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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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- Summer '13