This report discusses desirable policy directions and options in the aftermath of the Great Tohoku Earthquake. It argues that the importance of Japan’s productivity growth has not been invalidated by the disaster, and suggests that Japan should consider restoration and reconstruction from the earthquake as a great opportunity to reposition its policies.

It identifies concrete steps Japan can take to jump start growth in three broad themes: regulatory reforms (reducing the costs of doing business, stopping protection for zombie firms, deregulation especially in non-manufacturing sectors and growth enhancing special zones); opening-up of the Japanese economy (trade liberalization, reduction of agricultural subsidies and new immigration policy); and macroeconomic policy reforms (fiscal consolidation and monetary expansion to end deflation).