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Home > Debates Last Updated: 14:33 03/09/2007
Comment (June 9, 2004)

Comments on Takamitsu Sawa's Article "Recovery Needs New Markets"

Gregory Clark (Vice President, Akita International University)

Professor Sawa ( is quite right to point out the need for new sources of demand to sustain Japan's current recovery.

The current demand sources - expanded export markets, replacement demand after a prolonged slump and the digital products boom - may not last for ever.

But like many others he in effect calls on Japanese industry to come up with a never-ending supply of technological marvels and gadgets to keep the economy moving forward. This is simply not possible. There is a limit to the inventiveness of even Japanese firms.

Japan's chronic lack of domestic demand is due to the unwillingness of Japan's large middle and wealthy classes to emulate the massive spending on leisure and lifestyle found in all the other advanced economies. The extraordinarily high level of savings, especially among the elderly and the rich, is proof.

In this situation there are only two possibilities. One is to find ways to change the attitudes to leisure and lifestyle. This may be difficult since deep-rooted cultural values are involved.

If it is believed that government borrowing has reached a limit (a topic that can be debated) then the other alternative is to change the taxation regime to allow increased government spending.

This spending should focus on improved education, infrastructure, environment etc, to provide an improved public lifestyle as an alternative to the extravagant private lifestyles that the Japanese consumers to date have not sought after.

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