Japan races aheadIn Japan, business investment and the number of jobs available increased after the government lifted lots of regulations on conglomerates and development in the capital region. The government scrapped laws limiting the number of factories in the capital area and on relocating plants in the capital to rural areas in 2002 and 2006, respectively.
Laws limiting conglomerates’ ownership of shares of their subsidiaries, which Seoul copied, were also repealed. The Korea Chamber of Commerce and Industry says Tokyo’s restrictions on manufacturers have decreased 67 percent in the past decade. Since 2001, 1,500 restrictions on business, labor and enterprises have been lifted. Unrealistic environmental rules have also been eased.
The efforts paid off. Factory construction doubled from 853 square meters in 2002 to 1,567 square meters last year. In the final quarter of last year, Japan’s economic growth rate surged to 5.5 percent annually, exceeding its potential growth rate of 1.8 percent. The employment rate of college graduates soared to 87.7 percent, the best ever.
Japan and South Korea are both experiencing economic differences between urban and rural areas, and between conglomerates and small and medium-sized companies. But the two governments approached the issue in different ways. Our government restricts the capital region and large companies while Japan eases restrictions on the capital region and on companies.
The Japanese government must have carefully considered the issue. But it realized that both the capital and rural regions can survive as long as the growth rate goes up through looser restrictions. In fact, as the Japanese economy revived due to the lifting of restrictions on cities and large companies, the effects benefited rural regions and small and medium-sized companies as well. The Toyota Motor Corporation is building a new assembly plant in Kyushu and small and medium-sized companies have been recruiting more employees.
We feel regret watching Japan’s success. Over the past four years, the current administration has strictly regulated development in Seoul and on large companies, which led to a lack of economic energy and got the rural regions and smaller firms in trouble as well. The administration may have tried to help the poor, but it did just the opposite. Now many businessmen, carrying piles of documents, are looking for public employees to untangle complicated rules. Some leave the country, exhausted. Without bold reforms, it will be difficult for Korea to survive a rejuvenated Japan and a growing China.