ERI Discussion Paper Series No.83
Middle- to Long-term Challenges and Future Outlook for the Japanese Economy

June 1999
Akira Sadahiro
(Director General, Economic Research Institute, Economic Planning Agency)


This study is an attempt to address the following four points of debate regarding the medium- to long-term challenges and issues facing the Japanese economy. (a)How can the prolonged stagnation of the Japanese economy be interpreted from the perspective of business fixed investment? , (b)How should the industrial structure of the Japanese economy, which has resulted in declining economic growth, appreciation of the yen, and the emergence of the bubble economy, be analyzed, and how should the future reorganization of the industrial structure and the associated issues be viewed? , (c)How should the Japanese economic system, which is the obverse side of the industrial structure, be viewed in terms of its constituent financial and labor systems, and what are the pressures for changes to this system?. (d)What sort of changes have to be implemented to the government finance and social security systems along with the aging of society from the perspective of coming into conformity with Japan's future potential growth ?

The keyword for each of these points is to strengthen the efforts for narrowing four "gaps," that is, the "capital stock gap" between appropriate capital stock and actual capital stock, the "productivity gap" among industries, the "system gap" between the era of catching up to the advanced industrialized economies and the present global era, and the "burden gap" between present and future generations.

Structure of the whole text(PDF-Format 2 File)

  1. page1
    AbstractI will open in a new window(PDF-Format 143 KB)
  2. page4
    1. Introduction
  3. page4
    2. Background to the Stagnation of Business Fixed Investment
  4. page6
    3. Challenges and Issues for the Industrial Structure
  5. page13
    4. Challenges and Future Issues for the Financial System
  6. page20
    5. Challenges and Future Issues for the Japanese Employment System
  7. page25
    6 . Challenges and Issues for the Government Finance and Social Security Systems
  8. page33
    7. Conclusion
  9. ChartI will open in a new window(PDF-Format 385 KB)
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