How to get out of the crisis?

The JEF-DGAP symposium 2014 examined different approaches in Japan and the EU toward growth

03/06/2014 | 10:00 - 17:00 | DGAP Berlin | Invitation only

Discussion

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Dirk Enters/DGAP

The European Union and Japan have suffered from the impact of the global financial crisis and, of course, directly or indirectly, the ensuing euro zone crisis. The symposium outlined the different paths the two economies have taken to recover from the crisis and to ensure sustainable growth. Both the Japanese approach of “Abenomics” and European austerity policies seem to tackle crucial weaknesses in their respective economies. The symposium also stressed that both regions could benefit greatly from increased productivity and competitiveness through trade liberalization, and that for this reason, both seem determined to push forward negotiations at a bilateral, regional, and multilateral level. Finally, the symposium emphasized the challenge of ageing societies and the different actions that demographic change requires in Germany and Japan.

“Abenomics” and Austerity Policy as a Way toward Growth

Both the European and the Japanese economy have faced major economic struggles during the past years: the financial crisis, followed by the euro zone crisis, hit Europe hard, while the Japanese economy has been suffering for more than a decade from economic standstill and deflation.

The discussion stressed that macroeconomic strategies vary greatly in different economies, as the nature of the occurring problems and the mechanisms with which they need to be tackled are diverse. The EU member states have focused on structural reforms, trying to increase European integration (for instance through a banking union) in order to prevent future crises and to ensure better monitoring of and guidance for countries of the euro zone, a region consisting of many different states with their own fiscal policies but a common monetary policy. Japan on the other hand does not have to handle such issues and has built its reform plans (“Abenomics”) accordingly on the “three arrows” of fiscal stimulus, monetary easing, and structural reforms.

Increasing Productivity and Competitiveness through Trade

The EU is currently negotiating a large-scale free trade agreement (FTA) with the United States – TTIP –, while also negotiating FTAs with a number of Asian countries. Japan, too, is engaged in a great number of FTAs, and also part of the TPP negotiations.

Germany and Japan see great opportunities in free trade agreements as a trigger for growth and productivity, especially to foster their export-led economies after the crisis. For both, the main goals of such trade deals are the harmonization of technical standards, the reduction of bureaucratic barriers, and the elimination of other non-tariff barriers.

The Challenge of Ageing Societies

Germany and Japan share the problem of an ageing and decreasing population, a demographic change with major implications for the two economies and their labor markets. The panel stressed the issue of how to ensure growth and productivity in a changing demographic environment and outlined the different labor market strategies Japan and Germany will need to design to meet this challenge. Whereas Germany’s potential might lie in migration and integration of the immigrant workforce, Japan sees opportunities in a greater participation of women in its workforce. These approaches come with major political challenges; a more open public debate on the benefits of these strategies is needed in order to counteract risks like xenophobic resentment.

2nd JEF-DGAP Symposium 2014

  • Kazumasa Kusaka, Chairman and CEO, Japan Economic Foundation (JEF)
  • Dr. Reinhard Felke, Head of Directorate E B, Federal Ministry of Finance
  • Dr. Hiroshi Yoshikawa, Professor, Faculty of Economics, University of Tokyo
  • Dr. Klaus-Günter Deutsch, Senior Economist, Head of Berlin Office, Deutsche Bank (DB) Research
  • Jun Arima, Director General, Japan External Trade Organization, London
  • MinDirig Christian Berger, Director of Foreign Trade and Investment Promotion, Federal Foreign Office, Germany
  • Toshiyuki Shiga, Representative Director, Vice Chairman, Nissan Motor Co., Ltd.
  • Amb. Shinichi Saito (ret.)
  • Dr.Steffen Angenendt, Senior Associate, Research Division: Global Issues, German Institute for International and Security Affairs (SWP)
  • Nicola Brüning, Head of BMW Representative Office Berlin
  • Dr. Steffen Angenendt, Senior Associate , Research Division: Global Issues, German Institute for International and Security Affairs
  • Baron Paul von Maltzahn, Secretary General, German Council on Foreign Relations (DGAP)
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