Japan Can Do It, But Will It?

Abstract

Abstract If France, considered an anti-entrepreneurial country 25 years ago, can change, why not Japan? The immediate answer is that the measures applied in Japan have not been as well designed and executed as those in France. And the reason for this is that, on economic issues in Japan, so many interest groups have veto power that inertia is often the victor. The common complaint is: Everyone knows something must be done, experts know what to do, but no one actually does very much. But that ignores the many exceptions where political pressures have led to substantial change, though admittedly not enough. Japan’s tragedy is that the country need not change that much to set recovery into motion. For example, the payoff from some of the tax incentives proposed here would be very impactful while causing little disruption. Reform and revival remain an uphill climb, but the positive drivers are the most powerful they’ve been since the lost decades began in 1990.