The government's Council on National Strategy and Policy has drawn up a draft of the proposed new economic program dubbed "The Strategy for the Rebirth of Japan." The strategy has been cast by the government as a policy prescription for curing the Japanese economy of deflation and putting it back on a growth track.
Effective policy efforts to re-energize the economy will be indispensable in the effort to clean up the nation's public finances, which are in a shambles.
Stoking Japan's economic growth requires a broad array of regulatory reforms that will challenge vested interests as well as well-designed plans to nurture new growth industries.
But has the government, and particularly Prime Minister Yoshihioko Noda, who chairs the council, demonstrated a strong enough commitment to tackling this tough challenge?
The draft growth strategy has been crafted by the National Policy Unit from policy measures proposed independently by ministries and agencies.
Some 450 items in a wide range of areas, from the environment to health care to agriculture, are included in the package. Like the new growth strategy announced by the government two years ago, the latest blueprint for growth has been developed by putting together proposals put forward by ministries and agencies using a traditional bottom-up approach.
Bureaucrats have produced the proposals with their eyes on the annual battle for budget allocations in the next fiscal year.
Ministries and agencies have themselves assessed the effectiveness of the measures included in the previous growth strategy. Of about 370 items, only about 10 percent have been "implemented with tangible results," according to their evaluations. Some 60 percent of the measures have been "implemented but failed to produce expected results."
These evaluations amount to a recognition by bureaucrats themselves of the limitations of their ability to develop effective plans to rejuvenate the economy.
A new approach is in order. It is vital for the central government to give greater freedom of action to businesses, nonprofit organizations, local governments and other actors with sufficient knowledge of the economic reality. The central government should focus on supporting their activities through deregulation.
One inspiring example is in the area of ultra-compact cars, small vehicles designed to carry one or two people for short-distances.
The private-sector has been actively researching vehicles that are bigger than the up-to-50cc motorcycle class but smaller than so-called minivehicles, which have a maximum displacement of 660cc.
A government's move to ease regulations to allow people to drive such vehicles on public roads has been prompted by a campaign backed jointly by 36 prefectures.
In rural areas without sufficient public transportation, cars are an essential means of transport.
These prefectures have been promoting the development of small, safe vehicles for use by the elderly for short journeys to hospitals, stores and suchlike.
There is large potential demand for ultra-compact vehicles in overseas markets as well. Renault S.A. of France launched such a model this spring in Europe.
The government's role here is to create a regulatory environment that is conducive to the spread of such vehicles by focusing on tasks like the development of safety standards.
In agriculture and social security, bureaucrats still show a strong propensity to keep a tight control on the activities of shareholder-owned companies.
The Ministry of Agriculture, Forestry and Fisheries plans to spend 30 billion yen ($379 million) of taxpayer money to create an investment fund to promote the expansion of businesses in primary industry into processing and distribution.
Some major operators of supermarket and restaurant chains have been working with farmers to promote the involvement of farming businesses in these areas.
The government should focus on giving shareholder-owned companies more freedom to get involved in agriculture by easing its regulatory control on their investments in agricultural corporations and use of farmland.
The government is also trying to keep shareholder-owned companies from operating facilities for providing childcare support. It should instead establish a system that opens the market widely to companies, but ensures that ill-qualified players will be forced out of business.
There are tasks that only the central government can carry out, such as concluding agreements on expanding economic cooperation with other countries.
Instead of compiling a comprehensive list of measures in various areas, the government should perform its proper role in tackling that challenge.
—The Asahi Shimbun, July 14
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