Professor Kazuhito Ikeo emphasizes the importance of the financial services industry and the financial and capital markets in the Japanese economy, and discusses the Financial Services Agency's "Plan" to strengthen the financial services industry and the securities and commodities markets in Tokyo. Especially important is to create "multi-layered market structure," where financial activities are to be expanded in the form of what might be called "market-based indirect financing," which means the type of financial intermediation connecting firms or households on one hand and markets on the other, for efficient transformation and sharing of risks. "Product diversification" and "transactions in professional markets" should be encouraged such as market trading of ETFs in commodity futures. At the same time, financial institutions are expected to exercise their own self-discipline in the process of deregulation and overcome such challenges for success in the future, according to Professor Ikeo.

Professor J. Sean Curtin takes up the current and future relationship between Japan and China in a positive light on the occasion of Prime Minister Fukuda's visit to Beijing. He concludes that Mr. Fukuda's visit to China will indicate if Japan is ready to forge a new relationship between the two countries or whether Japan and China must continue to wait for a new beginning which both so desperately need.

Professor Toshihiko Kinoshita points out that Chinese business people can learn a lot from the successes and failures of Japanese business, especially from Japan's postwar experience regarding its interaction with American business in terms of quality control and business models. China should also learn Japan's business approach, paying attention to details to ensure high quality service, and brand strategies and intellectual property rights management not only from American and Japanese companies, but also from successful Asian businesses, according to Professor Kinoshita.

Mr. Masahiko Ishizuka argues that recent political developments, relaxing agricultural reform, could deter the desirable effort of finding ways to make Japanese agriculture a viable sector economically, socially and politically. As both the LDP and the DPJ, which are looking toward the upcoming lower house election are proposing to loosen the qualifications for receiving compensation to more small-scale farmers, such a populist compromise could act as an obstacle to the strengthening of Japan's agricultural industry, according to Mr. Ishizuka.

Professor Anthony D'Costa maintains that Japan has no choice but to tackle the labor shortage problem, especially for its important ICT industry, by introducing foreign talent. While Japan is currently relying on mostly Chinese and also Korean labor force for skilled jobs, more efforts will be required to attract professionals and students from India and other countries, as the high rate of growth in both China and India and the continued demand for ICT professionals worldwide are likely to constrain foreign talent availability for Japan in the foreseeable future, according to Professor D'Costa.

Mr. Yoshisuke Iinuma (Oriental Economist) argues that the current turmoil surrounding the Democratic Party of Japan has essentially been caused by DPJ president Ichiro Ozawa's "illness," or flaw in his political personality, where he is quite self-centered, and often destroys what he built up with his colleagues and ruins his relationship with them. According to Mr. Iinuma, there is no question that the momentum of the new trend pushed by Ozawa has been weakened, and next Lower House elections, which the DPJ targeted to have in April next year by pushing Fukuda into the corner, will be delayed.

Mr. Masahiko Ishizuka critically reviews the Japanese government's stance toward the military dictatorship of Myanmar, and points out the historical relationship between Japan and Myanmar, represented by the well-known novel and movies titled "Harp of Burma," seems to have contributed to the current soft position taken by the Japanese government. Japan should deal with today's reality by listening to the voices of the Myanmarese people, not to the harp of Burma, according to Mr. Ishizuka.

Mr. Shoichi IKUTA maintains that China's accession to WTO in 2001 was one of the most significant developments in the recent history of the Chinese economy, and points out a number of recent developments which are particularly important from Japan's viewpoint: (1) an interdependent economic relationship between Japan and China, (2) the size factor of China as a global power, (3) instability in the current stage of China's development, (4) numerous problems associated with the execution and practice of China's WTO accession conditions, and (5) China's monetary and exchange rate policies as well as FTA policies for regional integration.

Professor Sukehiro Hosono adopts a positive approach to the serious problem of central city decline in Japan's local regions and, after some careful examination of available data and causal relations for urban conditions, he proposes the following five successful formulas for community development and revitalization: (1) unique local brands, (2) choice and concentration, (3) human resource development, (4) networking people and organizations, and (5) information strategies.

Professor Toshihiko Kinoshita argues that Japan's excellent companies have been undergoing "reform" to evolve into 'hybrid' management organizations, maintaining their strengths such as the approach of bottom-up and team work with less specialization, etc., and partly absorbing some good practices as speedy management, frequent M&As, use of profit indicators from the Anglo-American model. What we need to do is to make this renewed "Japan model" more effective and persuasive internationally so that foreign investors would be willing to support excellent companies in Japan, according to Prof. Kinonshita.

