5 knowledge of this has already influenced private

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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.

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