The Challenge to Revive Japan

Fujio Mitarai Chairmen of Committee on Corporate Governance, Keidanren President and CEO, Canon Inc.

While expectations were great for structural reforms, in reality they have not progressed as planned. With the threat of a deflationary spiral looming, it is becoming increasingly difficult to wipe away the uneasiness surrounding Japan's future. Not even a trace of the pride and confidence that marked the "Japan as No. 1" era of the 80s remains today; in our search for some sure sign of a revival, we hesitate as pessimism fraught with desperation hangs in the air.

Has Japan really lost its power? I do not believe that this is the case, but rather that we have still yet to find the proper direction in which to concentrate our strength.

Looking at Japan now, I can detect many aspects that are remarkably similar to conditions I experienced in the United States during the 1980s when I was living there. At the time, while suffering a severe unemployment crisis due to a "hollowing out" of industry along with a structural recession, the U.S. fell into a lapse of confidence amidst concerns that a strong America would never emerge again. Under the Reagan administration, however, structural reforms based on solid policies and firm popular support were carried out and, in the 1990s, a strong America rose once again, realizing unprecedented levels of economic prosperity.

In support of a global leadership role in high-tech industries, the United States promoted various dynamic state-led projects, based on a long-term vision, that were designed to foster growth in such fields as the aerospace industry, the information highway, IT, and the biotechnology industry. In existing key industries, including automobiles, steel, and semiconductors, the country successfully revitalized business by carrying out reforms and restructuring aimed at cutting costs and boosting productivity through such means as supply-chain management and the implementation of simulation technologies.

Other major contributing factors include the strong coordination between industry, academia and government; active state-sponsored investment in fundamental advanced technologies; and a system that supports an easy transplanting to the private sector of the fruits of these development initiatives. The ability to swiftly industrialize the latest technologies supplied the lifeblood for the United States' recovery.

Even though we also call Japan's a free economy, we have still yet to completely shed our post-war protectionist attitude as the existence of countless regulations and customs stand in the way of free and open reforms. Furthermore, coordination between industry, the academic community and government in Japan is a decidedly fragile arrangement. The immediate deregulation and restructuring of our economic and financial systems is a burning necessity to achieve the short-term goal of reviving the economy. The real challenge before us, however, is how to combine and concentrate our outstanding technical prowess and productive capabilities to achieve a revival that will enable us to survive fierce global competition in the future and enjoy our own prosperity.

Development and production technologies are resources that Japan can truly be proud of. The value borne of these innovations will make possible Japan's recovery, which is why we must take great care to avoid the "hollowing out" of these industries by simply transferring production operations overseas.

To this end, I believe the bold introduction of a national project, based on a clear vision centered on long-term national interests, is called for. Additionally, I have a strong desire for the early realization of a system that makes possible an effective and strong cooperative relationship between industry, academia and government.