Can Abenomics and a “third opening” revive the economy?

Executive Summary

Since the late 1980s, Japan's economy has struggled to overcome years of recession and punishing price deflation, plus a declining population and aging citizenry. Among the forces pushing against these head winds: a small but growing group of entrepreneurs who are trying to bring creativity and energy to the economy, and the government of Prime Minister Shinzo Abe, which is attempting to spark growth through “Abenomics” and a “third opening” consisting of free trade. Reviews of these efforts are mixed, but many experts agree Abenomics is comprehensive and ambitious. Many also agree Japan's fate is tied to implementation of the trade pact known as the Trans-Pacific Partnership and to the nation's ability to solve its demographic crisis. As Japan attempts to rebuild its economy, economists and policymakers are debating a number of crucial questions. Will an aging population, falling birth rate and restricted immigration doom the Japanese economy? Should Japan restart its nuclear plants? Is Abenomics working?

Resources

Bibliography

Books

Dower, John, “The Useful War,” in Carol Gluck and Stephen Graubard, eds., “Showa: The Japan of Hirohito,” W.W. Norton, 1992. A historian examines how World War II affected the Japanese economy and the business world.

Johnson, Chalmers, “MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975,” Stanford University Press, 1982. A specialist in Asian and Japanese policy examines how the auto industry and others gained strength in Japan in the second half of the 20th century via the Ministry of International Trade and Industry (MITI).

Kingston, Jeff, “Contemporary Japan: History, Politics, and Social Change Since the 1980s,” Wiley Blackwell, 2nd ed., 2012. The director of Asian studies at Temple University's Japan campus analyzes that nation's recent history, with updates since the Fukushima disaster and the 2012 election that brought a change in prime minister.

Pyle, Kenneth B., “The Making of Modern Japan,” Cengage Learning, 2nd ed., 1995. A University of Washington history professor, an expert on all things Japanese, describes how Japan became a modern nation; his book includes good details on the roles played by the zaibatsu and the keiretsu.

Saito, William H., “An Unprogrammed Life – Adventures of an Incurable Entrepreneur,” Wiley, 2012. A child prodigy, entrepreneur and current adviser to the Japanese Ministry of Education chronicles his rise in the business world and sheds light on Japan's business culture along the way.

Articles

“About that debt,” The Economist, Nov. 18, 2014, http://tinyurl.com/luw9ewg. Questions arise about how Japan's debt ratio is calculated and what it actually means.

“The Annexation of Korea,” The Japan Times, Aug. 29, 2010, http://tinyurl.com/o72qnad. The story of how Japan annexed Korea holds lessons for modern-day Japanese, according to an editorial in Japan's oldest English-language newspaper.

“Farming in Japan: Field work,” The Economist, April 13, 2013, http://tinyurl.com/blcp8jv. The structure of Japan's agriculture sector presents economic and political challenges.

Evans, Peter, “Mitsui Fudosan Has a Big Plan for Abroad,” The Wall Street Journal, May 16, 2013, http://tinyurl.com/p3bm7y4. The large Japanese real estate firm is pursuing acquisitions and development deals in the United States and Europe.

Fingleton, Eamonn, “The Myth of Japan's Failure,” The New York Times, Jan. 6, 2012, http://tinyurl.com/npzu2jk. By some measures, Japan's economy is stronger than many observers admit.

Johnston, Eric, “Lessons from when the bubble burst,” The Japan Times, Jan. 6, 2009, http://tinyurl.com/qzq2vu4. Excess spending from 1985–90 preceded the “Lost Decade” of Japan's business history.

Kisiel, Ralph, “Gamble in rural Ohio pays off big,” Automotive News, June 8, 2009, http://tinyurl.com/pf9rwaj. Despite early detractors, Honda's first auto plant in the United States has become one of the nation's most efficient assembly operations.

Makinen, Julie, “A subculture of entrepreneurship hatches in Japan,” Los Angeles Times, March 29, 2015, http://tinyurl.com/ptlmw35. Business incubators are encouraging entrepreneurship in Japan.

McCurry, Justin, “Japan moves nearer to restarting nuclear reactors after court gives go ahead,” The Guardian, April 22, 2015, http://tinyurl.com/o79uyek. Over numerous legal objections, Japanese courts have approved the reopening of nuclear plants that closed after the 2011 Fukushima disaster.

