Why Did Japan Stop Growing?
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The Japanese economy has been stagnating for almost two decades. During this event, Takeo Hoshi will describe the findings of a report that he co-authored with Anil Kashyap of the Booth School of Business at the University of Chicago, the National Bureau of Economic Research (NBER), and the Federal Reserve Bank of Chicago. In the report, Hoshi and Kashyap utilized the neoclassical growth model in order to try to explain the causes of this stagnation and to identify policy choices that might help restore growth. Their focus was intentionally on longer-term issues, rather than the immediate challenges that are associated with the fallout from the global recession.
Looking at financial globalization and the collapse of the fixed exchange rate regime they found that by the end of the 1970s Japan could not rely on an undervalued currency to boost its exports. It had to rearrange its production system and other economic institutions to cope with globalization to reduce its reliance on external demand.
Japan's population structure was shifting and becoming increasingly elderly. Aging meant slower growth of the labor force. Declining fertility combined with aging eventually reduced the domestic saving that supported economic expansion during the rapid economic growth period.
Finally, monetary and fiscal policy performed poorly. The Bank of Japan consistently undershot its inflation objective. The government pursued massive fiscal stimulus during the 1990s and 2000s, so much so that Japan went from having the best debt position amongst advanced economies to the worst.
Hoshi is a Pacific Economic Cooperation Professor in international economic relations at the Graduate School of International Relations and Pacific Studies at the University of California, San Diego. He is also a research associate at the Tokyo Center for Economic Research, and is on the board of directors for Union Bank. His major research area is the study of the financial aspects of the Japanese economy, especially corporate finance and governance.
He is a recipient of the 2011 Reischauer International Education award, the 2006 Enjoji Jiro Memorial Prize, and the 2005 JEA-Nakahara Prize. Among his many publications is Corporate Financing and Governance in Japan: The Road to the Future (MIT Press, 2001), which received the Nikkei Award for the Best Economics Books in 2002.
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Takeo Hoshi
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Former Henri H. and Tomoye Takahashi Senior Fellow in Japanese Studies at the Freeman Spogli Institute for International Studies
Former Professor, by courtesy, of Finance at the Graduate School of Business
Takeo Hoshi was Henri and Tomoye Takahashi Senior Fellow at the Freeman Spogli Institute for International Studies (FSI), Professor of Finance (by courtesy) at the Graduate School of Business, and Director of the Japan Program at the Shorenstein Asia-Pacific Research Center (APARC), all at Stanford University. He served in these roles until August 2019.
Before he joined Stanford in 2012, he was Pacific Economic Cooperation Professor in International Economic Relations at the Graduate School of International Relations and Pacific Studies (IR/PS) at University of California, San Diego (UCSD), where he conducted research and taught since 1988.
Hoshi is also Visiting Scholar at Federal Reserve Bank of San Francisco, Research Associate at the National Bureau of Economic Research (NBER) and at the Tokyo Center for Economic Research (TCER), and Senior Fellow at the Asian Bureau of Finance and Economic Research (ABFER). His main research interest includes corporate finance, banking, monetary policy and the Japanese economy.
He received 2015 Japanese Bankers Academic Research Promotion Foundation Award, 2011 Reischauer International Education Award of Japan Society of San Diego and Tijuana, 2006 Enjoji Jiro Memorial Prize of Nihon Keizai Shimbun-sha, and 2005 Japan Economic Association-Nakahara Prize. His book titled Corporate Financing and Governance in Japan: The Road to the Future (MIT Press, 2001) co-authored with Anil Kashyap (Booth School of Business, University of Chicago) received the Nikkei Award for the Best Economics Books in 2002. Other publications include “Will the U.S. and Europe Avoid a Lost Decade? Lessons from Japan’s Post Crisis Experience” (Joint with Anil K Kashyap), IMF Economic Review, 2015, “Japan’s Financial Regulatory Responses to the Global Financial Crisis” (Joint with Kimie Harada, Masami Imai, Satoshi Koibuchi, and Ayako Yasuda), Journal of Financial Economic Policy, 2015, “Defying Gravity: Can Japanese sovereign debt continue to increase without a crisis?” (Joint with Takatoshi Ito) Economic Policy, 2014, “Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan” (with Anil Kashyap), Journal of Financial Economics, 2010, and “Zombie Lending and Depressed Restructuring in Japan” (Joint with Ricardo Caballero and Anil Kashyap), American Economic Review, December 2008.
