The Medium-Term Forecast for Japanese Industry
and the Challenges it Must Face:

Improving Japan's Quality of Life and Ensuring Full Employment Through Structural Economic Reform


  1. Japanese companies are making major efforts to survive in this era of mega-competition and in the severe business climate defined by the economy's high-cost structure and continuing appreciation of the yen. They are thinking in terms of global markets, instituting internal corporate reforms, and forming partnerships or "tie-ups" to attain the optimum allocation and mixture of internal and external resources. With the 21st century fast approaching, fear of exodus of growth-oriented sectors will grow if move toward structural reform will not be made appropriately. Unless our nation begins building a new industrial capital through comprehensive deregulation and a new social infrastructure through major investments in social programs to improve the people's welfare, there will be further shift of Japanese business to overseas locations, creating a serious economic imbalance.

  2. The key to stimulating medium to long-term, internally generated, and continuous economic growth lies in the improvement of the productivity of Japan's manufacturing sector. For the health of the Japanese economy, which will be supporting a rapidly aging population in the 21st century, a sustained upgrading of productivity is a matter of life and death. An increase in productivity is also essential if we are to overcome the growing problems of a diminishing workforce.

    Until now, the Japanese government has played a very specific role in the development of the economy, through its policy of cradling, protecting, and nurturing industry. Now we no longer need the government to play the parental role of the discretionary, regulatory administrator of the past years that emphasized order and stability. Now we need the government to demonstrate leadership by taking bold action to rebuild our economic infrastructure, to avert impending hollowing-out of our industrial base and create an economic system that is harmoniously balanced, both domestically and internationally. Our corporations must have this firm foundation so they can meet the challenges posed by the constantly changing domestic and global economic environments using their own creative solutions while taking individual responsibility for their decisions and ultimately, increasing productivity.

    To summarize, Japanese government should undertake drastic reform of its economic structure through deregulation and tax reform, in order to create a free and vigorous economic environment that will enhance business activities of domestic as well as foreign corporations. In following this path, the efforts of the business community will lead to the development of an increasingly sophisticated industrial structure, full employment and a better quality of life for the Japanese people.

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