The Noda Cabinet on July 31 adopted the Japan Revitalization Policy, which incorporates the strategy for economic growth through fiscal 2020. It aims to achieve average economic growth of 3 percent nominally and 2 percent in real terms by focusing on eco-friendly industries, medical services, and agriculture and fisheries.
But the program fails to provide concrete means for achieving the goal. The government needs to work out a process that will ensure the desired end result. Even if such a process is clearly laid out, the government will have to overcome another hurdle — how to finance the revitalization program.
As a general theme of Japan’s revitalization efforts, the program calls for creating a “new Japanese society” by overcoming the effects of the 3/11 disasters and the Fukushima nuclear crisis. It also said that the basic policy should be the transformation of the nation’s industrial structure in order to “get away from reliance on nuclear energy.”
Main policy targets include creating markets worth more than ¥50 trillion and creating more than 1.4 million jobs through nurturing “green” industries; creating markets worth ¥50 trillion and creating 2.84 million jobs through promotion of “life” industries such as medical, nursing care and health-related services; making full use of the vitality of medium-size and small enterprises to increase their sales overseas by 4.5 percent; and creating ¥10 trillion markets by strengthening elements of processing, retailing and tourism in agriculture and fisheries.
The program, for example, envisages boosting the share of hybrid, electric and other environment-friendly vehicles to 50 percent of car sales; increasing overseas sales of batteries to ¥10 trillion or a 50 percent of the global market; having all newly built homes meet state-set energy-saving standards; and expanding medical services and sales of medical equipment abroad to ¥20 trillion.
It will be difficult to achieve these targets unless the government works out an effective system to support and encourage research and development, including a tax system conducive to promoting R&D efforts.
The program also envisages building R&D bases for eco-friendly industries and medical drugs in the disaster-hit areas and increasing the share of electricity generated through renewable energy sources to 25 to 30 percent of the total electricity output.
Merely mentioning the future weight of green energy without working out a time-bound road map to reduce and eventually end reliance on nuclear power does not constitute a policy.
Given the shortage of funds, the Cabinet must scrutinize whether government ministries have surreptitiously included ineffective policy measures into the revitalization program.