and bursting of a bubble, the subsequent financial crisis, mild deflation, the aging of and decline in the population, and the great east japan earthquake. at the same time, other advanced countries have also ultimately experienced at least some of the same problems as japan, and this can be seen in developments since the mid - 2000s. one clear difference between japan and other advanced countries is the fact that japan was the first to experience such problems and, in the absence of a textbook that might address them, had to tackle them through its own efforts. in this sense, japan suffered from these difficulties in the unique position as a forerunner. such experiences provided some lessons that helped us recently in dealing with the global financial crisis, as evidenced by the relative soundness of japanese financial institutions. the long - term developments in japan ’ s economy third, i would like to take a look at how japan ’ s economy has developed over a longer time span ( chart 7 ). japan opened its doors to the world 160 years ago when a u. s. fleet led by commodore perry, who held an official letter from president fillmore, anchored off the coast near the capital city. after experiencing rapid economic development, japan became the first industrial nation among non - western countries. japan ’ s real gdp and gdp per capita back in 1870 – for which relevant statistics are available – were 26 percent and 30 percent, respectively, of the relative figures for the united states ( chart 8 ). the ratios had not changed much by the time the cherry trees were sent to washington d. c. as a gift of friendship 100 years ago. they gradually rose thereafter, but the ratio in terms of gdp per capita was still a mere 44 percent at the peak before world war ii. the war caused disruptive economic damage, but japan, after making strenuous efforts toward reconstruction, entered a period of rapid and high economic growth. the country ’ s high growth period started in the mid - 1950s and ended in the early 1970s. the average annual growth rate in this 15 - year period was high, at 9. 7 percent ( chart 9 ). there have been various discussions about the factors that enabled japan ’ s high growth after the war, but given the time constraint, i would like to highlight just three of them. the first factor is favorable demographics. japan benefited from the so - called “ population bonus ” that occurred when the total population increased together with the ratio of the working - age population. the second factor is the

measures working on the demand side. even if it takes time, i am not pessimistic about the future of the japanese economy. we should be proud of japan ’ s high quality labor force, technology, and managerial ability which enabled the post - war economic recovery. such economic potential is still intact. i believe that dynamism will be restored to the japanese economy if, with appropriate supply - side prescriptions, industries revitalize themselves through the transformation of existing firms or the creation of new ones in a competitive framework conducive to increasing risk - taking activity. in fact, the government has been examining various measures to tackle unemployment and industrial revitalization. and, in the private sector, we can observe some signs of future changes such as the increase in business affiliations and mergers and the review of business areas. by promoting structural change, the japanese economy will undoubtedly exhibit the potential to transform itself into an economy with vitality and high productivity. in coming up with specific supply - side prescriptions, cooperation between the private sector and the government is essential in discussing such problems as how to guide incentives for firms and households in a desirable direction and how to minimize moral hazard. i sincerely hope that my speech today will contribute to discussion on the very important problem of structural reform.