Shinzo Abe should focus on reforming Japan’s economy

Shinzo Abe came to the leadership of Japan in 2012 promising to end two decades of stagnation after the bursting of an economic bubble in the 1990s followed by prolonged recession. This month he became the country’s longest-serving prime minister, counting a year in office in 2006-07. But longevity does not necessarily reflect mission fully accomplished. Abe staked a deflation-busting recovery on “Abenomics”, a three-arrowed strategy to promote sustainable growth through monetary, fiscal and structural policies that stimulated business investment and consumer spending. The first two arrows involved massive policy easing and generous public spending that did revive growth. However, the third arrow of structural reform was crucial if the economy was to adapt to change. Alas, reform of old ways remains Japan’s Achilles’ heel. The third arrow has missed multiple targets.

Notably, Abe has failed to increase the representation of women in senior executive ranks of the public and private sectors, and corporate Japan continues to hoard profits instead of investing in talent, technology and innovation. The country is therefore not well prepared for the challenges of an uncertain strategic and economic future, including population decline of nearly 20 million by 2050.