OECD recommendations

Structural reform to raise productivity is fundamental to long-term growth. Narrowing the productivity gap with the top half of OECD countries requires bold reforms, such as enhancing trade integration through bilateral and regional agreements and increasing business-sector dynamism through improved corporate governance and regulatory reform. Boosting investment in knowledge-based capital, such as vocational education and training, is also essential to spur productivity growth.

  • Participate in high-level trade agreements, such as the Japan-EU Economic Partnership Agreement. Reduce restrictions on inward FDI.
  • Improve the business climate to boost productivity growth by:
    • Upgrading corporate governance to increase pressure on management.
    • Promoting labour market flexibility and mobility, in part by reduce effective employment protection for regular workers.
    • Improving the entrepreneurial climate by ensuring second chances and developing entrepreneurial education.
    • Revitalising venture capital investment to promote firm creation and innovation.
    • Reducing government support for SMEs to promote the restructuring of viable firms and the exit of non-viable ones.
    • Moving to a more market-based agricultural system by measures such as reducing commodity-specific payments to farmers and accelerating the consolidation of farmland.



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Productivity - Japan


Source: OECD May 2017 Economic Outlook database 

 Key publications

Randall S. Jones, Myungkyoo Kim (2015), “Enhancing Dynamism and Innovation in Japan's Business Sector”OECD Economics Department Working Papers,No. 1262.

Randall S. Jones and Shingo Kimura (2013), “Reforming Agriculture and Promoting Japan's Integration in the World Economy”OECD Economics Department Working Papers, No. 1053.

Fukao, K., K. Ikeuchi, Y. Kim, H. Kwon, T. Makino and M. Takizawa (2014), “The Structural Causes of Japan’s Lost Decades”

Institutions icon Productivity - enhancing institutions

Industrial Competitiveness Council (ICC)

The ICC is an advisory council to Prime Minister that was founded in January 2013. Prime Minister is the chair of the Council, which consists of nine ministers and nine private-sector experts (one academic experts and eight business persons). The Council’s task is to help develop Japan’s growth strategy and to strengthen the competitiveness of Japanese industry.  

This group does not have a website, but its meetings are reported on the Prime Minister’s website.

Council on Economic and Fiscal Policy (CEFP)

The CEFP is an advisory body to the Prime Minister that was founded in January 2001. It was dormant from 2009-12, before being reactivated by Prime Minister Abe after his election. The Prime Minister is the chair of the Council, which consists of five ministers, the governor of the Bank of Japan and four private-sector experts (two from academia and two from the business sector). The Council is mandated to provide advice on Japan’s growth strategy to promote the competitiveness of Japanese industry.   

Council for Regulatory Reform (CRR)

The Council was established in April 2001 to promote regulatory reform. As with the CEFP, the CRR was revived by Prime Minister Abe after being inactive between 2009-12. The CRR consists of 15 members from the business sector, academia and research institutes and presents annual reports on regulatory reform. Its mandate is to monitor the implementation of the three-year programme for promoting regulatory reform through co-operation between the government and the private sector.  


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