Restructuring Japan’s Infrastructure: A Sustainable Way Forward

Via.

Last week we looked at challenges facing the Japanese economy in a global setting, especially the demographic dilemma unique to Japan. While there are many possible solutions to these challenges, some agree that infrastructure is a vital priority.

Traditionally, Japan’s infrastructure investments have been geared towards new construction projects rather than improvements in existing structures. As in the U.S., such projects have been derided as political allocations to representative districts (i.e. “pork”) rather than as necessary expenditures. But infrastructure reinvestment can provide much-needed repair work for Japan’s roads, bridges, tunnels and buildings. Of course, this investment will come at a cost. Japan’s public debt is now close to double its GDP as social welfare spending and tax revenues are moving in inversely-related directions. A recent increase in the consumption tax will help fund pension liabilities, but one wonders how much of the other tax revenue streams will be available for infrastructure expenditures in the face of pre-existing government debt.

In light of the almost-complete abandonment of nuclear power following last year’s Fukushima incident, another major component of Japan’s infrastructure is energy investment. Recent incentives to promote solar power could eventually make Japan the world’s largest solar-power market (over Italy and Germany). It seems that the time is ripe for Japan to lead the way in “cleaner” energy investments.

In tonight’s Japan Society’s Corporate Program event A Roadmap for Japan’s Steady, Sustainable Pathway Forward, Professor Daniel Okimoto delivers the speech "Infrastructure Investments: Japan's Historic Opportunity” looking at how energy, transportation, IT, healthcare, and tourism can help move Japan forward.

Okimoto, a specialist on the political economy of Japan, is Professor Emeritus in the Department of Political Science at Stanford University and Director Emeritus and co-founder of the Walter H. Shorenstein Asia/Pacific Research Center (APARC) at Stanford University. In 2004, he received the Japanese Foreign Minister’s Commendation in recognition of his contributions to US-Japan relations during the 150th year celebration of bilateral relations, and in 2007, he was awarded the “Order of the Rising Sun with Goldray Neck Ribbon” by the Japanese government, one of the highest honors that can be bestowed on a non-Japanese citizen.

--Lyle Sylvander