Category Archives: BUSINESS

Is Abe securing or threatening Japan’s peace and democracy?

Authors: Sebastian Maslow, Kobe University and Christian Wirth, Griffith University

Despite his involvement in a series of political scandals, Japanese Prime Minister Shinzo Abe remains unscathed. And with a firm grip on power, his Liberal Democratic Party (LDP) has shifted its focus away from economic reform towards conservatives’ long-cherished goal of constitutional revision to allow for the use of military force abroad while increasing executive power at the expense of civil rights at home.Japan’s Prime Minister Shinzo Abe attends a news conference after close of regular parliament session at his official residence in Tokyo, Japan, 19 June 2017. (Photo: Reuters/Toru Hanai).

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Celebrating the 70th anniversary of Japan’s post-war constitution on 3 May, Abe took it upon himself to revise the document. To temper public opposition against changing the war-renouncing Article 9, the LDP has in recent parliamentary deliberations pledged to dispense a host of new social benefits. Abe has also used recurring North Korean missile tests and simmering maritime disputes to create a sense of urgency and prompt public acceptance of constitutional revision before 2020. And yet, despite or precisely because of heightened military tensions, the public remains divided. Many fear for Japan’s post-war pacifist legacy and democracy.

But as constitutional revision remains a long-term objective, …continue reading

    

Scandals are starting to stick to the Abe administration

Author: Aurelia George Mulgan, UNSW Canberra

School scandals are wiping some of the shine off the Abe administration. This time, the school is Kake Gakuen, a veterinary medicine school being constructed in a national special strategic zone (NSSZ) in Ehime Prefecture.

Having weathered the Moritomo Gakuen scandal earlier this year with barely a blip in the public opinion polls, Abe is clearly hoping to tough it out again. He may not be so lucky this time. The latest opinion polls in Japan are registering rising rates of disapproval of the Abe cabinet and the prime minister himself. Moreover, there are rumblings in the ranks of the Liberal Democratic Party (LDP) that potentially bode ill for Abe’s leadership. Two of Abe’s rivals for LDP president — Shigeru Ishiga and Taro Aso — both opposed construction of the vet school.

Japan’s Prime Minister Shinzo Abe attends a news conference after close of regular parliament session at his official residence in Tokyo, Japan, 19 June 2017 (Photo: Reuters/Toru Hanai).

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Even if Abe proves to be the ‘Teflon prime minister’, these two scandals reveal increasingly troubling aspects of the way in which he and other personnel in the Prime Minister’s Office (Kantei) conduct themselves, including Chief Cabinet Secretary Yoshihide Suga and Deputy Chief Cabinet Secretary Koichi Hagiuda. Suga dismissed the existence of a …continue reading

    

Distortions, growth catch-up, and the middle-income trap

Distortions, growth catch-up, and the middle-income trap

Understanding distortions

In theory, a distortion refers to a departure from the perfect competitive equilibrium with no externalities and in which resources have been optimally allocated so that each economic agent maximizes his or her own welfare. Thus, distortions are closely associated with market imperfections. In reality, an economy with no distortions does not exist—both advanced and developing economies use government interventions, such as stabilization policies, development strategies, industrial policies, administrative regulations, and so forth, which can be viewed as distortions, broadly defined.

Nevertheless, the extent to which the economic system is distorted differs substantially among countries. In general, the development phase, resource endowments, institutional arrangements, and socioeconomic factors play a crucial role in explaining these differences. Specifically, a “night-watchman” state, where an economy functions under the laissez-faire principle with minimal distortions, and a “paternalist” state, where the welfare system covers from “cradle to grave,” are commonly considered as two extreme types. Most countries, if not all, lie between them.

Perhaps more importantly, distortions are motivated by various purposes, good or bad. We can identify two types of distortions in terms of purpose. Some distortions, called “original sin,” are due to underdeveloped market systems. Others, which manifest as strong government intervention, are mainly caused through the motivations of developing countries to enact strategies to catch up in terms of growth. For this purpose of catch-up, some former or current developing economies, especially those in East Asia, including Japan, the four “Asian dragons,” (namely, Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China) and the People’s Republic of China, have achieved impressive growth performance through various distortionary policies. These policies include selective industrial policies, financial repression, trade and exchange rate arrangements, price “scissors” between industrial and agricultural products, and discrimination between public and private ownership.

Although distortions due to either “original sin” or “catching-up …continue reading

    

Koike’s challenge to Japan’s political status quo

Author: Corey Wallace, Free University of Berlin

Japan’s self-styled governance reformers have attempted to knit themselves into Japan’s political fabric in different ways over the last 15 years. But up to now, the various waves of reformers have failed to translate the popularity of their agenda into national political influence.

‘Koizumi’s children’, named after former prime minister Junichiro Koizumi, were a group of Liberal Democratic Party (LDP) politicians who came to prominence in the 2005 elections, hand-picked as candidates by Koizumi for their support of his reform agenda. The centre-left opposition Democratic Party of Japan (DPJ) then became the vehicle in 2009 for ‘Ozawa’s children’ to take the stage. Former mayor Toru Hashimoto used a takeover of local government in Osaka to build support for a new national party that also attracted former parliamentarians from both the Koizumi and Ozawa cohorts.

Tokyo Governor Yuriko Koike makes a speech for candidates from her Tomin First no Kai party ahead of a metropolitan assembly election in Tokyo, Japan, 28 May 2017 (Photo: REUTERS/Kim Kyung-Hoon).

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Yuriko Koike’s historic ascent to the Tokyo governorship is the latest such challenge to the political status quo.

Koike quickly vowed to address the escalating costs of the 2020 Tokyo Olympics, which had quadrupled from original estimates to US$25 billion. Koike also suspended the relocation …continue reading

    

How Silicon Valley is losing the Battle for Asia

How much are western companies willing to get along with governments?

The majority of the 4 billion people living inside a circle encompassing China, India, NE Asia and SE Asia—over half the world’s population—have not yet grasped the internet, but most of them will have within the next decade or two. How they do so, on what terms, and through which platforms, will go a long way to defining the winners and losers of the next wave of the web, and actually the very nature of the internet itself. So can we ask the question: how well placed are Silicon Valley companies to benefit?

The battlefield is a diverse patchwork of countries with distinct languages and cultures, varying degrees of connectivity infrastructure, diverse digital media landscapes, and contrasting political regimes with business environments that range from: mature but essentially open (Japan), barely connected and hence, in theory, up-for-grabs (India), effectively protected (South Korea), and outright walled off (PRC).

Against this vast and diverse tapestry of peoples and places, one of the biggest challenges for Silicon Valley folks is that not enough of them would find the title of this article absolutely preposterous. Having lived in “Asia” for 14 years, I find the very idea of Western minds attaching a single word to everything bundled into this mega-region increasingly absurd.

As I think the following case histories suggest, despite the relative ease with which the dematerialised nature of the web has allowed Silicon Valley’s star companies to scale-up faster than any others in history (Google became the world’s most valuable company in under 19 years), in order to play a big role in the future of the web in Asia, these companies will need to differentiate, decentralise and delegate control like never before, and hence become truly global in nature. Some will manage this feat, others will not, and we have already got some good …continue reading