FSI researchers strive to understand how countries relate to one another, and what policies are needed to achieve global stability and prosperity. International relations experts focus on the challenging U.S.-Russian relationship, the alliance between the U.S. and Japan and the limitations of America’s counterinsurgency strategy in Afghanistan.
Foreign aid is also examined by scholars trying to understand whether money earmarked for health improvements reaches those who need it most. And FSI’s Walter H. Shorenstein Asia-Pacific Research Center has published on the need for strong South Korean leadership in dealing with its northern neighbor.
FSI researchers also look at the citizens who drive international relations, studying the effects of migration and how borders shape people’s lives. Meanwhile FSI students are very much involved in this area, working with the United Nations in Ethiopia to rethink refugee communities.
Trade is also a key component of international relations, with FSI approaching the topic from a slew of angles and states. The economy of trade is rife for study, with an APARC event on the implications of more open trade policies in Japan, and FSI researchers making sense of who would benefit from a free trade zone between the European Union and the United States.
Sony Pictures Entertainment was set to release a satirical comedy, “The Interview,” in late 2014, but a cyberattack hit the organization that leaked corporate information, leading the company to initially pull the film and opening up a string of theories over who was behind the attack and how to respond.
Speculation began to mount as a clearer picture of the unprecedented hacking, both comprehensive and large in size, began to emerge. The breach is thought to be retribution for Sony’s production of the film, which carries a plot to assassinate North Korean leader Kim Jong-un.
Then, a threat was directed at movie theaters and moviegoers planning to screen and see “The Interview.” The message warned those against involvement ahead of the film’s Dec. 25 opening, indicating a “bitter fate” and alluding to the 9/11 attacks in the United States.
An unknown group, The Guardians of Peace “GOP,” claimed responsibility for the cyberattack. Media and those familiar with North Korea began to point blame on the country, which had already publicly condemned the film last June and has a history of cybercrime. Responding to accusations, top North Korean leadership rejected any involvement in the attack.
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The White House responded as Sony canceled the film’s New York premiere and said it would discontinue distribution. Following his year-end press conference, President Barack Obama condemned the hacking, citing the Federal Bureau of Investigation’s conclusion that North Korea was behind the attack. The President said the United States would respond “proportionally,” and on Jan. 2, signed an Executive Order that put into action a series of sanctions imposed by the Department of the Treasury.
David Straub, a Korea expert at Stanford University, answered questions about the Sony hacking and its policy implications for the United States and North-South Korean relations. Straub is the associate director of the Korea Program at the Walter H. Shorenstein Asia-Pacific Research Center. He formerly served as the State Department’s Korean affairs director.
What do we know about the Sony hacking? Who’s responsible?
Based on many types of evidence, including confidential information, U.S. government officials appear to be quite confident that North Korea did in fact conduct this operation. There’s still some disagreement in the media and among tech experts over who is responsible. They’ve cited a number of reasons but the main one is that the FBI’s official statement attributing the attack to North Korea provided evidence that they believe is far from conclusive. I myself am not a technical expert, but based upon my following North Korea for many years – the attack strikes me as being very likely to have been a North Korean operation. The FBI statement noted that the Sony attack is similar to an attack that the North Koreans conducted against South Korean banks and media outlets in March 2013. In that attack, many South Korean banks had their hard drives completely wiped clean. It was a hugely destructive attack and very similar to what happened to Sony.
Does North Korea’s response to the Sony hack coincide with past behavior?
In addition to the 2013 South Korean bank cyberattack, the North Koreans apparently sank a South Korean naval vessel in 2010, killing 46 sailors. In both instances, the North Koreans denied that they did it, expressed outrage over being accused, demanded that the South Koreans produce proof, said that they could prove that they didn’t do it, and then requested that the South Koreans conduct a joint investigation. These same demands are being made in response to the U.S. blaming Pyongyang for the Sony cyberattack. It couldn’t be more similar. More generally, the North Korean regime is very calculating. They know they can’t win an outright military confrontation with South Korea, much less the United States, so what they do is try to find a weak link and go after it in a way in which they have plausible deniability – a situation where it’s very difficult for the attacked party to prove who did it.
