Japan has been in a recession for quite some time and has failed to recover. Price deflation, a high public debt, a loss of political leadership, and a weak U.S. economy not taking in exports, Japan's economy looks to be in trouble.
The success of Japan's economy in past years can be contributed to two parts. One part was government's active role in economic policy. The second part was the Japanese management system, which
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domestic market will expand and Japanese companies will be less likely to invest abroad.
The greatest challenge for Japan, in many respects, is demonstrating leadership and developing a plan to rebuild confidence. Accelerating the reform process and accepting its short-term costs are the answers. A plan for Japan will involve replacing intervention with incentives, and challenging Japanese companies and citizens to deal with their own problems. Japan can compete, but only if it allows competition.