Growth policies that trigger Green economy – II (Japan)

(This article continues in the 4 part series of Policies for Green economy in USA, Japan, China, India by Rangika, Nathan, Gan and Pankaj at Anaheim Green MBA program. This post looks into the Japanese economy and the steps it has taken in that direction)

Japan: Fundamental economic growth with environmental growth

Post war era has seen a lot of innovative government policies being introduced, including universal voting rights, guaranteeing human rights, separating Japanese Shinto religion from the State, the enactment of an antitrust law, dissolving the powerful zaibatsu (company syndicates who manipulate the economic machine) and removing concentrations in land ownership.  All of those fundamental policies of groundwork for the development contribute to much of the economic growth.

A further observation shows us that the expanded Japanese economy is driven chiefly by manufacturing industrial sectors such as steel, ship-building, automobiles, combined machine-tools, precision machine, electronics and chemicals.  All of those industrial areas need a long-term or large-scale investment and strong government’s industrial policy. The success Japan achieved in maintaining a high level of economic growth shows us that in the short term, economic growth can be stimulated by:

  • Increased government spending, aggressive investment and implementation of active fiscal and monetary policies
  • Lower interest rates: This reduces the cost of borrowing and so encourages spending and investment
  • Increased wages: This increases disposable income and encourages consumer spending.

In order to promote the Green sector, Japanese government in 2009 promised to tackle global warming by reducing its greenhouse gas emissions by 25% versus 1995, (33% versus 2005) by realizing primary energy supply of 10 percent renewables by 2020. Prime Minister Naoto Kan recently unveiled a new energy promotion of solar and other renewable energy sources to 20% from 9% at the 50th anniversary of Organization for Economic Co-operation and Development (OECD) on 25 May, 2011. Some of the policies that Japan government intends to implement are:

  • Installation of solar panels on all houses and buildings
  • Promoting strong technological developments aiming at shifting away from traditional “heavy and sluggish” industries towards high-value-added “light and nimble” industries focusing on green industry.
  • Providing tax breaks for donations covered under energy-saving cars, home appliances as well as low public passenger transport and freight system.

All these policies need a large-scale priority investment, so it is the important role of the government in taking environmentally significant measures, and building a sustainable future through conservation.  The new growth approaches of environment related business are estimated to create over ¥50 trillion in new markets and 1.4 million new jobs by 2020.

Japanese economy has been supported by the continuation of an expansionistic fiscal policy.   However, it has also inherited a lot of troubles; the government has seen a dramatic rise in borrowing. The measures of tax cuts and investment in public projects are not of entirely government’s portfolio. State level must also work to put the nation’s public finances on a sound footing through measures aimed at reducing bond issues, and control the investment in public projects at appropriate level.

The Great Eastern Quake and the tsunami also slid Japan further steep in its troubles. Precuation against natural disasters is one of the major economic boosters in the construction area. Perhaps, Japan needs to look into its box of misfortunes and bounce back as it’s done in the past.

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