Professor Tomohito Shinoda maintains that there are two somewhat different issues involved in the extension of the Anti-terrorism Law. Regarding the subtance of Japan's international contribution, Japan's SDF mission in the Indian Ocean has been highly appreciated and should be continued by all means, but regarding the legal arrangement for Japan's mission, the extension of the current Anti-terrorism Law is not an appropriate measure for Japan to take. Instead, a permanent legal framework for SDF overseas missions, including anti-terrorism activities, should be set up, according to Prof. Shinoda.

Prof. Toshihiko Kinoshita argues that Prime Minister Abe's abrupt resignation should eventually lead to reorganization and reshuffling of all political parties in the long run, while the Japanese economy is likely to growth steadily despite such prolonged political chaos. However, there are some concerns that a vicious circle of political and economic problems could interfere with the macroeconomic performance of the Japanese economy, and it might take at least a few years to be able to see some clear directions in political reorganization and fundamental policy agenda to shape the future of Japan, according to Prof. Kinoshita.

Mr. Masahiko ISHIZUKA argues that today's problem of economic and social disparities reflects the dual structure in the 1950s, where the latter has reemerged as Japan's economic growth has slowed down and the government has reduced its assistance to weak sectors such as small business and agriculture, especially under the Koizumi-Abe administration. Although Democratic Party, led by Mr. Ozawa, succeeded in taking advantage of this situation by proposing income compensation to farmers. In truth, the nation has yet to be presented with a truly viable way to solve the dilemma of domestic interests vs. globalization, which lies in the background of the persistent dual structure in this country. Future political contests should center on finding solutions to this issue, and the considerable wrangling could augur major political realignment, according to Mr. Ishizuka.

Mr. Kanzo Kobayashi examines Japan's NPO/NGO activities in terms of their historical developments as well as their strengths, weaknesses, opportunities and threats. He concludes that Japanese NPO/NGOs must improve their ability and know-how to obtain public funding and private donations, while working with both private and public organizations at home and abroad more closely to fully achieve their objectives, and those retiring baby-boomers who already possess various skills and know-how are encouraged to join NPO/NGO activities and contribute much as a voluntarily participating member for themselves as well as for future generations.

Mr. Atsuo Mihara maintains that in order to overcome the problems of widening instability, increasing disparities and decreasing population, Japan should look at its accumulated resources of financial capital and intellectual human capital, and adopt a set of strategies to make full use of those assets, which interact with each other to increase the total value of human activities in the economy. For that purpose, we need to break away from our "success experience" and train ourselves in managing our financial and human resources efficiently and wisely, while the government should support such individual efforts by adopting permanent policy measures based on a sound philosophy with clear objectives to revive Japan as an affluent society, according to Mr. Mihara.

Mr. Yutaka Harada argues that the Japanese voters swung widely in the last Upper House election, because there is not much difference between the ruling coalition and the main opposition party in their basic approach to fundamental issues such as the Japan-US Alliance and the capitalistic system. Even in their economic policies, there could not be much difference in effect between Prime Minister Abe's "reform agenda only in words" and Democratic Party leader Ozawa's "money giveaway agenda without money," according to Mr. Harada.

Professor Toshihiko Kinoshita maintains that although political uncertainty resulting from Mr. Abe's election defeat is a negative factor, one should not be too pessimistic about the future course of Japan, as expressed by many observers, especially foreign critics. This is because the underlying conditions surrounding Japan's political economy seem to be firm and sound, especially in terms of Japan's relationship with the US as well as the global economy. It is likely that optimism will prevail in the private sector, in spite of some pessimism in Japan's political field, according to Prof. Kinoshita.

Mr. Robert Dujarric argues that the US is inevitably reducing its commitment in East Asia, and making concessions to North Korea, as a result of its involvement in Iraq and the Middle Eastern region in general, and Japan must accept this fact instead of having the sense of frustration and disappointment toward the US in this region. What Japan can do is to set aside the abduction issue in order not to isolate itself from current negotiations with North Korea, and to have a future prospect for turning the Six Party Talks into some sort of regional security organization, where Japan can make a major contribution and increase its presence to help compensate for the partial power vacuum in East Asia resulting from American policy in the Middle East.