Describe North Korea’s hacking capabilities.
North Korea is a very secretive country, so it’s hard to be completely certain of their cyber capabilities. However, according to many accounts, the North Korean government has established professional hacking schools and units over the years, resulting in hundreds if not thousands of trained hackers. North Korea has engaged in a number of attacks in the past, the most prominent one was the attack on South Korean banks in March 2013. But also, a few years ago, North Korea conducted less sophisticated attacks on major U.S. government websites.
Why would they conduct an attack?
The North Koreans appear to have both the capability and the motivation to attack Sony. The nation’s entire political system rests on a cult of personality – now a cult of family, actually – that began with the founder of the regime, Kim Il-sung, and extends to his grandson today, leader Kim Jong-un, who has been in power since Dec. 2011. It’s the only thing holding the political system together at this point. The cult of personality is so strong that any direct criticism of the top leader is something that North Koreans will compete among each other to reject. From this standpoint, it seems very likely that they would feel they had to prevent the showing of a movie that features an assassination of Kim Jong-un. And, the hackers had plenty of time to prepare for and implement the attack because everyone knew well ahead of when the movie would be released.
The United States placed new financial sanctions on North Korea. What impact will the sanctions have?
President Obama made it clear that the U.S. government would respond at a time, in a place, and in a manner of its own choosing. Not all measures taken would be made public. So far, the first publically announced measure was the President’s Executive Order on Jan. 2 imposing additional sanctions on a number of North Korean agencies and officials. This in itself is unlikely to have major consequences because most of those entities were already sanctioned. But, the Executive Order states that the sanctions are being implemented not only because of the cyberattack against Sony, but more generally because of North Korea’s actions and policies, including its serious human rights abuses. So in a sense, the North Koreans got the United States to expand its reasons for sanctioning them.
President Obama addresses the Sony hacking, saying the United States will "respond proportionally," at his year-end press briefing on Dec. 19.
President Obama addresses the Sony hacking at his year-end press briefing on Dec. 19. Photo credit: WhiteHouse.gov
What other steps will the United States likely take?
President Obama left open the possibility that North Korea might be returned to the U.S. State Sponsors of Terrorism list, from which the nation was removed in 2008. I think it was a mistake to remove North Korea from that list in the first place. It was done to promote progress on the nuclear talks, which eventually failed, and ignored a number of terroristic actions that North Korea has committed in recent years. Another possibility, which is being pushed by Republicans in Congress, is to increase financial sanctions that mirror the type that were successfully implemented in Iran.
How will the U.S. response influence cybersecurity policy going forward?
The attack on Sony is a huge wakeup call to American businesses, and even to the U.S. government. It’s the first attack of this size on a company located in the United States. It got tremendous profile in the media and the President has been personally engaged in responding. Nearly everyone has heard about it, so U.S. companies are now going to be focused much more on cybersecurity because it has exposed some potential vulnerabilities – a “if North Korea can do it, presumably others can too” mentality. Moreover, if an attack can be executed on a film company, it could also be done to other businesses and even to elements of U.S. critical infrastructure.
How do you view North Korean leader Kim Jong-un’s possible offer to meet with South Korean leadership this year?
Kim Jong-un said that he was open to the possibility of a summit with South Korea in his annual New Year’s address, although he made no specific proposal. He made clear that the summit would be conditional on actions to be taken in advance by South Korea. Among these, Kim demanded ending U.S.-South Korean military exercises and halting the flow of propaganda-filled balloons sent over the border into the North by non-governmental activist groups in the South. Moreover, North Korea has a history of expanding its conditions later, without any warning. So, I think one has to be skeptical. The signal is unfortunately less likely to be a sincere effort toward real, sustained dialogue, and more likely to be a North Korean propaganda effort devised to confuse, divert and divide international public opinion. That said, South Korea has acted entirely appropriately in welcoming the signal and reiterating its own offer of high-level talks. Let’s hope for the best.
