Annual Report on the Japanese

Economy and Public Finance

2003-2004

- No Gains Without Reforms IV -

July 2004

Cabinet Office

Government of Japan


 [Annual List

Annual Report on the Japanese Economy and Public Finance 2003-2004

Introduction

Chapter 1 Reform and Recovery in the Japanese Economy

    Section 1 Toward Economic Growth Based on Private Demand

    Section 2 Business Sector Benefiting from Reform

    Section 3 Improvement in the Labor Market and Household Sector

       1. Improvement in the Labor Market Despite Remaining Difficulties

       2. Stable Demand in Household Sector

    Section 4 Prospect of Overcoming Deflation

       1. General Prices Staying Flat

       2. Deflation and Monetary Policy

       3. Synthetic Judgment of Deflation and Future Policy

    Section 5 The Progress in Structural Reform in Fiscal Policy and Financial Systems

       1. Trends in Government Finances and Outlook

       2. Expenditure Reform

       3. The Problem of Domestic Funds Flow and the Progress of Financial Reform

    Section 6 Future Economic Prospect

Chapter 2 Prospect for Regional Economic Revival

    Section 1 Regional Disparities in Economic Recovery

       1. Disparities in Production Recovery

       2. Employment Situation Still Severe in Some Aspects

    Section 2 Economic Divergence Between Regions and Causes

    Section 3 Structural Reform in the Regions

       1. Structural Reform of Public Finances at the Local Government Level

       2. Progress in Administrative and Fiscal Reform in the Regions

       3. Special Zones for Structural Reform and Regional Revitalization

       4. Tourism and Other Means of Regional Revitalization Harnessing Special Regional Features

Chapter 3 New Challenges Presented by Globalization and Structural Reform

    Section 1 Japanese Economy and Globalization

       1. Significance of Globalization

       2. Characteristics of the Economic Developments with Focus on the Period after the 1990s

    Section 2 Economic Impacts of Globalization

       1. Macroeconomic Impacts of Exchange Rates

       2. Impact on Corporate Activities

       3. Impact on the Household Sector

       4. Regional Economy and Globalization

    Section 3 Promotion of Economic Partnership

       1. Initiatives for Economic Partnership

       2. Economic Effect of Economic Partnership

       3. Future Initiatives

    Section 4 Structural Reform to Draw Benefits from Globalization

       1. Required Structural Reform in Agriculture

       2. Need for Further Efforts Related to Foreign Direct Investment to Japan

       3. Utilization of Foreign Work Force and Other Tasks

       4. Concerns over Rising Labor Costs and its Impact on International Competitiveness

       5. Globalization and Competition Policies

   Conclusion

   Appended Figures and Tables

   Appended Notes

   Reference Materials

   Long-term Economic Statistics


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