News September 2001

[ New Research Projects ]

Research on a Policy-Making Process with the Participation of Citizens in the Development of New Energy Sources

This research project will explore the possibilities and methods of achieving citizens' participation in the policy-making process, with the development of new energy sources as a focus.

The development and use of new energy sources is related to the global warming issue and will be an important task for the twenty-first century. Technological issues alone are not the key to success; it will be necessary also to obtain a social consensus concerning the kind of energy source to be selected.

There has been a recent global trend towards transparency in the policy-making process and the promotion of citizen participation. In Japan, for example, numbers of briefings for residents and public hearings have increased; a greater variety of people, including representatives of the general public and NPOs participate in advisory bodies; and the number of referendums is increasing.

However, residents participating in such forums are required to make judgments based on sound common sense. The question as to how to reflect public opinion in fields requiring expertise is a difficult one.

Fair social consensus cannot be achieved in a situation in which knowledge is monopolized by experts.

The purpose of this research project is to analyze and consider a policy-making process involving the participation of citizens, and to make specific policy proposals.

Research on Policy Priority in an Aging Society: From the Common Viewpoints of Japan and the United States

The importance of policy evaluation has recently come to be increasingly recognized in Japan. Some local governments have demonstrated pioneering endeavors, and the central government is also proceeding with the establishment of systems. This tendency reflects the fiscal difficulties of the central and local governments. It may also be the result of relevant parties giving increased attention to the question of how to deal with diverse opinions concerning policy efficiency and transparency in the policy-making process. The awareness that public organizations have no future without accountability is growing year by year, and it may be said that the ground has been prepared for concrete action to be implemented.

The nation's financial imbalance is entirely clear to everybody, and the policy option of expanding government disbursements to aid economic recovery has already largely faded away. The prolonged economic slump after the collapse of the bubble economy is changing the traditional fundamental premises of policy-making. In addition, dealing with a rapidly aging population is an extremely important medium-term task not only for social welfare policies but also for economic policies in a broader sense. The United States achieved economic recovery and improved the efficiency of the economy in the 1990s after going through deregulation and a bubble economy in the 1980s. In addition, the U.S. budget deficit, one of the twin deficits, which was a factor of instability in the global economy, has disappeared at present. The U.S. achieved "structural reforms," and during that process, many attempts were made to analyze and evaluate policies at all levels including federal and state, and a great deal of experience was accumulated.

Given this circumstance, this research project will first examine the process of financial reconstruction in the United States. In addition, by introducing the U.S. experience of policy evaluation and focusing on the aging of population as a common task for both Japan and the United States, the project will conduct research aiming at improving the effectiveness of policy evaluation in Japan.

NIRA is conducting this project as both independent research and a joint project with the Urban Institute, a major U.S. think tank located in Washington, D.C., through the provision of grants to the UI.

[ Completed Research Projects ]

A Study on the Feasibility of the "Policy Market"

In Japan, policy-making has been undertaken mainly by administrative organizations (bureaucracy) and the ruling party and therefore, the process is conducted with a very low level of transparency. At present, however, Japan is in a period of change in many fields, for example in the issue of its rapidly aging society. It will be impossible to establish policies that satisfy the majority of citizens without change in the policy-making process. In recent years, increasing attention has been directed towards the direct involvement and participation of citizens in the policy-making process.

For this project, a study group was formed with the participation of specialists representing various research fields related to the topic. In addition, an open symposium was held in order to gather various opinions. Citizens are becoming increasingly interested in the implementation of a "policy market," representing an opportunity for the needs of the general public to be directly reflected in public policies. This project examined an optimum policy market, in which policies would be based on open discussion and exchange of opinions, and went on to present proposals.

This image of the policy market may be described as follows. It would be a tool to resolve the "asymmetry of information" between citizens and administration and enable "policy mixing" in the three stages of policy-making (reflection of needs in policies, formulation of policy drafts and formulation of bills). It would also serve as a means to take in various opinions concerning policies. A policy market would not necessarily require a specific location, and could possibly be located on the Internet.

In order to create this new policy market, it will be essential to start with familiar issues discussed in local governing bodies. Joint efforts between politicians, citizens and all other entities involved will be essential to the establishment of an efficiently-managed policy market which generates concrete results. The role of the managers (or coordinators) of the policy market is considered particularly important, and therefore it is necessary to cultivate appropriate personnel.

The Issue of Public Comment

Public comment is a procedure that obliges policy-makers to hold meetings in order to take in citizens' opinions and related information when they attempt to establish or revise bills which involve adoption or revision of regulations. This procedure was established in March 1999 in response to a cabinet decision.

In this research project, a questionnaire-based survey was conducted to clarify the actual status and problems of this procedure when implemented. The project also examined the causes of these problems as well as the areas requiring improvement.