David Straub also participated in an interview with Public Radio International on Jan. 1 about the prospect for North-South talks, the audio can be accessed on the PRI website.
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"The Interview," a Sony Pictures film starring actors Seth Rogen and James Franco about a fictional plot to assasinate North Korean leader Kim Jong-un, releases in theaters.
Prime Minister Shinzo Abe dissolved Japan’s lower house of parliament in November, and held an early election on December 14. The vote kept the status quo – the ruling Liberal Democratic Party retained its majority in the Diet, winning two-thirds of the seats.
“For Abe, this election was all about power, and retaining power.
“With this victory, Abe should have staved off any serious challengers, barring external events that dramatically change the perception of his government.”
Sneider said the question remains what Abe will choose to do with his ‘somewhat rebuilt’ political clout.
The full article is available on the Dispatch Japan blog, and in Toyo Keizai, a Tokyo-based economics/politics publication, in Japanese and English.
A climate of uncertainty marks the Xi administration’s second year in power. The unfurling of a nationwide anti-corruption campaign, including high-profile domestic and international targets, may have unintended effects on economic growth. But will these effects be short- or long-lived? Can this campaign build confidence, domestically and internationally, in the party’s governing capacity? Questions also swirl around the motivations for reviving Mao-era language in the political realm while maintaining a relentless urbanization drive in the social and economic realms.
For 14 years, Mariano-Florentino Cuéllar has been a tireless Stanford professor who has strengthened the fabric of university’s interdisciplinary nature. Joining the faculty at Stanford Law School in 2001, Cuéllar soon found a second home for himself at the Freeman Spogli for International Studies. He held various leadership roles throughout the institute for several years – including serving as co-director of the Center for International Security and Cooperation. He took the helm of FSI as the institute’s director in 2013, and oversaw a tremendous expansion of faculty, research activity and student engagement.
An expert in administrative law, criminal law, international law, and executive power and legislation, Cuéllar is now taking on a new role. He leaves Stanford this month to serve as justice of the California Supreme Court and will be succeeded at FSI by Michael McFaul on Jan. 5.
As the academic quarter comes to a close, Cuéllar took some time to discuss his achievements at FSI and the institute’s role on campus. And his 2014 Annual Letter and Report can be read here.
You’ve had an active 20 months as FSI’s director. But what do you feel are your major accomplishments?
We started with a superb faculty and made it even stronger. We hired six new faculty members in areas ranging from health and drug policy to nuclear security to governance. We also strengthened our capacity to generate rigorous research on key global issues, including nuclear security, global poverty, cybersecurity, and health policy. Second, we developed our focus on teaching and education. Our new International Policy Implementation Lab brings faculty and students together to work on applied projects, like reducing air pollution in Bangladesh, and improving opportunities for rural schoolchildren in China. We renewed FSI's focus on the Ford Dorsey Program in International Policy Studies, adding faculty and fellowships, and launched a new Stanford Global Student Fellows program to give Stanford students global experiences through research opportunities. Third, we bolstered FSI's core infrastructure to support research and education, by improving the Institute's financial position and moving forward with plans to enhance the Encina complex that houses FSI.
Finally, we forged strong partnerships with critical allies across campus. The Graduate School of Business is our partner on a campus-wide Global Development and Poverty Initiative supporting new research to mitigate global poverty. We've also worked with the Law School and the School of Engineering to help launch the new Stanford Cyber Initiative with $15 million in funding from the Hewlett Foundation. We are engaging more faculty with new health policy working groups launched with the School of Medicine and an international and comparative education venture with the Graduate School of Education.
