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Date of Issue:15/October/2002

Comments from the Participants of the 26th Leadership Program (1)
- Japanese economy and politics -

Institute for International Studies and Training (IIST)

In the last issue (No. 0028), the holding of the 26th Leadership Program was introduced. Impressions of and suggestions for Japan offered by the 13 opinion leaders from around the world following their participating in this program are introduced herewith in two parts.

Except for a few participants who took a very pessimistic view regarding the problems posed by traditional policies and sluggishness in dealing effectively with various issues (needing to decide on what to change and what to keep), such as those of the financial sector and the unemployment situation, the general view was that although Japan is now undergoing difficulties and understands this to be the reality, there is room for optimism since improvements can be expected in the future because of the strengths participants saw in Japan, whether from its track record such as technology innovation (e.g. Sanyo) and the international trading system.

Based on participant observations and discussions with the invited speakers, Japan's methodical and considered approach is seen as successfully resolving conflicting demands, leading Japan to reach new heights in economic growth and prosperity. The Japanese economy is still seen to be one of the strongest in the world, along with the U.S. and Germany. Despite reports in the press, the recent downturn in Japan's economy, which have caused highly noted and visible strains on the Japanese people, are relative to Japan's high levels of growth in the recent past, and Japan continues to enjoy a world-class economy.

More importantly, Japan is considered to have taken serious steps to analyze the reasons for the downturn, leading to internal debate on how to address these issues while maintaining Japan's cultural individuality and traditions. The overall perception of Prime Minister Koizumi is that his moves somehow represent change, altering some traditional political relations permanently. This also means changes in the economy as the political system is dominated by the economy, despite a certain perception that bureaucrats have become more powerful due to political turmoil, as highlighted by the flux in both the LDP and the ruling coalition, as well as in the opposition parties.

There was also the view that a decline in bureaucratic methods and control had occurred at the same time and probably pre-dating Koizumi in having an impact on the political scene, while also leading simultaneously to a state of uncertainty on how to really establish priorities and direction. Overnight changes are not expected though, for the old ideals of the Japanese are still being kept alive by a great number of those from the old generation. Local moves such as those in the prefectures (e.g. Nagano) and cities (Yokohama) seem to have attracted much attention from the participants. Emphasis was placed by one participant on modern society and governance − political and corporate, meaning the process of providing incentive mechanisms and policies − as now no longer being suited for managing contemporary Japanese society and thus forcing Japan into a position where it must find a more appropriate and tailor-made model of governance. As politics is also intimately tied to economics, the overall picture is extremely complex and cloudy.

Another observation was that Japan has again recognized that change has already started, and is managing it so as to be able to control the impact of that change. Thus, new alignments are being formed, tested, and the results measured for evaluation. Since the alignment process is slow and the results difficult to assess, many elections are seen as necessary in order to establish what works for Japan. Nevertheless, the consensus appears to be that Japan will most likely find solutions to its economic problems (whether this will apply to the political scene is thought to be another story).


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