From tragedy to the revitalisation of Japan

The March 2011 Great East Japan Earthquake was the worst disaster in Japan's post-war history. Reconstruction from this tragedy highlights some of the structural reform challenges faced by Japan. Overcoming these challenges should lead to the revitalisation of the economy, in part by making the Tohoku region a model for Japanese agriculture, while restructuring the electricity sector. The high level and distortionary nature of agriculture support imposes burdens on consumers and taxpayers, undermines the dynamism of the farming sector and complicates Japan’s participation in comprehensive bilateral and regional trade agreements that would boost its growth potential. The priority is to shift to measures decoupled from production and gradually reduce border measures. The reduced role of nuclear power following the Fukushima accident makes it necessary to accelerate the expansion of renewable energy, which requires setting a strong and consistent price for carbon. It also depends on creating a more competitive electricity sector by reducing the dominance of the ten regional monopolies through ownership unbundling of generation and transmission and expanding interconnection capacity, while introducing real-time pricing.