Reawakening the Sleeping Giant: A Multi-Faceted Strategy to Economic Recovery in Japan

Abstract

The end of World War II ushered in a new era for Japan as a global economic powerhouse. The lost decade of the 1990’s coupled with the Asian Financial Crisis of 1997-1998 and the Global Recession of 2008-2009 further complicated the already dire Japanese economic situation. To address the country’s protracted economic stagnation, Prime Minister Abe has resorted to the Keynesian approach known as “Abenomics” which focuses on aggressive government spending in public works projects. The rationale behind this is that such investments will lead to creation of jobs needed to lift the economy out of stagnation. The paper starts off by recognizing that economic policies do not exist in a vacuum as there are several variables that impact on them. The essay posits that addressing the economic stagnation in Japan requires a holistic perspective as there is no one-size-fits-all solution. Hence, political, social and cultural factors all have crucial roles to play in shaping the economic policies in Japan. The paper argues that each of these variables must be accorded utmost importance as economic reforms are not stand-alone policies. This research proposes some solutions some of which are: adoption of a points-based immigration system to attract skilled workers, raising the birth rate, introduction a more inclusive policy to encourage more participation of women in the work force, increasing foreign direct investment, opening up the country’s energy, breaking up monopolies and the implementation of medical insurance reforms that cater more to the needs of working women. Overall, vision not structure remains the key to recovery in Japan.

Keywords: Japan, Abenomics, Economic Growth, Politics, Culture