the Japanese economy, has surfaced. This represents a significant departure from the dominant long-held notion in Japan that a weak yen is good news and a strong yen is bad news for the economy. This situation can be attributed to several factors. I begin with an overview of the economic impact of a weak ... ... [Read more]

Kawashima Fujio, Professor, Kobe University   Key points The Asia-Pacific as a main battleground for digital trade The US and China fighting for control over the rules Japan ought to actively participate in rule-making as a matter of national interest   The United States and China are engaged in fierce fighting for control over rule-making on digital trade in the Asia-Pacific region. In September and November 2021, China applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which has an advanced chapter on electronic commerce and the Digital Economy Partnership Agreement (DEPA). By contrast, in October, the United States announced that they would start building the Indo-Pacific Economic Framework (IPEF) in 2022. Moreover, in January 2022, the Regional Comprehensive Economic Partnership Agreement (RCEP) for East Asia, which also has a chapter on electronic commerce, entered into force among Japan, China, and ... ... [Read more]

Yoshikawa Hiroshi, President, Rissho University   Key points Postwar social security developments have contributed to longer life expectancy Disparities are a mix of transient phenomena and long-term trends It will be difficult to sustain social security with the current national burden rate (Discuss Japan Note: This article was written before the sixth wave of the COVID-19 pandemic hit Japan)   The COVID-19 pandemic has subsided in Japan, but the situation remains unpredictable as the emergence of new variants and global re-spread may still occur. Over the past two years, the world’s economy and society have been at the mercy of the COVID-19 pandemic. In 2020, the global economy fell into a severe recession that exceeded the post-Lehman shock fall in 2008. When the first state of emergency was declared in the spring of 2020, Japan saw the biggest fall in GDP in the postwar ... ... [Read more]

Miyagawa Tsutomu, Faculty Fellow, Research Institute of Economy, Trade and Industry (RIETI)   Under the Kishida administration, debate has been ignited on the topic of “new capitalism.” Grasping the current situation of “capital” in Japan as the starting point for the debate is the minimum work that is necessary. Capital stocks in the Japanese private sector have barely increased since the beginning of the 21st century. The amount of capital stocks in 2000, which was 692 trillion yen, grew to 736 trillion yen in 2019, representing an increase of only around 40 trillion yen. The stagnant growth is a stark contrast to the increase of around 60 trillion yen recorded just over the five years of the second half of the 1990s. According to the growth accounting approach, which breaks down the economic growth rate into (i) labor force, (ii) capital, and (iii) other ... ... [Read more]

Hayakawa Kazunobu, Senior Research Fellow, Institute of Developing Economies, Japan External Trade Organization (JETRO)   Key points Exports to the United States and imports from China are both increasing Good opportunity to transfer production and attract investment from China Risk of trade friction proliferating within the ASEAN region The Biden administration, which inherited the trade friction between the United States and China, is strengthening US export control measures day by day. The view from the Association for Southeast Asian Nations (ASEAN) includes President Rodrigo Duterte of the Philippines stating that the country will not take sides, while Prime Minister Lee Hsien Loong says that Asian countries do not wish to choose between the United States and China. On the one hand, the geographical proximity to China suggests that the ASEAN probably gains the most economic advantage from trade friction between the United States and ... ... [Read more]

Ohtake Fumio, Specially Appointed Professor at the Center for Infectious Disease Education and Research (CiDER), Osaka University   How should the healthcare system be set up? How should the vaccination rate be increased still further? And how should a strategy to exit the pandemic be formed? Some thoughts from a leading expert in behavioral economics and member of the New Coronavirus Infectious Diseases Control Subcommittee. (Discuss Japan note: This article was written in October 2021 and first appeared in the December 2021 edition of Voice. It is republished on the Discuss Japan website with the permission of the writer and publisher.) Allocating specific roles to experts and non-experts is key Although it seems there has been a lull in COVID-19 infections since September 2021, some think that a sixth wave will come this winter, so we cannot lay down our guard. At present (October ... ... [Read more]