Hoshi received his B.A. in Social Sciences from the University of Tokyo in 1983, and a Ph.D. in Economics from the Massachusetts Institute of Technology in 1988.
Former Director of the Japan Program at the Shorenstein Asia-Pacific Research Center
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Seminars
Comparative policy responses to demographic change in East Asia
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East Asia's demographic landscape is rapidly changing and comparative academic research is crucial to help guide well-informed decisions in the many policy areas that are affected, such as security, economics, and immigration. From January 20 to 21, the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC) gathered subject experts from numerous fields for two days of lively and productive presentations and dialogue to help identify key research issues and questions for its new, three-year research initiative on this significant subject.
Shorenstein APARC held a public panel discussion on January 20, featuring eight scholars from across the United States and Asia. The issue of aging featured prominently in their presentations, as did fertility rates and immigration. A full audio recording of the panel discussion is available on the Shorenstein APARC website and summaries of the presentations follow below. A closed-session workshop took place the next day, the discussions from which will serve as the foundation for future programs and publications related to the research initiative.
January 20 Panel Discussion Presentations
The link between demography and security is more tenuous in East Asia than in other parts of the world, suggested Brian Nichiporuk, a political scientist with the RAND Corporation. Nichiporuk discussed possible policy responses to demographic change in Japan, North and South Korea, the Russian Federation, and China. He suggested, for example, that Japan's new maritime security focus is related to perceived economic and political competition from China, which is magnified by its domestic demographic concerns.
Michael Sutton, a visiting fellow with the East-West Center in Washington, DC, stated that Japan's aging population would remain a major policy issue for the next 20–30 years. He emphasized that the policy challenges posed by this phenomena are complicated by the role that the United States plays in the regional security structure, and also by the growing dominance of China and the history that it shares with Japan. Nonetheless, maintained Sutton, despite the obvious challenges, it is possible for Japan and the other countries facing this demographic issue to successfully adapt.
Social attitudes and policy in East Asia do not favor immigration, as they do in European countries such as Spain and Italy, suggested John Skrentny, director of the Center for Comparative Immigration Studies at the University of California, San Diego. Skrentny focused his talk on low-skill immigrant workers in South Korea and Japan, noting that these two countries, which began receiving workers in the 1970s and 1980s, commonly associate immigrants with social disruption. According to Skrentny, immigration policy is often tied to economics and tends to favor co-ethnic workers.
Chong-En Bai, chair of the Department of Economics at Tsinghua University, discussed numerous economic policy implications and responses related to demographic change in China. He noted areas where successful policies have been adopted but challenges still remain, including savings and investment, labor and urbanization, pension, healthcare, and long-term care. Bai described, for example, how the children of rural migrants now have access to urban schools, but that they still face the logistical challenge of having to travel back to their home provinces to take college entrance examinations.
Examining demographic change and health improvements is essential to understanding the significant economic growth in East Asia over the past several decades, emphasized David Bloom, chair of the Department of Global Health and Population at Harvard University. He noted the success of East Asian countries in lowering their infant mortality rates through investment in public health improvements, such as sanitation and vaccination. Bloom suggested that these and other past successful policy mechanisms have run their course, and that it is now imperative to find ways to address the region's key demographic issue of aging.
Naohiro Ogawa, director of the Population Research Institute at Nihon University, described findings from the National Transfer Accounts (NTA) project, an international effort to gauge economic flows across age groups. He discussed the pressure placed on Japan's working-age population by the increasing cost of caring for children and the elderly, as well as the challenges and possibilities related to having a large, healthy, aging population. Ogawa noted that institutional responses to demographic change, such as increasing the retirement age and adopting more open immigration policy, have moved slowly in Japan.