Those partnerships speak very strongly to the interdisciplinary nature of Stanford and FSI. How do these relationships reflect FSI's goals?
The genius of Stanford has been its investment in interdisciplinary institutions. FSI is one of the largest. We should be judged not only by what we do within our four walls, but by what activity we catalyze and support across campus. With the business school, we've launched the initiative to support research on global poverty across the university. This is a part of the SEED initiative of the business school and it is very complementary to our priorities on researching and understanding global poverty and how to alleviate. It's brought together researchers from the business school, from FSI, from the medical school, and from the economics department.
Another example would be our health policy working groups with the School of Medicine. Here, we're leveraging FSI’s Center for Health Policy, which is a great joint venture and allows us to convene people who are interested in the implementation of healthcare reforms and compare the perspective and on why lifesaving interventions are not implemented in developing countries and how we can better manage biosecurity risks. These working groups are a forum for people to understand each other's research agendas, to collaborate on seeking funding and to engage students.
I could tell a similar story about our Mexico Initiative. We organize these groups so that they cut across generations of scholars so that they engage people who are experienced researchers but also new fellows, who are developing their own agenda for their careers. Sometimes it takes resources, sometimes it takes the engagement of people, but often what we've found at FSI is that by working together with some of our partners across the university, we have a more lasting impact.
Looking at a growing spectrum of global challenges, where would you like to see FSI increase its attention?
FSI's faculty, students, staff, and space represent a unique resource to engage Stanford in taking on challenges like global hunger, infectious disease, forced migration, and weak institutions. The key breakthrough for FSI has been growing from its roots in international relations, geopolitics, and security to focusing on shared global challenges, of which four are at the core of our work: security, governance, international development, and health.
These issues cross borders. They are not the concern of any one country.
Geopolitics remain important to the institute, and some critical and important work is going on at the Center for International Security and Cooperation to help us manage the threat of nuclear proliferation, for example. But even nuclear proliferation is an example of how the transnational issues cut across the international divide. Norms about law, the capacity of transnational criminal networks, smuggling rings, the use of information technology, cybersecurity threats – all of these factors can affect even a traditional geopolitical issue like nuclear proliferation.
So I can see a research and education agenda focused on evolving transnational pressures that will affect humanity in years to come. How a child fares when she is growing up in Africa will depend at least as much on these shared global challenges involving hunger and poverty, health, security, the role of information technology and humanity as they will on traditional relations between governments, for instance.
What are some concrete achievements that demonstrate how FSI has helped create an environment for policy decisions to be better understood and implemented?
We forged a productive collaboration with the U.N. High Commissioner for Refugees through a project on refugee settlements that convened architects, Stanford researchers, students and experienced humanitarian responders to improve the design of settlements that house refugees and are supposed to meet their human needs. That is now an ongoing effort at the UN Refugee Agency, which has also benefited from collaboration with us on data visualization and internship for Stanford students.
Our faculty and fellows continue the Institute's longstanding research to improve security and educate policymakers. We sometimes play a role in Track II diplomacy on sensitive issues involving global security – including in South Asia and Northeast Asia. Together with Hoover, We convened a first-ever cyber bootcamp to help legislative staff understand the Internet and its vulnerabilities. We have researchers who are in regular contact with policymakers working on understanding how governance failures can affect the world's ability to meet pressing health challenges, including infectious diseases, such as Ebola.
On issues of economic policy and development, our faculty convened a summit of Japanese prefectural officials work with the private sector to understand strategies to develop the Japanese economy.
And we continued educating the next generation of leaders on global issues through the Draper Hills summer fellows program and our honors programs in security and in democracy and the rule of law.
How do you see FSI’s role as one of Stanford’s independent laboratories?
