Will it keep losing decades?
The Japanese economy, once the envy of the world, has been struggling to escape the doldrums ever since its “Lost Decade” of the 1990s. Prime Minister Shinzo Abe swept into office in 2012 on promises to revive the economy through a policy that relied on three “arrows”: expansive monetary policy, fiscal stimulus and structural reform. Progress has been slow, but two years of steady growth have revived hopes that Abenomics may finally be bearing fruit. Domestic consumption is increasing, unemployment is the lowest in 23 years and inflation is starting to rise slightly. Yet many economists remain skeptical, pointing to massive government debt and Abe’s lack of progress in pushing through reforms to modernize the country’s labor market and corporate structure.
Some key takeaways:
Japan’s economic growth averaged just 1.18 percent annually over the past 28 years, during which the nation slipped from second to third place among the world’s largest economies.
One of Japan’s key economic problems is a shrinking and increasingly elderly population, which causes labor shortages and increases pressure on public finances.
Amid the recent economic growth, the mood of Japanese business owners is brightening. In a recent Bank of Japan survey, they expressed high levels of confidence and foresaw the need for higher production and employment.
Resources for Further Study
Koo, Richard, “The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession,” Wiley, 2008. The chief economist at the Nomura Research Institute in Tokyo compares the United States’ Great Depression in the 1930s and Japan’s ongoing “Lost Decades.” He proposes models to explain why post-bubble economies are unresponsive to conventional policies.
Pesek, William, “Japanization: What the World Can Learn from Japan’s Lost Decades,” John Wiley & Sons, 2014. A Tokyo-based columnist for Bloomberg Views argues that Japan’s timid policies and lack of innovation held back economic recovery.
“The Bank of Japan sticks to its guns,” The Economist, Sept. 30, 2017, http://tinyurl.com/
“The Japanese government’s drive to lift wages is gathering steam,” The Economist, Feb. 1, 2018, http://tinyurl.com/
Kikuchi, Tomomi, “Japan GDP grows for 8th straight quarter in longest streak for 28 years,” Nikkei Asian Review, Feb. 14, 2018, http://tinyurl.com/
Kubota, Yoko, “How Foreign Workers in Japan Are Helping—and Hurting—the Economy,” The Wall Street Journal, Oct. 25, 2017, http://tinyurl.com/
Mollman, Steve, “Japan’s Government Offered Companies Money to Promote Women—and Not One Took It,” The Atlantic, Oct. 3, 2015, http://tinyurl.com/
Tabuchi, Hiroko, “When Consumers Cut Back: An Object Lesson From Japan,” The New York Times, Feb. 21, 2009, http://tinyurl.com/
Taylor, Adam, “It’s official: Japan’s population is dramatically shrinking,” The Washington Post, Feb. 26, 2016, http://tinyurl.com/
Reports and Studies
Desvaux, Georges, et al., “The Future of Japan: Reigniting Productivity and Growth,” McKinsey Global Institute, March 2015, http://tinyurl.com/
Jorgenson, Dale, and Koji Nomura, “The Industry Origins of the U.S.-Japan Productivity Gap,” Economic Systems Research, 2007, pp. 315–412, http://tinyurl.com/
The Next Step
Pesek, William, “Finally, Japan’s push for female empowerment is being led by a woman,” Quartz, Oct. 21, 2017, https://tinyurl.com/
Tanaka, Chisato, “U.N. regional director praises Japan’s efforts to empower women, but notes that few are reaching the top,” The Japan Times, March 8, 2018, https://tinyurl.com/
Vlisides, Victoria, “‘Deepen the Dialogue’ Initiative Targets Japan’s Gender Inequality,” Savvy Tokyo, March. 28, 2018, https://tinyurl.com/
Chandran, Nyshka, “Foreigners could ease Japan’s labor shortage, but Tokyo prefers robots,” CNBC, March 9, 2018, https://tinyurl.com/
Fujikawa, Megumi, “Japan’s Jobless Rate at Quarter-Century Low,” The Wall Street Journal, March 1, 2018, https://tinyurl.com/
Saito, Mari, “Japan Wants More Women in Construction. Pink Toilets May Not Be Helping,” The New York Times, March 8, 2018, https://tinyurl.com/
Bank of Japan
2-1-1 Nihonbashi-Hongokucho, Chuo-ku, Tokyo 103-0021, Japan
Japan’s central bank, which is responsible for enacting monetary policy and conducting economic surveys.
German Institute for Japanese Studies
Jochi Kioizaka Bldg., 2F, 7-1 Kioicho Chiyoda-ku, Tokyo 102-0094
A German research institute dedicated to understanding modern Japanese society and international relations.
International Monetary Fund
700 19th St., N.W., Washington, DC 20431
An international financial organization with 189 member countries, founded in 1944 to maintain global economic stability.
Japan Economic Research Institute
Otemachi Financial City Grand Cube 15F 1-9-2 Otemachi, Chiyoda-ku, Tokyo, 100-0004
Think tank, whose parent organization is the Development Bank of Japan; conducts research for the private and public sectors.
Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan
The government agency responsible for advancing the Japanese economy through private-sector initiatives.
Organisation for Economic Co-operation and Development
1776 I St., N.W., Suite 450, Washington D.C. 20006
Intergovernmental economic organization with 35 member countries, founded in 1960 to promote world trade and the market economy.
Tokyo Foundation for Policy Research
Roppongi Grand Tower, 34F, 3-2-1 Roppongi, Minato-ku, Tokyo 106-6234
A think tank that engages in policy and human resource research as well as leadership development.
U.S.-Japan Research Institute
1901 Pennsylvania Ave., N.W., Suite 801, Washington, DC 20006
A research consortium of American and Japanese experts who study policy and human resources to advise the public and private sectors.
1818 H St., N.W., Washington, DC 20433
An international financial institution with 189 member countries, dedicated to ending poverty and promoting prosperity.