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Implementing Structural Reforms in Abenomics: How to Reduce the Cost of Doing Business in Japan

Aug 2015
Working Paper
545
Jamal Ibrahim Haidar, Takeo Hoshi

Improving the environment for business is an important part of the growth strategy of Abenomics. As the KPI (Key Performance Indicator) for this effort, the Abe Administration aims to improve Japan’s rank in the World Bank Doing Business Ranking from the #15 (in 2013 Report) among high-income OECD countries to one of the top three. In the last two years, Japan’s ranking has slipped to #19, so the goal of becoming a top three moved further. This paper clarifies what it takes for Japan to be among top three countries in terms of ease of doing business. By looking at details of the World Bank Doing Business ranking, we identify various reforms that Japan could implement to improve the ranking. Then, we classify the reforms into six groups depending on whether the reform requires legal changes and on political resistance that the reform is likely to face. By just doing the reforms that do not require legal changes and are not likely to face strong political opposition, Japan can improve the ranking to 13th if the conditions in the other countries did not change. To be in the top 3, Japan would need to implement all the reforms that are not likely to face strong political resistance, but the reforms that would be resisted strongly are not necessary, if the other countries do not reduce the cost of doing business. The experience of the past two years shows that this assumption is unrealistic. Thus, in order to be one of the top three countries among OECD countries in terms of ease of doing business, Japan would most likely need to carry out all the reforms including those with high political resistance.

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