News July 2004

[Symposium and Lecture]

Symposium in Commemoration of NIRA's 30th Anniversary:
Market Governance Forum

As part of the series of symposiums held in commemoration of NIRA's 30th anniversary, the "Market Governance Forum" was held on May 24, 2004 and was participated in by approximately 100 specialists and practitioners. In this forum, governance appropriate for the twenty-first century was explored by developing discussions on specific topics such as "measures to strengthen market function in Japan" and the "issue of laws for the cross-border financial and service market.

Outline of the Forum

The openning address was given by Mr. Takafusa Shioya, President of NIRA and was entitled "In Pursuit of Governance Appropriate for the Twenty-first Century." In his speech Mr. Shioya suggested that Japan shift from "closed governance" undertaken by a limited number or organizations and individuals to "open governance" in which the players are diverse in order to solve the various problems currently facing Japan.

The openning address was followed by the keynote lecture and a panel discussion of leading specialists in their respective fields.

Finally, the interim results of a NIRA-conducted research project entitled "Research towards the Revitalization of Laws, Market and Civil Society," which is scheduled to be completed in September, were presented. The presentations given included, a lecture given jointly by two researchers on the "impact placed on the macro-economy by the qualitative improvement of laws and systems in the financial and capital markets" and research results concerning "establishing comprehensive, cross-border financial market laws."

Keynote Lecture: "A Proposal for Strengthening Market Function in Japan's Economy"

Based on the results from the two forums held last year as part of the research project conducted jointly by NIRA and Keio University, Professor Naoyuki Yoshino gave a keynote lecture entitled "proposals for strengthening the functions of Japan's economy, Asia's economy and the financial capital market." In his lecture, Professor Yoshino emphasized the importance of strengthening Japan's international competitiveness. He also pointed out that the following measures are essential to implementing this goal.

Panel Discussion: "the issue of legal regulations related to financial services"

The objective of this panel discussion was to analyze the problems of finance (the financial market) from the perspectives of consumers, in the hope that the issue will be recognized widely by citizens as a common problem. Based on this, governance appropriate for the twenty-first century (joint government) was explored. The following is an outline of the discussion.

[Outline]
In Japan, information concerning the financial market system was monopolized for a long period by a limited number of individuals and organizations, such as the government and financial institutions. Because of these restrictions, only limited information was available to citizens and therefore, they had few opportunities for investing their capital. As a result, the majority of citizens saved their capital in the form of principal-guaranteed bank savings and the risks accompanying investment in the market was borne solely by financial institutions (e.g.- banks). The "concentration of investment risk" became the major cause of the bubble economy which in turn led to financial institutions' bankruptcy. As a result the banks became reluctant to lend money which eventually led to the prolonged stagnation Japan's economy has suffered.

In order for Japan's economy to truly revive, the abovementioned situation referred to as the "market distortion" must be eliminated. If citizens invest their capital effectively and widely based on the principle of self-responsibility, the investment risks will be spread out.

However, Japan's financial market is currently not considered trustworthy. Although it is essential to emphasize the responsibility of the service providers (the financial businesses) together with the responsibility of individual citizens, the principle of "trustee responsibility," which includes providing citizens with information sufficient to make decisions, is vague. The responsibilities of financial businesses and industries remain undefined to date because of the absence of appropriate and comprehensive laws for financial services. This means that although "freedom" (deregulation) has been implemented as a result of the financial big bang, fairness (justice) remains insufficient.

In order to realize fairness, the consciousness on the side of the financial services must be reformed. At the same time, Japan must establish independent, comprehensive, cross-sectional laws and regulations by studying examples in other countries, such as the U.S. Securities and Exchange Commission (SEC) and the Financial Services Authority (FSA) of the United Kingdom. The personal responsibility which must be borne by the individuals and "trustee responsibility" of the financial service industries must be clearly stipulated in the form of laws and regulations.

A highly qualified market system cannot be established by depending merely on discussions developed by a limited number of individuals and organizations, and based on the laws and regulations provided unilaterally by the government. It must be created based on "open governance" whereby a thorough discussion is developed by diverse players who participate in the market, including those actually involved in the financial services, as well as the combined efforts of these players to operate this system. The process of establishing this system is the ideal innovation to be achieved by the government, companies, financial institutions and the citizenry.

[New Research Projects]

  • Cooperation and Alliance in the "Century of the City" - Case Studies

    As decentralization progresses and we move from the age of the "nation" to that of the "city," one of the most significant trends observed in recent years is that cities around the world are promoting cooperation and alliances beyond the framework of the nation, while they are working actively on an unprecedented scale to respond to shared policy issues and to create new cultures.

    Among examples of nationwide inter-city cooperation in which Japanese cities take leadership roles, this research project will select examples related to the three major areas (a system of cultural administration for cultural capitals, a system of cultural administration for multicultural cities, and a system of cultural administration for cities with creative environments) for which new policy developments will be required in the future urban cultural administration. The project will select two examples for each area and conduct a survey on actual conditions focusing on the following points.

    This research project will identify the current status and tasks through this survey, and based on the various lessons learned from the survey, consider necessary conditions and mechanisms in which inter-city cooperation will effectively function in promoting creative building and activation of urban space and environment.

  • Long-Term Forecast for Northeast Asia: Alternative Scenarios

    NIRA proposed the concept of the "Grand Design for Northeast Asia" that forecasts the future of Northeast Asia and is seeking a path to the realization of "physical integration" towards the ultimate goal of regional integration. As a part of this process, NIRA will conduct this research project to create middle- and long-term alternative scenarios for the region's economic development.

    Recently, in Northeast Asia, with the progress of transportation, communications, and IT, a Northeast Asian FTA is being discussed, and new developments are appearing in the field of international cooperation. The North-South Korea summit was held in June 2000, and the Japan-North Korea summit was held in September 2002. In addition, the six-party talks regarding nuclear issues are going into orbit, and there are signs of political detente.

    Against the background of these developments, this research project will focus attention on the future prospects and potential of this economic zone, prepare some alternative forecast scenarios in connection with Japan's economic cooperation, and assess their policy implications.

    Based on multiple area econometric models (NAMIOS 1 and NAMIOS 2) covering seven areas in Northeast Asia (China, South Korea, North Korea, Russia, Mongolia, Russian Far East, and China's three Northeastern Provinces), this research project will prepare a combined system of dynamic econometric models divided into five sectors, and an inter-industry relationship model consisting of 35 sectors for each area will estimate the degree of interconnection of production and trade in the seven areas in accordance with the 35 sectors. Then, linking this to Japan's economic model, this project will conduct numerical analyses for a vision of comprehensive development of the Northeast Asian economic zone. The interim target year will be 2015 and the final one will be 2025.

    [NIRA Topics]

    Introduction of a New Vice President

    Heita Kawakatsu

    My relationship with NIRA started only last year when I was invited to take part in the "Panel to Discuss the Optimal Direction for Japanese Think Tanks." Before that, I solely enjoyed NIRA's excellent research results. As a Vice President of NIRA, I am determined to share the responsibility to further develop NIRA, already one of the leading think tanks in Japan, and hope that I will be able to achieve good results and contribute to establishing a better society.

    I believe that when NIRA was established, arguing about Japanese culture was a mainstream trend both at home and abroad. Today, however, coexistence of diverse cultures is a challenge, and evaluation of Japan not only as a nation or a culture, but as a civilization has been well established. Civilizations have a centripetal force and thereby can have an impact on other cultures and civilizations. I am aware that it is a task to reorganize Japan's system of knowledge into one that is commensurate with its dignified presence as a civilization.

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