Andrew Mason, a professor of economics at the University of Hawai'i, Manoa, also utilized NTA data to make predictions about East Asia's economic future. He proposed that the amount of human capital, such as the money that parents spend on the education of their children, is likely to grow quite rapidly. He also suggested that financial wealth in East Asia is likely to increase significantly as the populations of its countries age. Finally, he suggested that the current trend of regional economic growth would continue, although at a somewhat steadier rate. Mason qualified his predictions with questions, such as whether the return on investment in education would be commensurate with what is spent.
James Raymo, a professor of sociology at the University of Wisconsin-Madison, described a wide array of findings about changes in fertility and family structure in Japan and their connections, as well as possible policy implications. Raymo discussed trends in marriage, childbearing, divorce, non-marital cohabitation, and the participation of women in the labor force. He pointed to gaps in current research, and suggested possible linkages to research on other demographic trends, such as Japan's aging population.
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China is becoming increasingly urbanized as the government adopts policies to encourage migration from the countryside. Rural migrant families face challenges amidst the new urban opportunities.
Sarah Lin Bhatia
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Entrepreneurship in the Global Marketplace
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About the event
On Tuesday, March 1, SPRIE and Alibaba.com hosted “Entrepreneurship in the Global Marketplace,” a seminar featuring noted venture capitalists, entrepreneurs and executives. The seminar was the first in a series being conducted at several California universities under the auspices of the Schwarzenegger Emerging Entrepreneur Initiative.
Famed venture capitalist Tim Draper kicked off the event, sharing his insight on trends and strategies relevant to global business. Multiple facets of China’s role in supporting and enabling entrepreneurial ventures were spotlighted, including the presentation of new research on the rise and global impact of Chinese e-commerce, a talk by an executive from Chinese e-commerce giant Alibaba.com, and lessons from a diverse set of entrepreneurs whose businesses depend on international trade. Additional perspectives were shared by China- and U.S.-based VCs.
This event was one of many being held at Stanford University during Entrepreneurship Week 2011, including compelling lectures, workshops, mentoring sessions, a job fair, and more. See full details at the Stanford Entrepreneurship Week website.
About the hosts
The Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) is dedicated to advancing the understanding and practice of innovation and entrepreneurship in leading high technology regions in the global economy. Through and international and interdisciplinary research, publications, executive education, and conferences, SPRIE impacts the arenas of academia, policy, and business.
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The Schwarzenegger Emerging Entrepreneur Initiative is a program to spur entrepreneurship and stimulate job growth in California, created by Alibaba.com in partnership with former Governor Arnold Schwarzenegger. Through a series of interactive events, the initiative aims to provide 3,000 California university students with guidance, skills and entrepreneurial know-how to start their own businesses and participate successfully in the knowledge-based networked economy.
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Timothy C. Draper
Founder
Speaker
Draper Fisher Jurvetson
Tami Zhu
Head of International Business Development and Marketing
Speaker
Alibaba.com Americas
Duncan Clark
Visiting Scholar
Speaker
SPRIE
Mike Effle
CEO
Speaker
Vendio
Marguerite Gong Hancock
Associate Director
Speaker
SPRIE
William F. Miller
Co-director
Speaker
SPRIE
Jonathan Ross Shriftman
Co-founder
Speaker
Solé Bicycle Co
Ryder Fyrwald
Vice President of Global Operations
Speaker
Kairos Society
Sanjay Subhedar
Managing Director
Speaker
Storm Ventures
Hans Tung
Partner
Speaker
Qiming Ventures
Seminars
The Flying Geese Paradigm Version 2.0: The Interactions of Demographic, Economic, and Institutional Dynamics in China, Japan, and Korea
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The Flying Geese Paradigm Version 2.0: The Interactions of Demographic, Economic, and Institutional Dynamics in China, Japan, and Korea
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Avoiding the Zodiac Omen from Tiger to Cat: Vietnam After the Party Congress
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Today is the last day of the Year of the Tiger in Vietnam. Tomorrow is the Year of the Cat (while in China it is Year of the Rabbit).
There was so much talk about Vietnam being an Asian Tiger in the past. Now, there is a growing concern about the country getting into the "middle-income trap." There is a real risk that the country might turn out to be just a cat and not a tiger.
