Environmental Engineering Reference
In-Depth Information
trading partner, and this is expected to adversely afect exports to China
and the capacity of Japanese irms in China to operate efectively.
Within a week of taking oice, Abe reversed his campaign pledge to phase
out nuclear power, announcing that he supports the build-up of newer, safer
nuclear power reactors. Although he has so far allowed the FIT of 2012 to
continue, it is widely expected that Abe's return to power represents a boon
to Japan's nuclear power industry.
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9.6.3 Fiscal Health
Economically, Japan is a disaster in progress. It has an aging populous; by
2050, it is estimated that one-third of all Japanese will be over 65 years of
age. his trend is fueling a number of problems. First, the cost of social pro-
grams is increasing while the ratio of workers to dependants is declining.
Consequently, government budgets have been squeezed to try and make up
for the inancial shortfall through existing tax revenues. Second, Japanese
industry is becoming top-heavy. It is now laden with aging employees who
exhibit comparatively low levels of productivity on a cost per employee
basis. Declining organizational productivity, in conjunction with increased
international competition, means that Japanese industry is far less proit-
able than it used to be. Since the late 1980s annual tax revenue has fallen by
30%, and the Japanese government has been forced to make up for the is-
cal shortfalls through the issuance of public debt instruments. Outstanding
Japanese government bonds now exceed US$9 trillion.
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Japan's gross debt to GDP ratio for 2013 is projected to reach 235%.
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To
put this into perspective, when the Greek economy began to collapse, its
gross debt to GDP ratio was estimated at 150-170%. A high gross debt to
GDP ratio means that the government must make substantial interest pay-
ments to service the debt, and this reduces the amount of funds available
for program inancing. In Japan's case, its high debt compounds the iscal
challenges described in the previous paragraph.
In order to counter progressive annual iscal deicits, Japanese policymakers
began studying the desirability of increasing the consumption tax from the
current level of 5% to 10%. Many economic studies, including an inluential
review by the IMF, concluded that an increase to 10% would not succeed in
restoring iscal health.
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herefore, prior to the Fukushima disaster, econo-
mists in Japan were debating further initiatives to improve iscal governance.
Aside from the social and environmental chaos associated with the
Fukushima disaster, the clean-up costs and the subsequent decision to
implement a moratorium on nuclear power plant operation has exacerbated
