OECD Economic Surveys: Japan

Every 18 months
1999-012X (online)
1995-3062 (print)
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OECD’s periodic surveys of the Japanese economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

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OECD Economic Surveys: Japan 2017

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13 Apr 2017
9789264272187 (EPUB) ; 9789264272170 (PDF) ;9789264272132(print)

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Economic growth has picked up since Abenomics was launched in 2013, and so has job creation. However, Japan faces serious demographic headwinds, as its population is projected to decline by a quarter over 2015-50, with the share over age 65 rising from 26% to almost 40%. Firms already face labour shortages. Population ageing also puts upward pressure on government spending. Gross government debt, which has risen to 219% of GDP, the highest ever recorded in the OECD area, continues to rise. Labour productivity is about a quarter below the top half of OECD countries despite Japan's high levels of human capital, R&D and business investment. Slowing productivity growth has been accompanied by increased income inequality and relative poverty. Gender gaps in employment and wages are relatively large. This Economic Survey of Japan assesses the country’s recent macroeconomic performance and prospects, and offers recommendations to boost productivity and foster more inclusive growth. In particular, the expanding gap between leading and lagging firms should be narrowed by promoting business sector dynamism and entrepreneurship. Breaking down labour market dualism is a priority to bring about inclusive growth and raise productivity. Faster productivity and output growth, accompanied by measures to limit public spending growth and gradually increase government revenue, would help ensure fiscal sustainability.


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  • Basic statistics of Japan, 2015

    This Survey is published on the responsibility of the Economic and Development Review Committee (EDRC) of the OECD, which is charged with the examination of the economic situation of member countries.

  • Executive summary

    Growth has picked up The dispersion in labour productivity between firms limits inclusive growthGovernment debt continues to rise as a share of GDP

  • Assessment and recommendations

    Recent macroeconomic developments and short-term prospectsRemoving barriers to labour participation in the context of population ageingIncreasing productivity to promote inclusive growthPutting the government debt ratio on a downward trend

  • Progress in structural reforms
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  • Expand / Collapse Hide / Show all Abstracts Thematic chapters

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    • Boosting productivity for inclusive growth

      Never in the past 30 years has productivity growth been lower than since the 2008 global financial crisis, and never has income inequality been higher than it is today in Japan, and in the OECD area. The two challenges have some common origins, including a widening productivity and wage gap between leading firms and those that are lagging. This creates scope for positive synergy between policies to promote productivity and inclusive growth. Exit policy should be improved to facilitate the closure of non-viable firms, whose survival hampers the growth of viable firms in Japan. This would also increase firm entry, along with policies to promote entrepreneurship. The growing gap between Small and Medium-sized Enterprises and large firms also needs to be addressed. Breaking down labour market dualism, which limits human capital accumulation by non-regular workers and contributes to earnings and income inequality, is also a priority. Finally, ensuring appropriate skills, including those needed for digitalisation, would help support higher productivity and inclusive growth.

    • Ensuring fiscal sustainability in the context of a shrinking and ageing population

      With gross government debt of 219% of GDP in 2016, Japan’s fiscal situation is in uncharted territory and puts the economy at risk. In addition to raising productivity and growth, Japan needs a more detailed and credible fiscal consolidation path, including specific revenue increases and measures to control spending to restore fiscal sustainability. Spending pressures associated with rapid population ageing make reforms to contain social expenditures a priority. Local governments need to be part of the effort to contain public spending in the context of a shrinking population. Much of the consolidation, though, will have to be on the revenue side, primarily through hikes in the consumption tax rate toward the OECD average and a broadening of the personal income tax base. Fiscal consolidation should be accompanied by measures to promote inclusive growth through the tax and benefit system, in particular by introducing an earned income tax credit to assist the working poor, hiking the tax on capital income and broadening the base of the inheritance tax.

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