May 16, 2021

News Analysis: In Japan, a Growth Strategy With Echoes of the Past

TOKYO — Digital medical records. Special economic zones. Structural reforms.

The core ideas behind Prime Minister Shinzo Abe’s much-publicized growth strategy are stirring a nagging sense of déjà vu.

They should. The plan, which is set to be approved later this week, borrows liberally from a string of previous government initiatives that similarly promised to bolster the economy, including his own. And economists and investors are increasingly worried that the latest initiative will have the same effect as the past ones — that is to say, little at all.

“Every prime minister in recent memory has introduced an economic growth strategy, each not much better than the other,” said Akihiko Suzuki, chief economist at Mitsubishi UFJ Research and Consulting, the research arm of the large Japanese bank.

“Expectations rise, but are quickly dashed,” Mr. Suzuki said. “It’s foolish to expect something different this time.”

The first two arrows of Mr. Abe’s economic push — a sizable dose of monetary and fiscal stimulus — initially impressed investors, sending the stock market soaring as much as 80 percent in six months. But some of that enthusiasm has evaporated, since Mr. Abe outlined the third piece, the core growth strategy. In recent weeks, the Nikkei has been in a steady slide.

Some investors worry that the prime minister’s plans are not much different than the largely ineffective attempts made by his predecessors, including Mr. Abe during his previous stint in 2006 and 2007.

Take Mr. Abe’s idea to help create a cutting-edge industry by digitizing Japan’s wealth of medical data, ripe for mining by technology companies. A similar policy was featured in Mr. Abe’s accelerated growth program, drawn up in mid-2007, during his previous term in office.

But after Mr. Abe resigned in September 2007, doctors started to grumble over the burdens of digitization. Many clinics run by older physicians eventually won exemption from the plan, along with others who found it difficult to work with digital technology. It is unclear whether the digital push this time will be more comprehensive or how much new business it may generate.

Mr. Abe also wants to create special economic zones that would relax some aspects of nationwide regulation in an effort to woo foreign investors. In part, the prime minister is pushing for more flexible medical services to cater to expatriates and more leeway for companies in emerging fields to hire and fire staff.

Mr. Abe’s mentor, the former prime minister Junichiro Koizumi, tried much the same tack in the early 2000s. His reforms led to the creation of almost 1,000 special zones for structural reform, which relaxed things like the paperwork required by foreign researchers, standardized school curriculums, and licenses to home-brew sake, or Japanese rice wine.

The opposition Democratic Party introduced similar zones during its three-year stint in power, which ended in late 2012 with the victory of Mr. Abe’s Liberal Democratic Party. But the long-term impact of such efforts has been limited.

Sweeping economic goals and strategies have become an almost annual rite for Japan’s successive prime ministers.

Before Mr. Abe’s growth strategy came three policy initiatives from the Democratic Party: Yukio Hatoyama’s New Growth Strategy of 2010; Naoto Kan’s Scenario to Bring Back a Lively Japan of 2011; and Yoshihiko Noda’s Japan Revival Strategy of 2012. Those initiatives did little to brighten Japan’s economic prospects.

Preceding those policies were Yasuo Fukuda’s Economic Growth Strategy of 2008 and Taro Aso’s Future Pioneering Strategy of 2009, which focused mainly on growing gross domestic product. But the Japanese economy suffered its most severe recession amid the global financial crisis, ending the Liberal Democratic Party’s half-century of almost uninterrupted rule.

Now, investors are worried that Mr. Abe’s growth strategy is merely more of the same, a situation that threatens to undermine confidence in the other facets of his program.

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