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Japan’s Crisis May Yet Be A Wake-up Call

Posted on 12 October 2012 by json

Tokyo at night.

   By Suvendrini Kakuchi

TOKYO, Oct 13 (TerraViva) – Forty-eight years ago in September 1964, Japan hosted the International Monetary Fund-World Bank annual meetings as a borrower. This week, the gleaming Japanese capital hosted the same meetings as a top international lender and the world’s third largest economy.

    The story of Japan’s change from aid recipient to top donor has been a recurring backdrop at the meetings here, but analysts warn that this revolutionary transformation gives no reason for smug celebration.

   Instead, they say, the deeper mood in Tokyo as it basks in the international limelight is one of restless foreboding coupled with a yearning for reforms of the very same institutions that nurtured it when it was a post-war economy on recovery.

   “Japan faces tough challenges today even though the country has come a long way from the ashes of the war when it was defeated in 1945,” said Dr Takehiko Ohta, an expert on land conservation policy who taught at the prestigious University of Tokyo.

   “I would describe the national mood as somber as we embark on the transition road to find apt and long-term solutions to our pressing problems,” said Ohta.

   Indeed, emerging alongside the major advances that Japan has made are those \that threaten its much-admired achievements.

   A stubborn three decade-long economic recession has seen growth rates fall to an average of 2 percent annually, a trend that has forced the government to cut back on its much-touted overseas development assistance (ODA) budget. It now ranks fifth among international donor countries, and its ODA has been decreasing by more than 7 percent annually.

   Its rapidly ageing population – Japan has the fastest ageing people in the world and some 20 percent of citizens are over 60 years old – is also something the country needs to find urgent solutions to, apart from wasteful public infrastructure projects and public debt that is ballooning as the government scrambles to support growing health and pension budgets.

   Unemployment – almost 10 percent among the younger generation – is also hurting public confidence given the fact 16 percent of Japan’s 127 million people is now on welfare assistance.

   Job opportunities for young people have become harder to find because companies are restricting hiring as they face competition from industrialising Asian neighbours that are now entering the global market.

   “Japan faces one of its worst postwar crises…. While the Great East Japan earthquake did immense damage to the country, it is undeniable that the self-conceit the nation developed during the period of high economic growth is partly to blame,” wrote the ‘Nikkei’, a leading Japanese financial daily, in its special on Japan-World Bank relations.

   Nikkei advocates that policymaking in Japan undergo oversight from third parties, pointing out that “government agencies are not always best at making plans”.

   While analysts view the Mar. 11, 2011 triple disaster of the Great Eastern Earthquake, tsunami and Fukushima nuclear accident as a huge blow to Japan, there is also growing consensus that this crisis could become the long-awaited catalyst to usher in important reforms.

   “The disaster has shaken the very foundations of Japan by revealing cracks in a system that was admired before. But the sobering evidence has brought important reform, some of them unthinkable in Japan,” observed Ohta.

   Ohta is now working on a coastal reforestation project in the tsunami- devastated north-east, led by a trilateral partnership among the local Nattori city, the civil society organization Oisca, and Wal-Mart Japan, which provides most of the funds.

   “Such collaboration and new partnerships would have been unthinkable a few decades ago,” he explained.

   For Japan’s Finance Minister Koriki Jojima, finding solutions means extending political support to weakened sectors of agriculture and medicine, which fell behind during the growth times that focused, among others, on developing the country’s much-vaunted automobile technology.

   “Subsidies aimed for job security now focuses on training youth,” he said, explaining the necessity for the younger generation to survive in a tougher and meaner global system. This situation is a far cry from that of their parents, who worked during the high-growth years.

    The Fukushima nuclear accident has indeed encouraged positive changes in Japan, according to Yurika Ayukawa, an expert on clean energy. She points to growing public opposition to nuclear power, which she says is “a major feat in a country that had traditionally accepted government slogans that justified large investments to build nuclear reactors on the basis of supporting economic development.”

   “When considering the support for change among average Japanese, there is no turning back,” insists Ayukawa. “This is the symbol of real change.” (END)


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  • Official site of IMF-WB meetings
    Official site of IMF-WB meetings
  • Japan host site
    Japan host site
  • IPS Asia-Pacific site
    IPS Asia-Pacific site


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