The Party is aware of that threat and is struggling to find the right path to accelerated prosperity for the people while maintaining political monopoly.
This talk will be from the perspective of a man on the ground and will try to separate the smoke from the fire and find the heat.
Mr. Kien Duk Trung Pham is currently the Chairman of Red Bricks Group, a private investment firm. He is the founder of the Vietnam Foundation and the Vice Chairman of the VietNamNet Media Group, the leading multi-channel media company in Vietnam. Prior to VietNamNet he was the founding executive director of the Vietnam Education Foundation.
In business, Mr. Pham was a market development executive in Fortune 500 companies as well as an entrepreneur in technology and consulting startups. In government, he served in the executive branch under Presidents Reagan and Bush, as well as in the U.S. Senate. He has established nonprofit foundations to assist college students, orphans, and the handicapped in Vietnam. Mr. Pham is publicly recognized for his leadership and management abilities.
Mr. Pham is active in international affairs. In 1986, he was chosen a Young Leader by the American Council on Germany, and in 1992 a U.S.-Japan Leadership Fellow by the Japan Society. In 1993, he was elected as a term-member of the Council on Foreign Relations and a participant in the American Assembly. Mr. Pham was the founder and chairman of the Vietnam Forum Foundation, a U.S. nonprofit organization that provides college scholarships, schools, and orphanage support in Vietnam. He was also a Board member of the Vietnam Assistance for the Handicapped, a leading humanitarian program to help war victims. In 1996, Mr. Pham was a recipient of the "Never Fear, Never Quit" Award.
Mr. Pham grew up in Saigon, Vietnam. In 1977, at the age of 19, he led his family on a high sea escape and came to the United States where they settled in Colorado. Mr. Pham became a factory worker, learned English, and later attended college on scholarship. He received a BS in marketing and international business from the University of Colorado at Boulder, and won a scholarship to study in England. His graduate degrees, earned concurrently at Stanford University, include an MBA in international and organizational management, an MA in international economics, and a special diploma in public policy management. In 1990, Stanford University named Mr. Pham among of the "Most Outstanding Alumni" in the school's 100 years of history. Mr. Pham is former White House Fellow and a recipient an honorary JD degree from Pfeiffer University.
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Pham Duc Trung Kien
Executive Chairman
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Red Bricks Group (RBG)
Seminars
Celebrating ten years of Korean studies at Stanford
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"I would like to invite my colleagues, students, friends, and supporters to celebrate what we have worked together to achieve over the last decade and I ask you all to join me in continuing this record of achievement in the decade to come."
Gi-Wook Shin
Stanford KSP Director
Gi-Wook Shin came from the University of California, Los Angeles to Stanford University in 2001 to establish a program in Korean studies. "Naturally, I had mixed feelings—of excitement and hope, but also of anxiety and uncertainty," says Shin. "Looking back, I made the right decision." The Stanford Korean Studies Program (KSP), today a thriving and vibrant program at the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC), recently held a series of major events to celebrate its tenth anniversary in February 2011.
Stanford KSP is unique among other Korean studies programs in its interdisciplinary, social science-based research focus on contemporary Korea. The U.S.-Korea relationship, particularly policy issues, is strongly emphasized in the program's research and publishing activities. Stanford KSP is instrumental in the success of Shorenstein APARC's two initiatives—the Korea-U.S. West Coast Strategic Forum and the New Beginnings policy study group—aimed at improving policy-making decisions in the two countries.
The program is grateful for the strong and generous support it has received from individuals, corporations, and foundations since the very beginning. In 1999, an endowment was established for the professorship that Shin holds, the Tong Yang, Korea Foundation, and Korea Stanford Alumni Chair of Korean Studies, which was followed closely by funding for two more Korea chairs. In 2004, Dr. Jeong H. and Cynthia Kim provided funding to establish a professorship named after former U.S. Secretary of Defense William J. Perry. Dr. Kim is President of Bell Labs at Alcatel-Lucent and a member of the Freeman Spogli Institute for International Studies Advisory Board. A search is currently underway to fill this important position. The Korea Foundation then donated funds in 2005 to establish a third professorship, which is currently held by Yumi Moon of the Department of History.
