Leontieva Elena. Economic Policy of the Shinzo Abe Cabinet under Globalization (Part II)

Economic Policy of the Shinzo Abe Cabinet under Globalization (Part II)

Elena Leontieva, PhD, Senior research fellow, The Primakov Institute of World Economy and International Relations of the Russian Academy of Sciences (IMEMO)

«Value-added chains» and new features of the entrepreneurial organization

At the beginning of the XXIst century, in the evolution of the world (not only Japanese) entrepreneurship, there was a shift towards cross-border operations - the so-called value-added chains. Over the past 20 years, the growth of global value-added chains has become one of the main events in world trade.

In its structure, the turnover of producers' goods and services is growing faster than the turnover of finished industrial products (see Table 5). All manufactured goods that enter international trade and are sold on national markets contain imported components. According to the available estimates, components in different countries comprise from 20% to 50% of the cost of finished products that reach ultimate consumers. Modern technologies of transport and communication have accelerated the turnover of intermediate goods and services. Furthermore, this was facilitated by the reduction of protective barriers in national economies.

Table 5. Gross exports and exports through value-added chains


World exports, mln. USD.

Export through "chains" mln. USD.

World GDP,

mln. USD.

World exports in % to GDP

Export through chains in % to GDP

Export through chains in % to world exports


5 729 887

4 647 776

29 787 337





7 034 013

5 422 147

32 334 431





11 219 686

8 375 755

45 712 154





17 053 224

12 639 288

61 243 561





17 053 224

13 740 267

57 941 672




Sourse: Rashmi Banga. Measuring Value in Global Value Chains. Unit of Economic Cooperation and Integration amongst Developing Countries (ECIDC) UNCTAD, 2013, p. 7. http://www.unctad.org.


Modern corporations move a significant part of final products abroad, using comparative advantages of other countries (cheap labor, geographic location, etc.). This gives them the opportunity to save on transportation and avoid high customs tariffs in international trade and inflated tax rates in countries of origin. Foreign branches produce goods of the same brand as the parent entities, or its modifications (for example, Japanese right-hand drive cars for sale in Australia and India). Branches are becoming sales and service bases in the regions of their deployment, and then beyond.

The "Japanese echelon" of the world's transnational corporations ranks second in the world - there are 219 of them in the list of 2000 global companies compiled by The Forbes magazine. Japanese corporations shifted to the development of trans border entrepreneurship in the mid-1980s, when their financial base became sufficiently strong, and the high yen rate and the rise in the cost of manpower triggered the capital outflow.

Table 6. Number of Japanese companies with a network of subsidiary companies

in Japan and abroad


Number of companies

Number of subsidiary companies in Japan

Number of subsidiary companies abroad

















Source: "Nihon tokei nenkan (Japan Statistical Yearbook)", 2009, 2011, 2016.


Direct foreign assets of Japanese corporations have doubled in the last 5 years and reached 12-13% of capital stock in their own country (see Table 7). Approximately half of foreign production and sales subsidiaries are located in Asian countries, 30% are located in North America[1].

Table 7. Direct private investments abroad and fixed capital of private companies in Japan (billion yens)


А. Direct foreign assets of Japanese companies

B. Fixed capital of private corporations in Japan

А : B, %

2011, 4th quarter

75 865

1 099 387


2012, 4th quarter

91 932

1 122 681


2013, 4th quarter

119 302

1 140 102


2014, 4th quarter

143 940

1 160 353


2015, 4th quarter

151 615

1 185 300


2016, 1st quarter

147 777

1 185 741


2016, 2nd quarter

159 710

1 327 118



Sources: Statistics of the Bank of Japan http://www.boj.or.jp. Statistics of the Ministry of Finance of Japan http://www.mof.go.jp. Japan Statistical Yearbook, 2016.

Financing of foreign subsidiaries is provided by their own profit (20%) and by capitals of its parent companies based in the metropolis (80%). It has been long since product release abroad and its distribution through cross-border chains became more profitable than exporting it from factories located on the territory of the Japanese islands. In Japan, only 9-10% of products of foreign branches are sold, and the rest is distributed across markets of the Asia-Pacific region, Europe and North America (see Table 8).

