Japan’s Abenomics Bumps Along

Patrick, Hugh T.

Japan again seems to be breaking out of the doldrums it has been in since the early 1990s. In this paper, I begin by assessing the past year ending in summer 2015. I first consider the economic situation; Japanese trade policy, specifically its involvement in the TPP and AIIB; and the latest political developments, particularly the results of Abe’s snap election of December 2014. I then examine the international and regional financial context, with China and India leading regional economic growth. Following this overview, I delve into the goals and progress of Abenomics: ending deflation and achieving 2 percent inflation; achieving 2 percent growth by increasing productivity; dealing with Japan’s huge debt with flexible fiscal policy; and addressing Japan’s low birth rate by increasing fertility and promoting women’s rights. I focus especially on the third arrow of Abenomics – achieving sustained growth – by making difficult structural changes, notably opening up markets in historically-protected sectors such as agriculture and healthcare, as well as more modest initiatives in corporate management and governance, promoting information technology, opening Japan to 60,000 foreign skilled workers a year, and strengthening the university system by creating distinguished graduate schools and special research institutions. I then consider further specifics about corporate governance, which Abe has made a focus of his efforts. Finally, I examine the vast changes occurring in Japan’s energy sector, which hold much promise with the development of renewable technologies and possible restarting of its nuclear plants – idled since the Great East Japan Earthquake in 2011 – but which also faces many challenges, considering Japan’s dearth of natural resources and subsequent vulnerability to the vagaries of global markets.

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More About This Work

Academic Units
Center on Japanese Economy and Business
Center on Japanese Economy and Business, Columbia University
Center on Japanese Economy and Business Occasional Papers, 74
Published Here
February 16, 2016