Abstract:

In just 10 years, from the beginning of the 1990s, Japan moved from being a universally admired economic model to emerge as the problem child of the G7. There are many indicators of crisis: negative growth in GDP, rising unemployment, bankruptcy of financial institutions and excessive public borrowing. Up to 2001 successive governments preferred to manage the crisis with short term measures without addressing the core issues. But the new Prime Minister, Junichiro Koizumi, has, since his election, piled on the structural reforms: recasting the financial intermediation system, privatisation and dereglementation, modernising the taxation system, resolution of the doubtful debts issues, reinforcing the social security system and emphasising the role of the individual. the objective is to turn Japan into a courntry more open to the rest of the world, and more competitive with other countries. But Japan can only undertake this metamorphosis, which would be comparable with the Meiji era, if public opinion stays on Koizumi and the reformers' side, accepting painful decisions in exchange for a better future.


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