Stanford KSP has successfully established two annual professional fellowship
programs, the Pantech Fellowship for Mid-Career Professionals and the Koret
Fellowship, something unparalleled by other Korean studies programs. The
program's faculty, fellows, and visiting scholars—most of whom teach courses and
speak at public events—greatly contribute to the intellectual vigor of the Stanford
community. Paul Y. Chang, PhD '08, an assistant professor at Yonsei
University's Underwood International College, says, "The program provided the ideal context to
engage with passionate scholars and develop my research program."
Stanford KSP's visitors find themselves, in turn, rewarded by the experience of
being at Shorenstein APARC. Former Korean Minister of Unification Jongseok Lee,
a visiting scholar from 2008 to 2009, says, "While enjoying every bit of life at Stanford . . . I worked hard in the
office from early morning to late evening, as if I were a graduate student
preparing his final dissertation . . . It was a truly meaningful and memorable
year." Stanford KSP maintains strong ties with its former students,
fellows, visiting scholars, and other affiliates, in part through the Stanford
Shorenstein APARC Forum in Korea, an organization that has grown since 2003 to
boast a roster of over 100 members.
In addition to the interaction with Stanford
KSP's faculty and visitors, Stanford students benefit greatly from numerous social
science and language courses, internship and overseas seminar opportunities,
and the ever-growing Korean-language library collection supported by the
program. Social science courses cover such topics as the Korean economy, the
politics of the Korean Peninsula, modern Korean history, and many others.
Through the Stanford Language Center, students may take a rigorous,
comprehensive offering of beginning- through advanced-level Korean-language
courses. An internship program
co-sponsored with the Center for East Asian Studies provides students with the
valuable opportunity to live and work in Korea each summer. Since its
establishment in 2005, Stanford's Korean-language library collection has expanded
to include a total of 41,300 print volumes and 13 electronic databases.
On an annual basis, Stanford KSP offers innovative and impactful programs
addressing current, policy-relevant issues and events, as well as historical
factors with contemporary relevance, that are shaping the future of the Korean
Peninsula and the U.S.-Korea relationship. Conferences and workshops bring together leading Korea
scholars with policymakers and other subject experts, including business leaders and international
journalists, for productive and meaningful dialogue, research, and publishing activities. Stanford KSP's popular,
long-time seminar series and
special events afford members of the Stanford community and the general public
the opportunity to listen to and
engage with distinguished political figures and prominent scholars.
Stanford KSP celebrated its tenth anniversary on February 23 with a special
public seminar examining the state and prospects of science, technology, and
economics in Korea and Northeast Asia. The next
day, it held its annual Koret Conference, a major event bringing
together prominent Korea experts to discuss the future of North Korea. The
anniversary activities concluded that evening with a dinner and reception
to honor the generosity of Stanford KSP's long-time donors.
Proud of the program's accomplishments to date and optimistic about the future,
Shin says, "I would like to invite my colleagues, students, friends, and
supporters to celebrate what we have worked together to achieve over the last decade
and I ask you all to join me in continuing this record of achievement in the
decade to come."
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Gi-Wook Shin, director of the Stanford Korean Studies Program, delivered remarks at a dinner celebrating the program's tenth anniversary, February 24, 2011.
