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  5. Are Growth Strategies Needed? The Illusion that Growth Strategies Lead to a Higher Economic Growth Rate

2013 Vol.1
Are Growth Strategies Needed? The Illusion that Growth Strategies Lead to a Higher Economic Growth Rate

2013/01/01

The Ikeda Cabinet’s National Income Doubling Plan can be said to have guided Japan’s postwar rapid economic growth. Such economic plans continue to exist and are referred to as growth strategies. Today, it has become like a ritual for a newly formed cabinet -be it Democratic or Liberal Democratic- to develop a growth strategy. However, a free economy putting forth a growth strategy, which hints at some quality of a planned economy, seems to be contradictory and subject to limitations in the first place. Also, as Japan’s ability to grow its economy weakens, the country has fewer options in making policy responses that require government expenditure, due to a deteriorating fiscal structure. This makes the limitations in attempting to increase the economic growth rate by putting forth a growth strategy even more obvious. In addition, having to deal with the new challenge of getting out of deflation, the country’s growth strategy is increasingly lacking direction. The Japanese economy is being affected by major changes: advanced population aging, decreased growth potential for the world economy, deterioration in Japan’s international competitiveness, and continuing high prices of imported raw materials. If these issues are considered in an unbiased manner, it is clear that the government should not put forth a growth strategy like sending up a flashy advertising balloon. We need to put an end to the slogan, “redirecting the Japanese economy to a growth path, using a growth strategy as a lever.” What is needed is a national strategy that directly tackles the country’s structural problems. Granted, such a policy would not immediately lead to growth, it would also be painful, arousing opposition from many people, and it would be an inconspicuous policy that would remain unpopular among the public even if successfully implemented. However, if politicians consider it to be the right policy, it is their job to persuade the public of it and realize the policy.

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