RIETI Report January 13, 2023

Greeting from the Chairman

Dear Readers,
Welcome to RIETI Report.
This bi-weekly newsletter will keep you updated with the recent columns, event information and research results by RIETI fellows and other leading economists in Japan and around the world.

In this edition, we would like to introduce RIETI’s new chairman Shujiro Urata who took his leadership as of January first. He has been associated with RIETI for long time as a faculty fellow with extensive expertise in international economics and development economics.

We hope you will enjoy it. If you have any feedback, we would love to hear from you (news-info@rieti.go.jp).
Editors of RIETI Report (Facebook: @en.RIETI / Twitter: @RIETIenglish / URL: https://www.rieti.go.jp/en/)

This month's featured article

Greeting from the Chairman

URATA ShujiroChairman, RIETI

The world is facing a difficult situation, indeed a crisis situation, the likes of which it has never experienced before, which includes the U.S.-China conflict, Russia's military invasion of Ukraine, the COVID-19 pandemic, climate change, and supply chain disruptions. In addition, Japan is facing an aging population, low productivity, and accumulated government debt. It is no exaggeration to say that the future of Japan and the world will depend on how we respond to this crisis. If we can respond appropriately by viewing it as an opportunity to resolve or improve existing institutional and structural problems, it will be possible to reproduce the high growth that was achieved before the crisis. On the other hand, if we respond incorrectly, I believe that we may find ourselves in irreversible turmoil.

Governments and international organizations around the world are implementing various policies to overcome the crisis. An important mission of the Research Institute of Economy, Trade and Industry (RIETI) is to present policymakers with appropriate policies in difficult economic situations, but we also face various challenges in finding appropriate policies. For example, it is extremely difficult to clearly identify the causes and effects of the various problems mentioned above because they are occurring simultaneously. Some believe that the crisis conditions that have divided the world economy are leading to its de-globalization, but the fact that globalization has already made significant progress makes it difficult to separate domestic and international economic issues. Furthermore, many economic issues are closely intertwined with various other arenas such as politics, society, and history, making it difficult to find solutions without taking interdependencies into account. In particular, economic security has become an important issue at a time when political conflicts between nations are becoming increasingly acute.

When considering a policy, the impact of the policy on the economy must be analyzed, often through ex-ante and ex-post analysis. Ex-ante analysis analyzes the impact of a policy before it is implemented, whereas ex-post analysis analyzes the impact of a policy after it is implemented. Ex-ante analysis often involves simulation analysis using economic models, etc., whereas ex-post analysis generally uses statistical methods to analyze collected data. Not only are both ex-ante and ex-post analyses conducted using theoretical models, but in many cases, the results of the ex-post analysis are applied to the ex-ante analysis. The method of formulating policies using data obtained from these quantitative analyses is called Evidence-Based Policy Making (EBPM), and is attracting attention around the world, with RIETI taking a particularly strong interest in promoting it.

Although the private sector is the primary actor in terms of economic activity, there are situations in which it is difficult to achieve the most desirable outcome for the economy through decisions and actions taken solely by the private sector, such as problems between nations. Many of the problems mentioned above are such that appropriate responses require government policies. One issue here is what form of, and to what extent, government involvement is desirable in response to actions by the private sector. The desired level of government involvement will vary from issue to issue. RIETI has been providing a forum for such research and has produced excellent research results. I am committed to taking a lead in this endeavor.

The link of this article:

Urata’s profile page:

Urata’s recent articles

VoxEU Columns
“The role of international investment agreements in attracting Japanese foreign direct investment” (co-authored with Youngmin BAEK)

“Impacts of firm global value chain participation on productivity: A case of Japanese manufacturing firms” (co-authored with Youngmin BAEK)

“Who benefits from trade liberalisation? A case from Japan” (co-authored with Youngmin BAEK , HAYAKAWA Kazunobu and TSUBOTA Kenmei)

Urata’s recent discussion papers

“Impact of International Investment Agreements on Japanese FDI: A firm-level analysis” (co-authored with Youngmin BAEK)

“Impacts of Increased Chinese Imports on Japan's Labor Market: Firm and regional aspects” (co-authored with HAYAKAWA Kazunobu and ITO Tadashi)

“Effects of Product-Specific Rules of Origin on Trade in Free Trade Agreements: Evidence from the cases of Japan” (co-authored with ANDO Mitsuyo and YAMANOUCHI Kenta)

“Import Competition from China and Markup Dispersion” (co-authored with HAYAKAWA Kazunobu and YAMANOUCHI Kenta (Kagawa University)

“Impacts of Firm GVC Participation on Productivity: A Case of Japanese Firms” (co-authored with Youngmin BAEK)

Our latest discussion papers

“Long-run Effect of a Horizontal Merger and Its Remedial Standards”
FUKASAWA Takeshi (Tokyo University) / OHASHI Hiroshi (Faculty Fellow, RIETI)

“Does VC Investor Type Matter? Determinants and effects of VC backing for new firms in Japan”
KATO Masatoshi (Kwansei Gakuin University) / Nicolas LEGENDRE (HEC Montreal) / YOSHIDA Hiroki (Keio University)

“Sustainable Development Goals and International Trade Law: A critical analysis”
NAKAGAWA Junji (Faculty Fellow, RIETI)

“U.S. Trade Imbalances, East Asian Exchange Rates, and a New Plaza Accord”
Willem THORBECKE (Senior Fellow, RIETI)

[List of discussion papers]
[List of upcoming and past symposiums]
[List of upcoming and past BBL seminars]

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