BY many measures, Japan’s economic fortunes have turned up. The Tokyo stock market has surged about 65 percent since last fall. In the second quarter, the economy expanded by 3.8 percent, which is faster than other developed economies. At last, prices are edging upward, a good thing for Japan. Yet, the mood in Tokyo among businessmen and economists remains precariously balanced between enthusiasm for the monetary and fiscal stimulus unleashed by Prime Minister Shinzo Abe and worry that promised structural reforms might not be implemented.
That’s a worry that other countries should absorb. What concerns businesses in Japan concerns business all around the world. In the endless global debate about the importance of macroeconomic budgetary and monetary policies, insufficient attention is often given to the unsexy, often politically toxic pile of smaller-bore policy challenges that can be critical to restarting a faltering economy.
Many countries need to take on those challenges, including calcified parts of “old Europe” like France and Italy, emerging nations like India, and even the United States, with its shortsighted slant toward consumption in place of saving and investment.
Japan is certainly as shackled by its own rigidities as any other country. While some export-oriented industries (autos but, notably, not electronics) have remained competitive, the domestic economy feels straitjacketed by bureaucracy, tradition and overregulation.
Accordingly, Mr. Abe has promised to deliver a vast array of microeconomic reforms, from permitting online drug sales to increasing the number of women in the work force by expanding child care, to “corporatizing” Japan’s fragmented farming industry.
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