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NO. 18 — May 8, 1998

 

Feature Article

JAPAN'S ECONOMIC MESS

A Paper By Edward J. Lincoln, The Brookings Institution,
Presented To The Japan Economic Seminar, Washington, D.C., April 25, 1998

Summary

Analysts on both sides of the Pacific still are weighing the impact of Tokyo's late April fiscal stimulus package on the performance of the slumping Japanese economy this year and next. Sooner or later, however, they will return to the more difficult question of Japan's economic future. Today, the medium-run to long-run prospects for the world's second-biggest economy appear anything but bright. The reasons are numerous but, as this report indicates, financial-sector policies and practices go a long way toward explaining the pessimistic forecasts of mainstream economists.

Edward J. Lincoln brings a unique perspective to the discussion of Japan's economic future. The author of Japan Facing Economic Maturity and Japan's Unequal Trade, he is a senior fellow in Foreign Policy Studies at The Brookings Institution in Washington, D.C. During former Vice President Walter Mondale's tenure as U.S. ambassador to Japan, Mr. Lincoln advised him on economic issues. That assignment followed his initial affiliation with The Brookings Institution. Before then, Mr. Lincoln was the executive vice president and chief economist of the Japan Economic Institute.

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Weekly Review

ALBRIGHT HAILS STIMULUS PACKAGE BUT URGES FURTHER ACTION by Barbara Wanner

To some diplomatic observers, Secretary of State Madeleine K. Albright's April 28 visit to Japan en route to meetings in the People's Republic of China, South Korea and Mongolia seemed to be an unenviable mission. While offering encouraging words concerning the ¥16 trillion-plus ($133.3 billion at ¥120=$1.00) fiscal stimulus plan released four days before her visit, Ms. Albright at the same time made it clear that Washington does not regard the package as a cure-all. She prodded Tokyo for further deregulation.

 

JAPANESE OFFICIALS HIT THE ROAD TO PROMOTE STIMULUS PACKAGE by Eric Altbach

Since Tokyo announced its ¥16 trillion-plus ($133.3 billion at ¥120=$1.00) fiscal stimulus package April 24, top government officials and Liberal Democratic Party leaders have mobilized to promote the plan in Washington and at several international gatherings of finance officials. While the initiative received cautious approval in some Asian capitals, it generated a muted response from the United States. Clinton administration officials and others are calling for more deregulation and restructuring efforts to reenergize Japan's weak economy.

 

GLOOM FAILS TO LIFT FROM JAPANESE ECONOMY by Douglas Ostrom

Given the arguably unprecedented pressure on Tokyo to jump-start the economy, the Japanese government might be expected to be eager to paint a relatively optimistic picture of economic conditions. Yet, even top officials are using unusually pessimistic language to describe the economic environment. This gloominess is the product of the latest statistics.

 

TOKYO AND WASHINGTON PONDER PATENT REFORMS by Jon Choy

As advanced technology has become the driving force in a wider and wider range of industries, American and Japanese interest in protecting intellectual property rights — patents, copyrights, trademarks and service marks — has grown apace. Last year, Washington tried — and failed — to pass major amendments to its IPR laws, running afoul of the American tradition of fostering individual inventors. Tokyo is weighing whether to overhaul its patent and copyright laws for the first time since the 1950s, with prospects for adoption looking good. Even with the changes, some Japanese and foreign observers contend, protections for intellectual property in Japan still will be weaker than those granted in the United States and Europe.

 

NOTES:

The Japanese government took another step April 28 toward broadening the country's defense roles and responsibilities. Despite opposition from the ruling Liberal Democratic Party's two parliamentary allies, the pacifist Social Democratic Party of Japan and the New Sakigake Party, the cabinet of Prime Minister Ryutaro Hashimoto approved three bills that would authorize the Self-Defense Forces to provide noncombat support to U.S. forces as outlined in the September 1997 revised guidelines for U.S.-Japan defense cooperation. The package was submitted to the Diet later that day.

 

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