Murakami, Hiromi, and Kiyoshi Kurokawa, “Fukushima crisis fueling the third opening of Japan,” The Japan Times, Dec. 1, 2011, http://tinyurl.com/q8kgxt6. Two Japanese academics explore the “third opening”—Japan's willingness to discuss the free trade agreement that would eventually become known as the Trans-Pacific Partnership.

Schreffler, Roger, “Auto Industry Leading Market for Japanese Robotics,” WardsAuto, Aug. 21, 2013, http://tinyurl.com/p85mvew. Automakers are the biggest buyers of robots, most of which are made in Japan.

Sekiguchi, Toko, “Japan Opens Door Wider for Foreign Workers,” The Wall Street Journal, April 4, 2014, http://tinyurl.com/pc5nctv. New economic policies seem to invite more foreign workers to Japan; memories persist of a 2009 policy to pay foreign workers to leave the country.

Takada, Aya, “Japan's Farm Lobby Concedes to Abe's Agriculture Reform Plans,” Bloomberg Business, Feb. 9, 2015, http://tinyurl.com/q4m7nmy. Prime Minister Shinzo Abe appears to be winning his battle with the powerful farm lobby.

Reports and Studies

Kanaya, Akihiro, and David Woo, “The Japanese Banking Crises of the 1990s: Sources and Lessons,” International Monetary Fund, January 2000, http://tinyurl.com/m5txk2. International finance experts review the causes of the Japanese financial meltdown that led to the “Lost Decade,” from a banking point of view.

Yoshino, Naoyuki, and Farhad Taghizadeh-Hesary, “Three Arrows of ‘Abenomics’ and the Structural Reform of Japan: Inflation Targeting Policy of the Central Bank, Fiscal Consolidation, and Growth Strategy,” ADB Institute, August 2014, http://tinyurl.com/nbg8va6. Two economists explain the major components of “Abenomics,” Prime Minister Shinzo Abe's plan to invigorate the Japanese economy.

The Next Step

Aging Population

Moore, Jack, “Two Numbers: Japan Has More Than 60,000 Centenarians, and Tokyo Can't Afford Their Gifts,” Newsweek, Sept. 23, 2015, http://tinyurl.com/o9em98j. The number of Japanese who are at least 100 years old grew to nearly 62,000 in 2014, costing the government $2 million for commemorative gifts that it sends to centenarians.

Nikaido, Yuki, “Japan's population decline the steepest on record,” The Asahi Shimbun, July 2, 2015, http://tinyurl.com/q3cg6qg. Japan's population declined for the sixth year in a row in 2014, and the number of people age 65 or older accounted for one-fourth of residents for the first time in history.

Nohara, Yoshiaki, “In Japan, the Rise of Machines Solves Labor Shortage,” Bloomberg Business, Sept. 13, 2015, http://tinyurl.com/nptgrf2. The Japanese government is encouraging the country's manufacturing, health care and service industries to use more robots to supplement its aging workforce.

International Trade

Arvinth, Karthick, “Japan's July trade deficit unexpectedly widens as exports slow,” International Business Times, Aug. 19, 2015, http://tinyurl.com/qfynadh. Japanese export growth slowed by nearly 2 percentage points in July while imports fell by 3 percent, creating a $2.2 billion trade deficit.

Chakravorti, Bhaskar, “How Japan's shortcomings can trigger its next burst of innovation,” The Washington Post, July 6, 2015, http://tinyurl.com/q275wyx. Japan can benefit from the proposed Trans-Pacific Partnership between Pacific Rim countries by investing more in innovation and infrastructure, according to an associate dean of international business and finance at Tufts University.

Soble, Jonathan, “With Ban on Exports Lifted, Japan Arms Makers Cautiously Market Wares Abroad,” The New York Times, July 12, 2015, http://tinyurl.com/nscmj2v. Japanese weapons manufacturers are developing more products to sell to other countries after Prime Minister Shinzo Abe ended a nearly 50-year ban on exporting military equipment.

Nuclear Power

Lavelle, Moira, “Volcano near nuclear plant raising concerns in Japan,” Public Radio International, Aug. 17, 2015, http://tinyurl.com/noguaw2. Japan has opened its first nuclear plant since it shut down all reactors in 2011, but critics worry about the potential for another disaster because the reactor is close to an active volcano.