It's important to recognize that FSI's growth comes at particularly interesting time in the history of higher education – where universities are under pressure, where the question of how best to advance human knowledge is a very hotly debated question, where universities are diverging from each other in some ways and where we all have to ask ourselves how best to be faithful to our mission but to innovate. And in that respect, FSI is a laboratory. It is an experimental venture that can help us to understand how a university like Stanford can organize itself to advance the mission of many units, that's the partnership point, but to do so in a somewhat different way with a deep engagement to practicality and to the current challenges facing the world without abandoning a similarly deep commitment to theory, empirical investigation, and rigorous scholarship.
What have you learned from your time at Stanford and as director of FSI that will inform and influence how you approach your role on the state’s highest court?
Universities play an essential role in human wellbeing because they help us advance knowledge and prepare leaders for a difficult world. To do this, universities need to be islands of integrity, they need to be engaged enough with the outside world to understand it but removed enough from it to keep to the special rules that are necessary to advance the university's mission.
Some of these challenges are also reflected in the role of courts. They also need to be islands of integrity in a tumultuous world, and they require fidelity to high standards to protect the rights of the public and to implement laws fairly and equally.
This takes constant vigilance, commitment to principle, and a practical understanding of how the world works. It takes a combination of humility and determination. It requires listening carefully, it requires being decisive and it requires understanding that when it's part of a journey that allows for discovery but also requires deep understanding of the past.
Susan Shirk is the chair of the 21st Century China Program and Ho Miu Lam Professor of China and Pacific Relations at the School of International Relations and Pacific Studies (IR/PS) at UC San Diego. She also is director emeritus of the University of California, Institute on Global Conflict and Cooperation (IGCC), and chair of the IGCC International Advisory Board.
Thomas J. Christensen is the William P. Boswell Professor of World Politics of Peace and War and Director of the China and the World Program at Princeton University. From 2006-2008 he served as Deputy Assistant Secretary of State for East Asian and Pacific Affairs with responsibility for relations with China, Taiwan, and Mongolia. His research and teaching focus on China’s foreign relations, the international relations of East Asia, and international security.
China’s Conflicting Policy Directions
A climate of uncertainty marks the Xi administration’s second year in power. The unfurling of a nationwide anti-corruption campaign, including high-profile domestic and international targets, may have unintended effects on economic growth. But will these effects be short- or long-lived? Can this campaign build confidence, domestically and internationally, in the party’s governing capacity? Questions also swirl around the motivations for reviving Mao-era language in the political realm while maintaining a relentless urbanization drive in the social and economic realms. In foreign affairs, centrifugal regional forces and suspicion of US intentions in the Pacific must be reconciled with China’s deepening engagement with global institutions and commitment to “opening up” to the world. To address these issues, this series will bring together experts to share research and insights on the underlying logic for the seemingly contradictory policy paths recently chosen by China’s leaders.
A unified Korea is likely but it won’t come easily, said Stanford professor Gi-Wook Shin, in a recent interview with NK News. The most plausible scenario is reunification following a breakdown of the North Korean regime and eventual South Korean absorption of the North.
“Of course, I cannot predict the timing of such an occurrence, but it is likely that it will happen in the not-too-distant future,” said Shin, director of the Walter H. Shorenstein Asia-Pacific Research Center, in a Q&A among a panel of experts on inter-Korean relations.
In the event of unification, Shin says he is convinced it will be on South Korean terms. He said he doubts that the North Korean government, led by leader Kim Jong-Un and the ruling Worker’s Party of Korea, would find a role in South Korea’s democratic system.
Shin heads a multiyear research project focused on understanding the domestic and global implications of North Korea’s future. Earlier this year, he coauthored a policy brief assessing the situation and policy context on the Korean Peninsula. The report recommends steps that the South Korean government can take to engage North Korea toward the ultimate goal of Korean unification and a sustainable security environment in Northeast Asia.