It determined that first, it is important to make efforts to introduce the system widely, and to pursue public relations activities in the hope that the bill will become well known among the public. Second, as the information provided by the administration concerning a bill is often extremely difficult, the possibility of coordinating efforts towards the provision of information and comments with an organization independent from the administration should be examined. These conditions should be summarized into a proposal.

Korea's Economic Crisis: An analysis from the Viewpoint of Systems

Since the outbreak of the Asian financial crisis and its ensuing epidemic-like spread throughout the region, the South Korean economy has attracted a great deal of attention. It is still claimed that the South Korean economic system itself was to blame for the severity of the domestic economic crisis from which the country is still reeling.

Given South Korea's growing influence on the regional and global economy, and its role as a development model emulated by many less-developed countries, this research project aims to shed valuable light on the formulation of a new economic system and policy management schemes that are in line with increasing global interdependence and the present realities of the Korean economy.

KDI has published a report that compiles a collection of studies containing in-depth analyses, including comparative assessments of the Korean and Japanese cases, and findings emerging from the relevant research areas. The report which NIRA will edit on the basis of the KDI report will present broad economic issues concerning Korea's historical economic development as well as more specific themes.

Asset Utilization in an Aging Society - Issues for Promoting Reverse Mortgage

With the arrival of a fully-fledged aging society in the twenty-first century, it is expected that existing systems will not be able to take appropriate measures against the various new problems that may emerge. For example, because of the declining birthrate and the increasing numbers of elderly citizens, it has become difficult to guarantee funds for living expenses of the elderly due to growing pressure on the pension system.

A new system needs to be established in order to guarantee a comfortable livelihood for the elderly by promoting a flow of assets (including their own houses). By means of this system the elderly will be able to receive loans which can be used for living expenses by utilizing assets, such as houses, as collateral. The pledged assets will be used for repayment of the loans after their deaths.

This research project examined the feasibility of a private business which transfers housing assets into funds for living expenses, together with the preparation of the necessary environment to make such a business possible.

In a situation in which the elderly use their houses as collateral while continuing to reside in them, they are likely to face risks that stem from the immaturity of the real estate market when their assets are sold (after their death). For example, there is a risk that their houses may not be sold for an appropriate price and also that the value of their houses may decline. It is unlikely that private companies alone could cope with these risks. Therefore, it is essential to establish a framework to cope with such risks with the participation of public organizations.

In a situation in which it is presupposed that the elderly will sell their houses and move into a new house, they will be free from the risk that the price of real estate may drop. At the same time, risks accompanying the conversion of their houses into cash will also be reduced. These imply that in this case, it would not be difficult to establish a private business that converts housing assets into funds for living expenses. In order to further promote such a business, it is essential for the companies involved (real estate agencies, construction companies specializing in housing for the elderly and insurance companies) to make joint efforts to present a coordinated service. At the same time, legal systems related to real estate tax should be improved.

[ Symposium & Lecture ]

International Symposium

Shenzhen's New Challenge "International Think Tank Forum 2001"

Shenzhen's New Challenge
Shenzhen has begun a new challenge. China, which has build up considerable momentum in economic development, lags behind other countries in economic and social democratization and the construction of infrastructure based on market principles, particularly in the establishment of soft infrastructure, including the disclosure of information. To achieve steady economic development in the twenty-first century, it is important for China to involve itself in a broad range of policy research in collaboration with advanced nations. Therefore, "Shenzhen: a forerunner in open economic policies" will promote future projects as a "window on a global policy research network." As a representative example of these projects, the "International Think Tank Forum (ITTF) 2001" was held in Shenzhen on June 15 -17.

The China Development Institute (CDI), which sponsored this Forum, was established in 1989 with donations from the Development Center of the Chinese government and the local government of Shenzhen. The CDI conducts independent research looking to the private sector for assistance, and intends to promote exchange with both domestic and foreign research institutions in the field of policy research.

Intellectual Exchange among Policy Researchers
The ITTF is an experiment attempt to organize a forum to deepen discussions concerning specific policies from various angles, gathering together experts from leading policy research institutes in major countries on a regular basis. The CDI took a leading role in the realization of this new forum, with NIRA providing comprehensive assistance centering on intellectual aspects and the policy research network.

The necessity for infrastructure to actively promote international intellectual exchange and fusion among major think tanks and research groups and to promote time-efficient global policy research has been recognized. The ITTF was designed to encourage improvement of policy research as one aspect of such infrastructure.

Unified Theme: "New Economy and Asia"
Following the first meeting last year, the second ITTF meeting was held under the unified theme "New Economy and Asia" and was participated in by specialists from think tanks throughout the world. The total number of participants exceeded 400, guaranteeing a lively exchange of opinions concerning the dynamism of new economy and the future of Asia's economies and societies.