McNeill, David, “Japan's emissions have soared since Fukushima nuclear disaster,” The Irish Times, Sept. 21, 2015, http://tinyurl.com/oqys9kt. Japanese carbon emissions in 2014 rose to their second-highest mark ever, the result of growing dependence on coal-fired power plants for electricity since the Fukushima nuclear disaster in 2011.

Yamaguchi, Mari, “Can towns near Japan's Fukushima nuclear plant recover?” The Associated Press, Sept. 9, 2015, http://tinyurl.com/nbvtlz4. A town heavily affected by radiation that leaked during the Fukushima nuclear plant's 2011 meltdown reopened in September, the first of the evacuated nearby municipalities to do so.

Women in the Workplace

Gilman, Azure, “Work conditions for Japanese women may be affecting marriage, birth rates,” Al Jazeera America, June 26, 2015, http://tinyurl.com/pe3tetc. Poor benefits for working mothers, workplace harassment and low wages deter many Japanese women from having children or marrying, according to experts on Japanese culture.

Kameda, Masaaki, “U.N. opens office dedicated to women's empowerment in Tokyo,” The Japan Times, Aug. 30, 2015, http://tinyurl.com/nsl6dqk. The United Nations agency for women's empowerment opened its first Asian office in Tokyo in August, in part to support Prime Minister Shinzo Abe's policies to improve women's workplace rights.

Lewis, Leo, “Number of Japanese women in work reaches record high,” Financial Times, July 31, 2015, http://tinyurl.com/pn8tase. The number of working women in Japan rose to nearly 28 million in June, the highest ever, representing 43 percent of the country's workforce.

Organizations

Embassy of Japan
2520 Massachusetts Ave., N.W., Washington, DC 20008
202-238-6700
www.us.emb-japan.go.jp/english/html/
Japan's official embassy in Washington; hosts many social and business-related events.

Foreign Press Center/Japan
6F Nippon Press Center Building, 2-2-1, Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011, Japan
81-3-3501-5251
http://fpcj.jp/en/
Nonprofit foundation that helps foreign journalists gather news in Japan; also offers fellowships and scholarships.

Japan Association of Corporate Executives
1-4-6, Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan
81-3-3211-1271
Fax: 81-3-3212-3774
www.doyukai.or.jp/en/opinion/index.html
Group of top Japanese business executives; founded in 1946 to support reconstruction of economy after World War II.

Japan Business Federation
1-3-2 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan
81-3-6741-0111
www.keidanren.or.jp
Japanese business lobbying association, also known as Nippon Keidanren.

Japan Chamber of Commerce and Industry
New York office: 145 W. 57th St., #6, New York, NY 10019
212-246-8001
http://www.jcci.or.jp/home-e.html
Chamber's New York office made up of large and small businesses throughout Japan.

Japan Commerce Association of Washington, D.C.
1819 L St., N.W., B2, Washington, DC 20036
202-463-3947
Fax: 202-463-3948
www.jcaw.org
Professional organization of Japanese business community members.

Japan International Cooperation Center
Odakyu Dai-ichi Seimei Bldg., 16th Floor, 2-7-1, Nishi-shinjuku, Shinjuku-ku, Tokyo 163-0716
http://sv2.jice.org/e/
81-3-6868-2702
Fax: 81-3-6838-2701
Outreach and coordination agency promoting mutually beneficial relationships between Japan and other nations.

Japan National Tourism Organization
One Grand Central Place, 60 E. 42nd St., Suite 448, New York, NY 10165
212-757-5640
Fax: 212-307-6754
www.jnto.go.jp/eng/
Attached to the Embassy of Japan, the group promotes travel to Japan.

National Association of Japan-America Societies
1819 L St., N.W., Suite 200, Washington, DC 20036
202-429-5545
Fax: 202-429-0027
www.us-japan.org
Private nonprofit organization that offers educational, cultural and business programs about U.S.-Japan relations.

New Energy and Industrial Technology Development Organization (NEDO)
Washington office: 2000 L St., N.W., #605, Washington, DC 20036
202-822-9292
Fax: 202-822-9289
www.nedo.go.jp/english/index.html
Japanese industry, government and academic organization dedicated to international research.

U.S.-Japan Business Council
1615 H St., N.W., Washington, DC 20062-2000
202-659-6000
www.uschamber.com/us-japan-business-council
Business association dedicated to Japanese-American ties.

DOI: 10.1177/2374556815613991