Hiroko Tabuchi had an interesting piece up yesterday.
“Everything about the Japanese economy tends to be skewed in favor of large, established companies and toward Tokyo, and that needs to change,” said Kenji Takaoka, the chief executive of Pijin.
A 2010 study by the economists Kyoji Fukao and Hyeog Ug Kwon at Tokyo’s Hitotsubashi and Nihon Universities showed that Japanese companies set up after 1996 added the most jobs in the period to 2010, creating 1.2 million, compared with a net loss of 3.1 million jobs over the same period at all companies founded before 1996. Foreign companies added more than 150,000 net jobs to Japan.
To economists, the discrepancy highlights the need for Japan to open up to more foreign direct investment. Those inflows came to less than 4 percent of economic output in 2010 compared to one-fifth of the American economy and half of Britain’s.
When they say “net jobs”, they’re not talking about the internet. They mean that in the period 1996-2010, it was newer Japanese companies AND that 4% GDP of companies with foreign direct capital who contributed to expanding Japan’s job base.
Like everywhere else, established companies are not the job creators, unless they are willing to be innovative and to shake off corporate politics—usually the latter. The problem in Japan is that there are more of the established kind than the new. And that establishment built its riches during the postwar Showa era, when the getting was good (because the country was destroyed).
Myself, I think what Abe is doing is an old song sung in a different key. Making clear the deflationary trap that Japan is in has been the only notable change.