AIR: Japan Much Better Positioned in 2006 than in 2002
The Australasian Investment Review describes how Japan in 2006 looks a lot better than it did in 2002. Four years ago, whatever growth Japan experienced was export driven. Both capital investment and real estate remained in the doldrums, Japan's credit rating was lousy, and foreign investment was miniscule. On the political front, Prime Minister Koizumi was faring poorly, and his economic reform program was going nowhere.

Fast forward four years and Japan's GDP growth had recovered powerfully, with some economists predicting expansion of as much as 3.6% this year. Workers' wages are up, deflation appears to be beaten, and retail sales are starting to grow. Koizumi will soon leave office with important achievements, notably post office privatization.

AIR also says there has been a shift in the Japanese personality, with a greater willingness to take risk and open new businesses. We're less sure about this thesis. It seems we've been hearing about the changing Japanese mentality for a long time. Increased entrepreneurialism my simply be a reflection of reduced opportunities and security in Corporate Japan. While workers may have accepted the end of the lifetime employment system, they have hardly embraced it. Indeed, according to at least one survey, most young workers value teamwork more than individual accomplishment. And although AIR cites Takafumi Horie favorably as representative of the new breed, the joy that the Japanese media had at his (and, more recently, Yoshiaki Murakami's) downfall makes one wonder at whether the press, and Japanese society as a whole, are eager to celebrate a different breed of Japanese.