Table 8. Distribution of revenues of foreign branches (billion dollars,%)



mln. USD.



mln. USD.



mln. USD.


Total revenue

10 442,7


10 754,8


10 433,1


On-site sales

7 375,4




7 555,6


Sales to Japan

1 018,2


1 036,0




Sales to other world countries

2 048,1


2 076,0


19 296,2


Investments in local production








Source: Survey statistics of the Ministry of Trade and Industry "Survey of Overseas Subsidiaries", October-December 2015, January-March 2016. http://www.meti.go.jp.

* The results in columns exceed 100%. Compilers refer to the fact that they use preliminary and estimated data.

It is likely that the reduction of Japanese exports is also associated with this phenomenon.

Thus, in recent years, upper circles of the Japanese corporate sector have changed the model of its functioning. It deals not as much with the export of manufactured goods, as with their production and distribution abroad. Terms of trade are also unprofitable for the export of goods. In 2012-2014 the export boom allowed Japanese corporations to increase profits by more than 40%. But this unexpected record did not last long. In 2016, profits from foreign trade "went into the red". Usually export expansion serves as a trigger mechanism for the renewal of economic growth. This export function has failed due to a fundamental change in the organization of business on the global markets.

In 1986, in order to encourage cross-border entrepreneurship, Japan adopted a law "On operations on the offshore market". In the world practice, the term "offshore organization" refers to a financial organization for economic activities abroad that is not controlled by national authorities - a safe haven for tax evasion and laundering of questionable income.

However, in the Japanese legal system, the term "offshore market" simply means a foreign market that is under the special control of national tax authorities. All subsidiary companies of Japanese corporations abroad, foreign branches of Japanese banks and brokerage firms, as well as foreign corporations and non-resident banks that have branches and suboffices in Japan are admitted to operate on it. For Japanese residents, access to the offshore market is limited: for individuals it is completely closed, and access for legal entities is limited to a new generation of companies and banks that go beyond the national market. Transnational corporations constitute holding groups. To provide them services in banks that operate in Japan, a parallel subsidiary bank is created "offshore" - a backup. The geography of the market was not stipulated by law.


The law of 1985 directed the flow of capital abroad and established the supervision of tax authorities over the transfer of profits from a foreign network to Japan[2]. The law is still in effect, although the government would rather prefer to redirect this flow to the domestic market. Transfers of profits from a foreign network increase year by year and cover the foreign trade deficit (see Table 9).


Table 9. External calculations of Japan and the exchange rate






4th quarted


1st half of the year

Balance of payments, current account, billion yen

4 457

4 381

16 413

2 665

10 626

Trade balance, billion yen

- 12 252

- 13 499

- 2307

- 2 333

- 2 144

Transfers (transfers of profits from investments abroad), billion yen

17 698

19 374

20 853

5 452

10 441

Gold and foreign exchange reserves, billion USD

1 267

1 269

1 262

1 233

1 262

Current yen rate, ¥/$






Purchasing power parity rate, ¥/$






Sources: "Japan's Balance of Payments Statistics for 2015 and International Investment Position of Year-End 2015", the Bank of Japan Report, 2016. http://www.boj.jp.or.; Statistics of the Ministry of Trade and Industry http://www.meti.go.jp., Monthly Financial Review, June 2016, http://www.mof.go.jp..

The purchasing power parities of the yen were calculated and published in the OECD http://www.oecd.org.( No data available for 2016).

* As of August 15, 2016.

Export of Japanese goods is shifting towards the countries of the Asia-Pacific region, the USA and Canada. Pacific Asia has become a huge and very promising consumer market. The financial assets of the population of this region at the end of 2014 composed $47 trillion, which exceeds assets of the population of the whole Western Europe ($39 trillion). It is expected that by 2019 they will increase to $75 trillion and will be more than in the US and Canada ($75 trillion) [3].

Table 10. Geographical structure of Japanese exports (%)


North America

Western Europe

Asian-Pacific area









Source: JETRO - The Japan External Trade Organization. http://www.jetro.go.jp.


