Analysis

Creating a Strategic Scenario for Implementing Economic Structural Reform 13, June 1999

The Obuchi administration is currently considering new policies for providing additional public spending to prevent a slow down in the economy during the second half of the current fiscal year. Unfortunately, there is a startling shortfall in the tax revenues needed to support such measures. In fact, there is expected to be a shortage of some 9 trillion yen compared to the estimates for the original budget. The Hashimoto administration placed a high priority on cutting fiscal expenditures, which resulted in failed economic policies. This ultimately led to his removal from office. The Obuchi administration has, on the other hand, focused on economic policy and has postponed efforts to reduce fiscal debt. Therefore, even if these policies result in a temporary economic recovery,the person in charge of the next administration will be confronted with an even more troublesome fiscal dilemma. Under the current situation in which various political parties are striving to work in concert, it seems very unlikely that individual politicians will be able to subjectively push forward with economic structural reforms. Accordingly, a way must be found to create a forward-looking scenario for just such economic structural reform. Structural reform does not come without pain. In terms of loosening restrictions and negotiating around barriers to international trade, a system must be created by which adjustments can be made beforehand within the U.S. and Japanese economies, and by which priorities can be confirmed. Such a system must also be created separate from the governmental administrative level. It is also very important that existing think tanks in Japan become actively involved in the creation of such a system. Continued high employment and clearly defined political policies and routine proposals dating back to the end of World War Two have made Japanese economic think tanks overly complacent. However, we will now need for these think tanks to assume a more active role.

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