Major Common Themes: 2005

RIETI aims to become an "Economic Policy-Designing Headquarters" that can contribute to the formulation of pioneering and cross-cutting policies, detecting and excavating important policy issues in an adequate and preemptive manner by facilitating three-way exchanges among the government, the private sector and academia. To achieve this end, RIETI has set out "Major Common Themes" consisting of six pillars of key economic issues as a new mid- to long-term framework for research activities.

I. Comprehensive Appraisal of "Lost Decade"

RIETI seeks to comprehensively appraise gains and losses of the 10-year stagnation both from macro- and micro-economic viewpoints and to identify new challenges. Such systematic research on the exit mechanism from deflation will provide valuable knowledge to other developed nations as well as to neighboring Asian countries.

Sub Major Issues

  • I-(1) Exit mechanism unique to Japan's deflation
  • I-(2) Changes in determinants of TFP
  • I-(3) Structural reforms - implementation and their effects
  • I-(4) Institutional complementarities between corporate and government governance

II. New Global Imbalances in an Era of Asian Integration

The sustainability of the huge external deficits of the United States and the rapid accumulation of foreign reserves in Asia will be examined, based upon which RIETI seeks to design policies for trade, foreign exchange and structural changes that are compatible with future integration in Asia.

Sub Major Issues

  • II-(1) Triangular trade pattern and intra-industry vertical specialization
  • II-(2) Searching for smooth adjustments to global imbalances
  • II-(3) Relations between exchange regimes and domestic institutional development
  • II-(4) Exploring compatibility between free trade and environment
  • II-(5) Seeking for effective FTA/EPAs
  • II-(6) Technocrat-government relationships in post-crisis Asia

III. Public Debt and Economics of Ageing

RIETI seeks to establish new comprehensive "economics of aging" that address not only the problem of fiscal deficits and public debt but also social security issues such as pensions, medical care and nursing, thereby presenting an ideal fiscal system for Japan.

Sub Major Issues

  • III-(1) How can Japan sustain its huge public debt?
  • III-(2) Holistic approach to social security issues: economics of ageing
  • III-(3) Searching for ideal pension systems
  • III-(4) What social security systems would minimize disincentives in labor market?

IV. New Financial Market Architecture and Corporate Governance

Toward the creation of a new financial system, RIETI seeks to establish a theoretical framework that goes beyond the conventional direct-versus-indirect finance approach thereby studying asset securitization and liquidity, corporate governance, small business finance, and public finance within that framework.

Sub Major Issues

  • IV-(1) New analytical framework for designing financial architecture
  • IV-(2) Institutional differences between banking systems and capital markets
  • IV-(3) Where is Japanese corporate governance heading?

V. Exploring New Systems for Innovation

RIETI seeks to clarify the linkages between science and technology (S-T linkages) and those between technology and industry (T-I linkages), the strengths and weakness of Japan's technological innovation and the role of regional clusters, and to explore technology innovation for information appliances, i.e. digital appliances that are capable of communication.

Sub Major Issues

  • V-(1) Searching for new innovation systems that strengthen competitiveness
  • V-(2) Intellectual property rights and strengthening competitiveness
  • V-(3) Regional cluster and enhanced industry-university collaboration

VI. Strengthening Database and Model Operations

RIETI seeks to enhance microdata and improve model simulations that contribute to analysis of the areas of trade, pensions, energy and the environment, thereby strengthening the infrastructure for RIETI research activities.

Sub Major Issues

  • VI-(1) Developing micro-models for policy evaluation of deregulations
  • VI-(2) New micro-database related to services, ageing, and environment
  • VI-(3) Strengthening model operations related to international trade and pensions

*Title Abbreviation SF: Senior Fellow / F: Fellow / FF: Faculty Fellow / CF: Consulting Fellow