The government's economic and fiscal report for 2004, which was released last week, has a subtitle that sounds only too familiar: "No growth without reform." Yet the report deserves attention for two reasons. First, it focuses on the regional economy, a subject that has been more or less overlooked in the past. Second, it deals with economic globalization, a trend that conflicts with regional economic development.
One problem with Japan's economic recovery is that the regions remain in the doldrums. Another is that internationally noncompetitive sectors, such as agriculture, are exposed to the unrelenting forces of globalization. Unless these weaknesses are effectively addressed, it will be difficult to set the Japanese economy on a trajectory of sustainable expansion.
The white paper puts a positive spin on the current recovery. Private-sector demand, it says, continues to provide the main thrust of growth, as shown by commercial banks' stepped-up bad-debt writeoffs, marked declines in the overall unemployment rate and the surge in corporate capital spending.