Professor Koichi Mera maintains that it is important to reexamine various "history issues" regarding Japan from the standpoint of fairness and objectivity, where all differing views are presented and discussed openly without being influenced by political or ideological powers. He concludes that Japan must be assertive, much more than Prime Minister Abe's "proactive diplomacy," to shed its sense of guilt and regain its national pride by engaging in open debate on Japan's history issues for a healthier state of mind among Japanese and a more normal relationship between Japan and the rest of Asia Pacific countries including the US.

Dr. Nathalie Cavasin first explains about the geographical distribution and concentration of industrial research and development activities in the Tokyo region, and then focuses on METI's cluster development policy to support two sector-based clusters and five territorial-based clusters in the Tokyo metropolitan area. Dr. Cavasin concludes that there seems to be much room for improvement regarding interactions and mutual trust among businesses, governments and academic institutions within each cluster in the Tokyo region, although remarkable progress has been made for the last couple of years in this respect, mainly due to favorable economic conditions in the Tokyo metropolitan region.

Yutaka HARADA offers a solution to Japan's budget deficit problem without tax increases by proposing a cap on fiscal expenditures until 2011. He believes that, given such restrictions and the end of deflation, the primary balance will be restored by 2009, and the fiscal situation will improve steadily thereafter. On the other hand, substantial tax increases would likely lead to relaxed government spending and making fiscal restructuring more difficult in the long run, according to Mr. Harada.

Masahiko ISHIZUKA points out that an increasing number of rural communities are becoming "marginal hamlets," which are bound to disappear as more and more people are moving to large cities. Criticizing a school of thought that concentration of population in big cities like Tokyo with declining rural areas is inevitable and efficient in the age of globalization, Mr. Ishizuka concludes that something other than just economic efficiency may have to be considered from the viewpoint of balanced happiness and diversity of lifestyles, and asks whether Japan will be able to truly thrive with its population concentrated in Tokyo and rural areas left entirely deserted.

Keikichi HONDA argues for a comprehensive EPA between Japan and the US, based on the two countries' bilateral relationship, which has formed a "de-facto" EPA atmosphere in the postwar period, and points out that the long-standing agricultural problem should be objectively reevaluated from the viewpoint of risks for national security. Having considered various aspects of trade and risk problems, Mr. Honda concludes that what Japan needs is a reliable partner after all, and Japan and the US can be such reliable partners to benefit each other on the equal footing basis, to be strengthened by a comprehensive EPA with a guiding principle of "minimum harmonization" and "mutual recognition of differences."

Takatoshi ITO points out that in contrast to South Korea, which concluded an FTA with the US in April, Japan is yet to decide what to use FTAs strategically, mainly because of its agricultural protection. In this regard, political decisions are urgently needed on the part of the Japanese government to conclude an FTA agreement with Australia, and start FTA negotiations with the US and the EU as soon as possible, before Japan becomes disadvantaged by FTA arrangements by other countries such as South Korea, according to Prof. Ito.

Mr. Masahiko ISHIZUKA criticizes Prime Minister's Abe's vagueness about the meaning of his pledge to "break away from the postwar regime," resulting in public ambivalence about Abe, especially, indifference among postwar generations. Impassive public response to this low-key, gentle-looking leader might turn out to be a dangerous thing in the end, because such cardinal issues as constitutional amendment, collective self-defense right and education reform will have to be decided in spite of the absence of willingness and ability on the part of the public to engage in debate on such issues, according to Mr. Ishizuka.

Prof. Kazuhito IKEO, having observed a number of misconducts in the Japanese capital market for the last few years, argues that "integrity" is an indispensable element for capital market development, not just from the normative viewpoint, but from the positive viewpoint of realizing sustainable returns. This is because without integrity on the part of market participants, there would be too high transactions cost, which consists of search cost, bargaining cost and enforcement cost, in the market. Therefore, it is imperative that every market participant behave on the basis of real integrity beyond the mere compliance of the law in order to eliminate all possible misconducts arising from the lack of ethical norms and create a kind of market environment in which participants can trade based on mutual trust for the development of the Japanese capital market, according to Prof. Ikeo.

Prof. Noritake Kobayashi has examined recent corporate data regarding relations between internationalization and business performance, and found that Japanese international corporations can be classified into four groups in terms of the degrees of internationalization and performance. It is concluded that while internationalization trends and business performance factors tend to show some common patterns regardless of sector or size, it seems essential for management to steer companies appropriately by taking into consideration cyclical patters of those factors and by making enough preparations and efforts for improvement and maintenance of business performance in the process of internationalization.

