Product details

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.
You can change your cookie settings at any time but parts of our site will not function correctly without them.
Management article
-
Reference no. SMR45216
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 2004
Length: 3 pages

Abstract

Japan''s economy has been in the doldrums for so long that many Japanese seem to have adopted a resigned attitude of Sho ga nai (''That''s life'') toward it. But Japan, of course, can become competitive again, provided its political and corporate leaders take on four difficult but essential tasks. The first task is to instill a commitment to growth. Since Japan''s economy grew on average by only 1% in the 10 years from 1992 to 2002, many Japanese have come to see ''no growth'' as the norm. This self- defeating view must be overcome, and specific reforms can help. For example, Japan''s corporate tax rate is simply too high to induce firms from other countries to invest in the country. Given the unique abilities of Japanese workers in such industries as microelectronics and robotics, the government should create an investment climate and offer tax incentives that encourage corporations to set up shop in Japan. In addition to foreign direct investment, another crucial element of growth is consumer spending. Younger Japanese in particular are in need of help. A reform of inheritance taxes - which have a top rate of 70% - would put more spending money in the pockets of younger consumers. Similarly, housing policy should be revised so that younger people can buy their own homes more easily. Such changes would stimulate the economy and begin to reverse the no-growth attitude.

About

Abstract

Japan''s economy has been in the doldrums for so long that many Japanese seem to have adopted a resigned attitude of Sho ga nai (''That''s life'') toward it. But Japan, of course, can become competitive again, provided its political and corporate leaders take on four difficult but essential tasks. The first task is to instill a commitment to growth. Since Japan''s economy grew on average by only 1% in the 10 years from 1992 to 2002, many Japanese have come to see ''no growth'' as the norm. This self- defeating view must be overcome, and specific reforms can help. For example, Japan''s corporate tax rate is simply too high to induce firms from other countries to invest in the country. Given the unique abilities of Japanese workers in such industries as microelectronics and robotics, the government should create an investment climate and offer tax incentives that encourage corporations to set up shop in Japan. In addition to foreign direct investment, another crucial element of growth is consumer spending. Younger Japanese in particular are in need of help. A reform of inheritance taxes - which have a top rate of 70% - would put more spending money in the pockets of younger consumers. Similarly, housing policy should be revised so that younger people can buy their own homes more easily. Such changes would stimulate the economy and begin to reverse the no-growth attitude.

Related