The Democratic People’s Republic of Korea (DPRK) remains a potentially destabilizing element of the Korean Peninsula, making it difficult to construct a regional architecture that could help preserve peace and prosperity. “Korean Reunification: An American View” suggests that transformation of the North Korean regime may be a prerequisite for Korean reunification and a key factor in building a sustainable future in Northeast Asia. The United States, the Republic of Korea, Japan and others must find ways to engage the North, without rewarding misbehavior. Two suggested approaches include pushing for Chinese-style reforms and increasing incentives for the DPRK elite.
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Stanford-Sasakawa Peace Foundation New Channels Dialogue 2015
"Innovation: Silicon Valley and Japan"
January 22, 2015
Bechtel Conference Center, Encina Hall, Stanford University
Sponsored and organized by the Sasakawa Peace Foundation (SPF) and the Shorenstein Asia-Pacific Research Center (APARC) in Association with U.S.-Japan Council
The Japan Program at Shorenstein APARC, Stanford University is continuing the "New Channels" dialogue which started in 2013 with support from the Sasakawa Peace Foundation. The project was launched to create new channels of dialogue between experts and leaders of younger generations from the United States, mostly from the West Coast, and Japan under name of "New Channels: Reinvigorating U.S.-Japan Relations," with the goal of reinvigorating the bilateral relationship through dialogue on 21st century challenges faced by both nations.
Last year, in its inaugural year, the Stanford-SPF New Channels Dialogue 2014 focused on energy issues. This year's theme is innovation and entrepreneurship, which will take place on January 22 at Stanford University with participants that include business leaders, academia and experts from both the United States and Japan. On January 23, a closed dialogue among participants will be held at Stanford.
Shorenstein APARC will be tweeting about the conference at hashtag, #StanfordSPF. Join the conversation with the handle, @StanfordSAPARC.
Brief Agenda
9:15-9:30 Welcome: Gi-Wook Shin, Director, Shorenstein APARC, Stanford University Yuji Takagi, President, Sasakawa Peace Foundation
9:30-10:50 Panel Discussion I: Current State of Silicon Valley Innovations
Chair:Kazuyuki Motohashi, Sasakawa Peace Fellow, Shorenstein APARC, Stanford University
Panelists: Richard Dasher, Director, US-Asia Technology Management Center, Stanford University Tak Miyata, General Partner, Scrum Ventures Patrick Scaglia, Consultant and Technology Advisor, Startup Ventures and former senior executive, Hewlette Packard Norman Winarsky, Vice President, SRI Ventures, SRI International
11:10-12:30 Panel Discussion II: Current State of Innovations in Japan
Chair:Kenji Kushida, Research Associate, Japan Program, Shorenstein APARC, Stanford University
Panelists: Yusuke Asakura, Former CEO, mixi Takuma Iwasa, CEO, Cerevo Yasuo Tanabe, Vice President and Executive Officer, Hitachi Ltd. Hiroaki Yasutake, Managing Executive Office and Director, Rakuten
12:30-13:30 Lunch
13:30-14:50 Panel Discussion III: Taking Silicon Valley Innovations to Japan
Chair:Richard Dasher, Director, US-Asia Technology Management Center, Stanford University
Panelists: Jeff Char, President, J-Seed Ventures, Inc. and Chief Mentor, Venture Generation Akiko Futamura, President and CEO, InfiniteBio Allen Miner, Founder, Chairman & CEO, SunBridge Corporation John Roos, former U.S. Ambassador to Japan
15:10-16:30 Panel Discussion IV: The Japanese Innovation Ecosystem and Silicon Valley: Bringing them Together (How Japanese firms can make use of SV?)
Chair:Takeo Hoshi, Director, Japan Program, Shorenstein APARC, Stanford University
Panelists: Robert Eberhart, Assistant Professor, Santa Clara University and STVP Fellow, Stanford University Gen Isayama, CEO and Co-Founder, WiL (World Innovation Lab) Naoyuki Miyabe, Principal, Miyabe & Associates, LLC Hideichi Okada, Senior Executive Vice President, NEC Corporation
Though some signs point to Japan falling into recession, Stanford economist Takeo Hoshi disagrees and says it is premature to judge the effectiveness of Japan's new approach to its economy. Not enough time has passed for the reforms to produce results.
