Japan: Promoting Inclusive Growth for an Ageing Society
Japan has achieved a comparatively high level of well-being: skill levels are high,
unemployment is low and life expectancy at birth is the highest in the OECD. Since
its launch in 2013, Abenomics has had a positive effect on the economy, and per capita
output growth has picked up. However, to achieve inclusive growth and greater well-being,
Japan needs to address important challenges to foster fiscal sustainability, narrow
the productivity gap with leading OECD countries and manage the demographic transition.
A new fiscal plan going beyond achieving a primary surplus should lay out concrete
measures to raise revenues and control spending. As Japan’s population ages, using
all available talent in the labour market and achieving gender equality are key to
overcome labour shortages. Boosting productivity, which has been stagnant, will require
increasing returns from R&D, capitalising on the digital economy, fostering the dynamism
of SMEs, and reducing barriers to foreign direct investment and trade to promote greater
integration into global value chains. Japan’s education system is one of the top performers
in the OECD, but there is scope to further invest in teachers and schools. Finally,
further action to foster green growth and environmental quality as well as effectively
leveraging upcoming international sports events, such as the Rugby World Cup 2019
and the Olympic and Paralympic Games 2020, would also boost local development and
inclusive growth. The complementarity of reforms needed to achieve inclusive and sustainable
growth in in an aging society makes a compelling case for a comprehensive approach.
Published on April 18, 2018Also available in: Japanese
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