Rod Searcey
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The Flying Geese Paradigm Version 2.0: The Interactions of Demographic, Economic, and Institutional Dynamics in China, Japan, and Korea
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Analyzing official economic and demographic data of China, Japan, and Korea, Aoki identifies the four phases of economic development that these economies have been passing through and are expected to face. Each phase is characterized by a particular pattern of relationships between demographic factors, such as labor participation rates and rural-urban migration on one hand, and economic performances measured by per capita GDP and labor productivity on the other. There is expected to be a remarkable commonality in this demographic-economic dynamic among those economies, stemming from the common historical legacy of monsoon agriculture dominated by small family-managed farms in pre-industrialization time. Together with this commonality, however, there are differences in the timing of transitions from one phase to the next, conditioned by political events and so on, as well as in institutional arrangements facilitating the transitions. Aoki characterizes these patterns of demographic-economic-institutional dynamics as "Flying Geese Paradigm Version 2.0," distinguishing it from the original Flying Geese Paradigm, once popular in the development economics literature, that focused on the historical pattern of technological transfer in Asia from the 1930s to the 1960s. Aoki then goes on to discuss its policy implications in terms of possible strategic complementarities
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Masahiko Aoki
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Henri and Tomoye Takahashi Professor of Japanese Studies, Department of Economics, Emeritus
Senior Fellow at the Freeman Spogli Institute for International Studies, Emeritus
Senior Fellow at Stanford Institute for Economic Policy Research (SIEPR)
Masahiko Aoki was the Henri and Tomoye Takahashi Professor Emeritus of Japanese Studies in the Department of Economics, and a senior fellow of the Stanford Institute of Economic Policy Research and the Freeman Spogli Institute for International Studies at Stanford University.
Aoki was a theoretical and applied economist with a strong interest in institutional and comparative issues. He specialized in the theory of institutions, corporate architecture and governance, and the Japanese and Chinese economies.
His most recent book, Corporations in Evolving Diversity: Cognition, Governance, and Institutions, based on his 2008 Clarendon Lectures, was published in 2010 by Oxford University Press. It identifies a variety of corporate architecture as diverse associational cognitive systems, and discusses their implications to corporate governance, as well their modes of interactions with society, polity, and financial markets within a unified game-theoretic perspective. His previous book, Toward a Comparative Institutional Analysis, was published in 2001 by MIT Press. This work developed a conceptual and analytical framework for integrating comparative studies of institutions in economics and other social science disciplines using game-theoretic language. Aoki's research has been also published in the leading journals in economics, including the American Economic Review, Econometrica, the Quarterly Journal of Economics, Review of Economic Studies, the Journal of Economic Literature, Industrial and Corporate Change, and the Journal of Economic Behavior and Organizations.
Aoki was the president of the International Economic Association from 2008 to 2011, and is also a former president of the Japanese Economic Association. He is a fellow of the Econometric Society and the founding editor of the Journal of Japanese and International Economies. He was awarded the Japan Academy Prize in 1990, and the sixth International Schumpeter Prize in 1998. Between 2001 and 2004, Aoki served as the president and chief research officer of the Research Institute of Economy, Trade, and Industry, an independent administrative institution specializing in public policy research in Japan.
Aoki graduated from the University of Tokyo with a B.A. and an M.A. in economics, and earned a Ph.D. in economics from the University of Minnesota in 1967. He was formerly an assistant professor at Stanford University and Harvard University and served as both an associate and full professor at the University of Kyoto before rejoining the Stanford faculty in 1984.
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Seminars
Private Health Insurance in South Korea: An International Comparison
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In this event, Dr. Jaeun Shin will discuss the historical and policy background of expanded
private health insurance in South Korea. Looking at the public-private mix of
health care financing and its impacts, Shin
conducted a comparative study of thirty member countries of the Organization for
Economic Co-operation and Development (OECD) during the period 1980 to 2007 to ask
whether private health insurance can counterbalance limited government
financing, high out-of-pocket payments, and the persistent financial deficit of
South Korea’s National Health Insurance system.
The panel analyses of OECD
Health Data from 2009 suggest that private health insurance financing is unlikely to
reduce government spending on health care and social security. Also, Shin found little
evidence that out-of-pocket payments will be replaced by private health
insurance payments. Private health insurance payments, however, are found to
have a statistically significant positive association with total spending on
health care, which indicates that the coverage effect of private health
insurance—in addition to national health insurance—may exceed the efficiency
gain through the market competition that private insurers may deliver to the
health care sector. These findings leave it unclear whether private initiatives in health care financing will be as
effective as the policy advocates hope for, in dealing with the challenges of
national health insurance in South Korea. Shin suggests that further studies of how public and
private insurers, and providers and consumers interplay in response to a given structure of private-public mix
in financing are warranted to decide the right balance between private coverage
and publicly provided universal coverage.
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Jaeun Shin
Associate Professor of Economics
Speaker
KDI School of Public Policy and Management, South Korea
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