Executives and researchers from the world's leading think tanks, such as Mr. Claude Smadja, Managing Director of the World Economic Forum, Mr. John Chipman, Director of the International Institute for Strategic Studies (U.K.), and Mr. Robert Litan, Vice President of the Brooking Institution, participated in the following sessions: "The Role of New Economy," "The Challenge of New Economy," "New Economy and Innovation," "New Economy and Capital Markets," "Relations between International Economy and New Economy," and "New Economy and the Future of Asia."

At the latter session, Mr. Joseph Stiglitz, Stanford University Professor and former Vice President and Chief Economist of the World Bank, took up the characteristics of Asia's economies and societies from the global viewpoint and argued their possibility for development and momentum.

It is hoped that the ITTF, developing as it does from Asia will achieve sound development as infrastructure for policy research by world think tanks.

OECD International Futures Programme Conference

"The Future of Money"

NIRA and the OECD jointly held the conference "The Future of Money" in Luxembourg from July 11-13 as part of the OECD International Futures Programme.

About 70 participants attended this conference, including Mr. Johnston, OECD Secretary-General, and Mr. Polfer, Vice President of Luxembourg, in addition to scholars and representatives of financial institutes and monetary authorities from around the world. Discussions were held for three days concerning the future of money given the rapid progress of information and communications technology (ICT). These included arguments derived from the process of generation of money.

The following is an outline of the conference report produced by NIRA Researcher Nobusuke Tamaki, a participant in the conference.

The Development of ICT and the Roles of Money and the Financial System
Quoting a lecture by the Deputy Governor of the Bank of England, OECD Secretary-General Johnston referred to the possibility that the rapid development of ICT would drastically change the traditional nature of money, for example, the system in which bank notes are issued as legal tender by central banks, and demonstrated the necessity for fundamental discussions.

The Generation of Money and Its Historical Development
The generation of money is often explained in economic theories as follows: "A thing that is convenient as a means of exchange will naturally be selected by the market and will become money." However, scholars voiced many critical opinions regarding this explanation. They pointed out that although money improves the efficiency of exchange compared with barter trade, acting as a means of exchange is only part of money's function, and that in order for money to be established as a measure of value, collective power, such as that of the nation is necessary. It was also pointed out that when focusing on money as a means of exchange, we tend to think in a dichotomous manner that the real economy can exist by itself and money is just like a veil covering it. Money can be money only in the relations among economic agents.

Numerous experiments with electronic money have been conducted recently in Europe and America, and it was argued that revolutionary changes make take place in the near future. However, it was reported at the conference that all these experiments cannot be said to have achieved major commercial success. In response, it was recognized that merely improving efficiency as a means of exchange through the development of ICT is insufficient for the generation of anew form of money. It was repeatedly pointed out that nations should continue to play a major role in the establishment of trust in money.

As a result, the following opinion was prominent throughout the conference: It is difficult to imagine a scenario in which the rapid development of ICT will generate and popularize electric money and other new types of money in the near future, and the traditional framework in which banks and other financial institutions supply money and provide society with payment and credit functions will be changed all at once. On the other hand, it was pointed out that in measuring the impact of ICT development on money, it will be necessary to consider the current social relations that make money exist as money.

Singapore's Plan to Issue Electronic Money as a Legal Tender
Traditionally, experiments with electronic money have mainly been conducted by the private sector, and this money has not been a legal tender. A participant from Singapore attracted attention in reporting that a plan to issue electronic money as a legal tender is being drawn up in that country. Although this plan is still in the conceptual stage, the Singaporean government is seriously considering the possibility of issuing an electronic legal tender "that can be used by anyone, anywhere, anytime, in a simple manner, and to buy anything," mainly aiming at reducing the costs of payment using paper and metal cash.

The social position of the electronic legal tender is the same as that of the traditional one, and if it is accompanied by the improvement of physical efficiency, there is a possibility that it will be widely accepted by Singaporean society. On the other hand, the Singaporean government has made clear that the issuance of an electronic legal tender will not replace the issuance of traditional paper and metal legal tender, which will continue to be issued. The reason for this decision is that the government recognizes that a need for paper money still exists for some people.

The future direction of this plan is certain to attract attention.

[ NIRA Topics ]

Introduction of Visiting Research Fellows

I am visiting NIRA in order to take part in a joint research project conducted with the Urban Institute, one of the major think tanks in the United States. Recently, policy research and evaluation have become issues receiving increased attention in Japan. In the hope that the current "reform boom" will not be a temporary phenomenon, policy research with profound scientific analysis must be undertaken.

At Osaka University, many economists are pursuing their activities against the background of a strained relationship between pure theory and practical policy-oriented research. I have been involved in strongly policy-oriented topics since I was a member of the former Economic Planning Agency (now the Cabinet Office).

I am presently particularly interested in such fields as education, medical care and welfare, namely, those fields in which it is possible that either the market or government may fail. I am also focusing on the study of the role played by the NPOs and NGOs. Given the opportunity of this joint research project, I am looking forward to engaging new field of research while partaking of the stimulating environment of NIRA.

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