Professor Fukao – How to Fix Japan’s Economy: Improving Governance is Part of the Policy Prescription

Professor Kyoji Fukao and Professor Kwon of Nihon University have published a masterful analysis of what has been going wrong with Japan's economy during the past 20 years and what can be the key drivers of growth going forward.

Key conclusions include: a) For the past 15 years, the major contributors to net jobs growth and GDP expansion have been emerging young Japanese companies, and foreign direct investment. Policies that focus on the needs of these groups are essential; b) for many years Japan has been plaguedthe dual problems of a sluggish metabolism (slow reallocation of resources to their best uses) and an exit effect that isnegative,a net drag on total factor productivity rather than a positive contributor (i.e., more productive firms are leaving industries, and less productive firms arestaying, otherwise translated as their are too many zombies still around to waste time competing with them when I can expand elsewhere…); and c) corporate governance reform may be needed to fully address the problems in (b).

A presentation by the Professors that explains these issues and many can be downloaded at:

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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