Waseda University GCOE & Erasmus Mundus-GEM Joint PhD Summer Institute 2011
Closing Remarks
By Prof. Shujiro Urata
Prof. Urata started with the discussion about the Japanese economy that is facing avery difficult situation. He divided the problems into two broad types. One is the longterm structural problem and the other is the short term transitional problem. Long
term problem includes the most important demographic factor in particular thedeclining population problem which directly affects the growth of the economy. Throughthe declining labor input and also due to the aging population, the savings rate is also
declining from 20% to 2-3%. And with this declining savings rate Japan cannot expect
capital inputs to grow unless it successfully attracts foreign capital. Again, attracting
foreign workers is another option to increase labor input. But these two alternatives
cannot be taken in action within the short time period. Therefore, it is important toincrease or improve productivity which is a challenge that Japan is facing. The shortterm problem relates to the three disasters which Japan has faced recently after theearthquake; shortage in electricity, sharp appreciation of yen and high corporate incometax. Japan has one of the highest corporate income taxes in the region. There was talkabout reducing the tax before the earthquake but now it is going to increase instead, tofinance the government expenditure to deal with the disasters. These three areaffecting the Japanese companies in every aspect and many companies are thinking ofout locating the production unit outside Japan.
Prof. Urata argued at this point that, one possibility is to signing enough FTAs, and also
engaging in EPA and TPP, which will open up markets for Japanese exports. It isalready known that because of agriculture, it is difficult to sign FTAs. Most of the FTAs
are under negotiations but recently China & Japan has become very close which issurprising and they will take initiatives to speed up the ASEAN+3 and ASEAN+6processes. Prof. Urata thinks that China is interested in speeding up the process ofregional integration in East Asia in response to TPP and Japan is interested in taking alead in regional integration in East Asia. Therefore, until recently Japan and Chinawere competitors, but now they have decided to make this proposition by speeding up
the process of East Asian regional integration. He mentioned that lately USA becamevery interested in TPP, may be because USA saw regional integration being constructedin East Asia. So, TPP was in response to Asian regionalism and East Asian regionalism
seems to move forward in response to TPP. At the same time it will be very interestingto see how ASEAN respond to this movement of China and Japan in speeding up theprocess of East Asian regionalism.
On the issue of Asia and Europe, as an economist, Prof. Urata is interested to see theimpact of EU and EU integration on member economies. What influence does it have on
the income distribution, flow of goods, capital and people? Although this is final year forGIARI, he believes that some other initiatives will take over GIARI’s activities. This
event was only the beginning of the collaboration and he hopes to continue the long last
relationship which has just began.

Binti Ferdous