Understanding the Japanese Economy: Barriers to Increasing Trade

Abstract

Even if Japan took steps to end its neo-mercantifist barriers to free trade, Japanese domestic demand would remain low for structural reasons. If Japanese domestic demand is to be enlarged, structural reforms are needed that will stimulate private spending and investment. The report of the Maekawa Commission of 1986 to the Japanese prime minister is a blueprint for the structural enlargement of demand. Japan must do three things: end excessive savings, enhance household income, and reorient its economy from one based on exports to one devoted to meeting domestic needs.