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Unformatted text preview: the potential growth rate over
the next quarter century cannot lie above 2 per
cent.5 Knowledge of this has already influenced
private-sector behaviour. Firms have started reducing their investments, while households have stepped
up provisions for old age. The 1990s slow-down, in
other words, represents, at least in part, an adjustment to a lower potential.
This lower potential is further impaired by a whole
range of institutional features which hold back
private-sector initiative and dynamism. Influenced,
no doubt, by the success of the US economy in the
late 1990s, a consensus is evolving in the country
around the view that government intervention is far
too pervasive and that the traditional corporate and
labour-market structures, which may have served
Japan well in the past, are today holding back competition and growth in new activities. What is required is
wide-ranging structural reform, a drastic break with
former attitudes and institutions, and a rapid acceptance of Anglo-American business practices....
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This note was uploaded on 02/03/2014 for the course ECON 204 taught by Professor Devero during the Summer '13 term at American University of Sharjah.
- Summer '13