In this article, Mr Ishizuka emphasizes the importance of abolishing the "amakudari" system for Japanese bureaucracy, and focuses on Prime Minister Abe's reform bill, under which a unified job-placement agency would be created to help retiring bureaucrats find new jobs, but at the same time it would shield the process from the influence of individual ministries over private companies under their jurisdiction. Mr. Ishizuka also points out that a series of corporate scandals and consumers' demand for tighter regulations are partly responsible for bureaucrats' control over the private sector, and maintains that it is crucial to abolish the self-righteous bureaucracy in order for Japan to achieve a truly free, efficient and independent-minded society.

Mr. Yukawa, journalist and blogger, maintains that there seems to be an explosion of social (participatory) media taking place now and its social impacts can no longer be ignored by any established organization such as businesses and mass media in Japan or elsewhere. Now that we have entered a new world of social media, where people's desire for self-expression and creativity is being emancipated, no single company such as Google could control the exploding amount of information coming out of creative individuals all over the world. In this new world, whether in Japan or elsewhere, the most important thing is not fears, but hopes and dreams for us to pursue by following our own desire to express ourselves through ever-expanding social media to be advanced by our own creativity, according to Mr. Yukawa.

In this article, Mr. Kobayashi asks where we are and what we should do in the process of globalization, especially in this age of the so-called information revolution, and tries to answer this question, first by focusing on national borders which are less and less important in economic terms, and then focusing on our mindset in facing an increasing number of cases to choose between local values and global values on a daily basis. He concludes that it is each individual who can empower himself or herself to change the world fundamentally by starting or joining voluntarily formed groups of individuals with shared values or objectives and, at the same time, has to keep in mind his or her heavy responsibility in self-training, self-discipline and self-evaluation to be associated with the power acquired in the information age.

The U.S. and South Korea have just reached agreement on an FTA deal as a political and economic compromise between the two countries. As such, there are problems associated with this FTA, and its effects on Japan and other Asian countries may be mostly psychological, rather than real. In a sense, this is a welcome move for U.S.-South Korea relations as well as for Japan-South Korea relations, possibly leading to reopening of Japan's negotiations with South Korea over an FTA, according to Prof. Kinoshita.

Professor Kinoshita predicts that it will probably take another year for Japan to conclude an EPA with ASEAN, although official negotiations between Japan and ASEAN will start this April. A sticky problem is agriculture, and Japan needs fundamental reform in agriculture to take the initiative not only in its EPA negotiations but also in the Doha round of WTO negotiations, according to Prof. Kinoshita.

In this article, a proposal is made to improve Japan's international airport service by allowing international flights to and from Haneda (not Narita) Airport in the early morning and the late evening. In addition to better access for air passengers, more efficient use of　Haneda Airport in Tokyo would yield substantial economic benefits In the context of Japan's international politico-economic strategy, it is quite important to upgrade the nation's airports in terms of accessibility and convenience, and several policy recommendations are made, including "open sky agreements" with Asian countries.

In the context of income disparity argument in Japan, Professor Otake criticizes those who emphasize the importance of economic growth as well as those who insist on reduction in economic disparities, and argues that the criterion for affluence should be the absolute level of income for policy purposes. This is because unreasonable policies such as income redistribution from the poor to the rich in absolute terms might result unless the absolute level of income is taken into consideration. This could happen, since those who feel very unhappy tend to resort to strong political power. That may be the reason why the "ice age" for new recruitment occurred, while regular workers were protected, and also reform of the social pension system has been resisted in Japan. Therefore, it is necessary to think of the present and the future in terms of absolute levels, instead of comparing to the past or others, as in the growth or disparity approach.

Japanese firms - especially big ones - served as a provider of social security. Dismissals of employees in layoffs or restructuring drives were rare. Job security was usually not a matter of concern. In exchange, the company demanded virtually open-ended devotion from employees, who responded accordingly. This has changed drastically in the past decade as Japanese companies have undergone painful restructuring to survive the lengthy slump in the 1990s in the wake of the economic bubble's collapse, with additional impact coming from global competition. The question remains as to what sort of communities the Japanese people will form in the new job and working environment. Some political leftists are concerned that the right wing is poised to take advantage of the situation, filling the vacuum by increasing the state's influence and resulting in a possible rise of nationalism.