Despite a recent slowdown, time will tell if Japan has charted the right economic course after more than 15 years of deflation, says a Stanford economist.
In the last two years, Japan undertook a new economic direction in adopting fiscal reforms known as "Abenomics," which refers to its principal advocate, Japanese Prime Minister Shinzō Abe. Abenomics consists of monetary policy, fiscal policy and economic growth strategies to encourage private investment. But new data suggest that Japan may have fallen into a recession, which adds to worries about the slowing global economy.
Is Japanese Prime Minister Shinzo Abe’s "Abenomics" working?
It is too early to tell. Abenomics is not failing – yet. It has three pillars or "arrows," as they are often called. The first arrow – monetary expansion – has succeeded. Japan is out of deflation, which had lasted more than 15 years. The inflation rate has not reached the target rate of 2 percent and is recently falling a little bit, but it is away from zero. The postponement of the consumption tax increase that was announced last week was a step back on the efforts to reduce the budget deficits, which is considered to be a part of the second arrow (flexible fiscal policy). However, some people in the government have started to argue that fiscal consolidation has never been a part of the second arrow.
According to Abe, the government will implement a consumption tax rate hike in April 2017 – it will rise from 8 percent to 10 percent. This time, the law will not include an escape clause, which made the earlier one contingent on economic conditions. It was also announced that the government will develop a real plan to achieve a fiscal surplus by a certain date. These efforts may lead to a credible plan to reach fiscal sustainability. So, it is too early to say if this second arrow of Abenomics has failed.
The third arrow is the growth strategy. The original strategy announced in June 2013 lacked focus, but the revised version enacted in June 2014 offers 10 focus areas, some of which are quite sensible. The government has just begun on some of these economic reforms. It is way too early to tell if these efforts to restore growth in Japan will prove fruitful.
Will the Japanese recession have painful implications for the United States?
I would not say Japan is in recession now. Many people say that Japan is in recession because the first preliminary estimate of the third quarter real GDP growth came out negative. With the negative growth in the second quarter, Japan's economic condition satisfies a standard definition of recession (two consecutive quarters of negative growth). But the negative growth in the second quarter was inevitable because the demand was shifted from the second quarter to the first quarter in anticipation of the consumption tax hike on April 1. People shifted the timing of durable consumption goods purchase from the second quarter to the first quarter. So, the "true" negative growth has been observed only for a quarter.
Even the negative growth in the third quarter may not really signal a serious trouble. First, the negative growth disappears if we exclude the change in inventory. In other words, the production was down from the second quarter but the demand – or sales – did not fall. Also, many people expect the second preliminary estimate for third quarter growth that will be published on Dec. 8 will be revised higher.
Will this hurt the global economy?
If Japan was in recession, that would hurt the rest of the world, especially when the economies in Europe are weak and China is slowing down. But I don't think Japan is in recession – yet.
What would have been a better strategy than "Abenomics?"
Abenomics has been better than any other alternatives that have been tried in Japan. The Bank of Japan finally stopped its deflationary policy. Abenomics also showed some early promise in economic reforms, which were tried before only in piecemeal ways.
Assuming the Liberal Democratic Party retains power and Prime Minister Abe returns as the prime minister after the next election – which seems to be a safe assumption – the government will continue Abenomics with a renewed commitment to fiscal reform and growth, I hope.
What is the lesson for countries around the world?
Many people have prematurely declared the "failure" of Abenomics. I don't think their assessment is correct, but the government could have done better by implementing some easier economic reforms in the beginning – and calling attention to its early successes. This could have included, for example, reducing the barriers to start new businesses.
Clifton Parker is a writer for the Stanford News Service.
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An electronic board shows Japan's Nikkei prices and related indexes at the Tokyo Stock Exchange in Tokyo (image crop, brightness applied).