These problems are presumably being addressed as

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Unformatted text preview: only when the capital and labour stock adjustments in the corporate sector are completed, that investment expenditure will finally pick up. In addition, banks will have to eliminate more of their nonperforming loans, whose size in 1998, was put at 5– 10 per cent of GDP (OECD, 1998). These problems are presumably being addressed, as shown by the continuing provisions made for bad loans, by falling investment and by rising unemployment over the last 2 years, but it could clearly take time for them fully to run their course. The whole process could be speeded up, according to some at least, if Japan managed to embrace structural change more wholeheartedly. Regulatory and legal reforms designed to facilitate company formation and entrepreneurship (as discussed in the contribution by Yutaka Imai and Masaaki Kawagoe in this issue), greater encouragement to research and innovation (as suggested in the paper by Akira Goto), an end to the allegedly anti-competitive and efficiency-reducing practices of the traditional ‘mainbank system’ (as argued by Masaharu Hanazaki and Akiyoshi Horiuchi in the...
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