Some say that economic education in the U.S. is a model for that in Japan, but this is not necessarily true, because there seems to be no clear understanding of what economic education ought to be in the U.S. or anywhere else for that matter. First of all, economics is a "methodology" and not a "subject matter." What distinguishes economics from other social sciences is not the subject matter but rather the methodology, which can apply to any situation with scarce resources. Second, economics emphasizes the fact that all decisions are taken under constraints. In economic education, students should be taught the fact that all decisions require identification of the constraints as well as the objectives. In a more concrete terms, they should be aware of realistic constraints, whether in daily living or in future career. Economics can tell you these important aspects of decision making, but unfortunately, it is not yet widely appreciated. Hopefully, this situation will improve, as more economists become involved in economic education in the U.S., Japan and other countries.

As India and Japan are improving their bilateral relationship in the context of a larger Asian and global economy, there is an important issue to be addressed, that is, the availability of highly trained technical professionals for the booming information technology and other related high technology sectors. The question is how will Japan pay for its healthy, elderly, non-working citizens seems a question that many have asked but few have advanced any meaningful, workable solutions. Clearly in addition to the usual bilateral needs between India and Japan, India could support Japanese demographic challenges by offering well-trained technical professionals, while Japan takes a deeper and more long-term interest in the Indian economy and contribute to India's development. Labor shortages in many ageing societies will dictate the direction and magnitude of the flows of technical talent. But thus far neither India seems to find Japan attractive nor does Japan seem to be ready for this inevitability. Such status quo must change as the stakes for both are high: for Japan to rejuvenate its high tech economy with fresh, globally-oriented talent and for India to obtain Japanese manufacturing know-how to sustain the high growth and widen the benefits of growth to more Indians.

The Japanese tradition of the relationship between a corporation and its employees, sometimes referred to as "security and fetters," needs to be replaced by the new notion of work-life balance (WLB). WLB is intended for the individuals to review the way of working in order for them to enjoy fulfilling private lives while at the same time companies reassess the ways of doing business, so as to increase hourly productivity of added-value and improve business performance. As WLB is, after all, a way of life, implementation will become most effective when community based activities are undertaken. But it will become necessary for the national government to be involved if such challenges were to be made a megatrend throughout the country. It is necessary, therefore, to establish a "basic law to promote realization of work-life balance" by first drawing a grand design of future Japan, and stipulating what must be done by each of the government, management, and labor sectors.

Amateurs and laymen are now equipped with the tools to express their views to the world. The trend is being dubbed the Web 2.0 revolution. "Web Shinka-ron" ("Theory of Web Evolution") - a bestseller in Japan written by Mochio Umeda, emphasized the optimism that Web 2.0 will usher in a better, fairer world. He wrote that search engines like Google are aimed at restructuring "the orders of the intellectual world" from "God's viewpoint." But the concept of "God's viewpoint" echoes of Adam Smith's "God's invisible hand." Although there is little knowledge of the Friedman and Thatcher philosophies in the Web 2.0 community, the online revolution clearly contains elements of their style of conservatism. Whether politicians are aware of the impact that an Internet society will have on politics is not clear. Another interesting question is how Prime Minister Shinzo Abe, who identifies himself as a conservative, views the conservative nature that lurks within the fabric of Web 2.0.

The failure in U.S. policy to deal with Iraq and Middle East as a whole weakens the U.S., which will likely be less willing to intervene overseas in the future. Tokyo should think about the detrimental consequences of Iraq and post-Iraq on U.S. allies such as Japan. What is interesting about Japan's defense policy for the last 10-15 years is that there has been virtually no change in defense spending as a percentage of GDP. It is amazing to see no significant increase in defense spending, even in the aftermath of North Korea's nuclear test and missile launches of 2006. Though the US alliance is by far the best policy for Japan, it would be prudent for Japan to "hedge" against a decline in the quality of the Security Treaty. This would imply re-thinking the defense budget, figuring out ways to strengthen security ties with South Korea, and making Japanese policy towards China more effective.

Prime Minister Abe in his policy speech in September set forth the "Asian Gateway Vision." The term "gateway" used here is not necessarily intended to represent the image of an entry point such as an airport, but rather, it is meant to make all of Japan a gateway where it would contribute to promoting stability and prosperity throughout Asia, while drawing on the vitality of Asia for its own benefit. One approach is to make Japan open to Asia and the world through domestic reforms. And the other is for Japan to exercise leadership, which is not in the "follow me" attitude but by adopting the "leading from the back" style. And one way to realize this is to make Japan a hub of the high-level human resources development network.