Abstract
High levels of public debt and frustratingly low growth in Japan and Italy have a common root: an ineffective response to the challenges of demographic ageing and globalization. Both countries do not have large governments living beyond their means but have been running deficits to stabilize their economies while income generation shifted from young to old and demand shifted from industrial manufacturing to services. The chapter follows the reactions of ageing corporations, households, and governments to show that debt crises in mature economies are growth crises that require proactive policies to shift the equilibrium from preserving wealth and vested interests to renewed income generation and innovation.
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Notes
- 1.
These public debt data are quoted as gross debt to GDP ratios, as is common internationally. Due to the nature of Japan’s complicated public investment programs and multitude of government agencies, the following graph and the comparisons below will be expressed in “net” debt terms, i.e. excluding intra-government credit, which is particularly large in Japan, as well as counterbalancing government assets.
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Schulz, M. (2014). Ageing, Debt, and Growth Crises: Two Forerunners. In: Beretta, S., Berkofsky, A., Rugge, F. (eds) Italy and Japan: How Similar Are They?. Perspectives in Business Culture. Springer, Milano. https://doi.org/10.1007/978-88-470-2568-4_12
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DOI: https://doi.org/10.1007/978-88-470-2568-4_12
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