Post-Fukushima Japan: A Roadmap for Rehabilitation

The May 2011 issue of Monocle – an increasingly indispensible magazine – has the issue of ‘jump-starting’ post-Fukushima Japan at its heart, with Editor-in-Chief and Chairman Tyler Brûlé mapping out several possible steps to be taken in his thought-provoking piece, New Build – Japan. These include the excellent suggestions of establishing a government and diplomacy school with pan-Asian credentials, and providing support to the specialist, knowledge-rich SMEs which proliferate in the Japanese Archipelago.

However, Japan faces serious structural problems beside which increasing the country’s influence in the domain of international relations or the ability of its smaller corporations to continue to compete in global markets look positively low priority. Addressing the following issues will mean that Japan should continue to be in many respects a model country; conversely the price of leaving these in abeyance will be a high one:

1. Energy. Incredibly, the reactors at Fukushima I represent only the tip of the Japanese nuclear iceberg: one of the most earthquake and tsunami-prone countries on earth has 50 main nuclear reactors which generate around 30% of the nation’s electricity, a figure which was expected to rise to circa 40% in 2017 and 50% by 2030. After Fukushima, this situation is probably no longer tenable; the impact of a second or a third such accident could totally destroy Japan’s image globally and lead to capital flight on an unprecedented scale. A Japanese mobilisation of the country’s tremendous resources in renewable energy – companies such as Sharp and Kyocera are world leaders in solar power, and Japan has more wind and rain than it knows what to do with – should be a matter of the utmost urgency.

2. Immigration. While the Japanese are no longer the legendarily insular creatures of years gone by – indeed, their co-hosting of the 2002 World Cup is regarded as a paradigm of hospitality and generosity – discrimination against even Nikkei, ethnic Japanese who have origins in countries such as Brazil and Peru, is real, let alone towards immigrants from the Korean Peninsula, China, Iran and Indonesia. However, pure demographics amply illustrate that this parochial mentality is no longer feasible: a rapidly ageing and shrinking population needs – according to a UN estimate – an infusion of at least 17m foreign workers by 2050 just to maintain a productive economy. Japan needs to embrace this fact: it represents an incredible opportunity to culturally and economically enrich the country.

3. Post-growth. Japan’s economy has long puzzled global onlookers, many of whom seem mesmerized that a highly-educated, economically egalitarian country which exports some of the finest, most innovative consumer products known to humanity is now synonymous with low growth; others – not least Norohiro Kato, Professor of Japanese Literature at Waseda University – recognise that Japan might well be pioneering a new, steady-state macroeconomy. Low growth has not hindered Japan’s status as the second-largest creditor nation in the world, nor its typical annual current account surplus of 3% of GDP; unlike the United States or Greece, Japan’s public debt of around 200% of GDP is owed to its own private sector rather than foreign institutions. In a era defined by resource crunches, Japan may well find it expedient to elaborate on this new path forward.


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Filed under Business, Economic Development, Economics

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