Japanese companies sell finished goods of mass and large-scale production - cars, electronics, textiles, etc. in the countries of North America and Western Europe. Most of the machinery and equipment is produced in China, Taiwan, Indonesia and Thailand. These countries, Japan's main partners in the Asia-Pacific region, buy in Japan mainly prefabricated semi-finished products - details, units and components for the assembly and re-export finished products, not only to developed Western countries, but also to richer countries of the region itself. Textile products are produced in Vietnam and Myanmar. Due to activities of Japanese multinational corporations, the Asia-Pacific region became a Japanese industrial factory abroad.

In 2014, for the first time in the post-war history of the Japanese economy, export of commodities ceased to play its usual role of the driving force for getting out of the recession. Customs statistics of all countries register goods delivery at market prices announced in deals. But in fact, part of commodity flows passes through the channels of the multinational corporations' internal turnover at transfer prices between the parent companies of the holding groups and their branches and between branches themselves as a result of the fragmentation of supply, production and marketing.

Within added-value chains companies in developed countries specialize in the most qualified work - the development and design of new products and new technologies, marketing and after-sales service of new products. The more services of this kind[4] are produced and sold by companies of a developed country, the higher their quality, the higher their competitiveness in world trade. Functions such as transportation, communications, financing, cargo insurance, legal support and accounting act as intermediary products. In turn, cross-border chains acquired their own banking, insurance, dealer and transport infrastructure[5].

Japanese multinational companies sell details, components, materials, technical documentation to their regional subsidiaries. Multinational companies in Taiwan, China and South Korea produce and sell electronic components only through added-value chains. Within the East Asian region, the volume of this market is $300 billion, and abroad - in the US, Europe, Japan - electronic components are sold for $750 billion[6].

Organizational forms of enterprises have changed noticeably. Industrial companies in developed countries are increasingly moving into services field. There is already a category of manufacturers without plants or factories (factoryless goods producers). Most companies that don't have production work in information networks, communication, wholesale and retail trade and service industries. These are large companies with high productivity, efficient management and high salaries. They invest in R&D, buy and sell non-material assets (know-how, trademarks), and their head offices are engaged in coordinating production, marketing and financial flows through chains.

Both property relations (subsidiaries) and commercial contracts connect the periphery to parent companies. It provides services not only to enterprises of parent companies, but also to other customers, if it is profitable and allows eliminating currency risks. In the turnover within the companies, costs of coordination of activities and transaction costs are always lower than if goods flows were under commercial contracts.

There are many companies without factories and plants in England and in the USA. A survey of 30,000 companies conducted by the Ministry of Economy, Trade and Industry in 2013 showed that there were 2,688 such companies in Japan with an average number of employees 1,146 people. Of these, 50% were engaged in the development of information and communication technologies, 30% - wholesale and 10% - retail trade. These include large retailers who own distribution networks in many countries around the world: First Retailing Co., Ltd. (UNIQLO), Nitori Co., Ltd., and Ryohin Keikaku Co., Ltd. (MUJI) [7]. Their products - clothes, household utensils, furniture - are ordered at factories in China, Indonesia and Vietnam. Sometimes their foreign branches deal with outsourcing.


On the average, Japanese companies without industrial enterprises are 40% larger than companies that have a manufacturing base in their home country. The level of labor productivity is 10%, and wages are 8% higher than in the latter[8].

The Japanese government is interested in preserving the production base of companies on the territory of the Japanese archipelago. Officials believe that without this it is impossible to develop new technologies and new products. The "perception gap" is plane to see - a clear contradiction between business and authorities in the perception of economic reality.

Japanese economists who study this process believe that it has a great future, as transport and communication costs will become cheaper, and new mega-regional agreements (for example, The Transatlantic Trade and Investment Partnership) will accelerate fragmentation of production and marketing processes and spread of added-value chains[9]. Cross-border business organization is a modern form of economic integration at the micro level. Unlike the Western European integration of the XX century, it is does not have geographical boundaries and does not require the unification of production and exchange conditions.

An increasingly powerful cash flow that has reached almost 70% of domestic investment from Japan goes abroad (see table 11).

Table 11. The ratio between the growth of private foreign assets and gross domestic investment (billion yen in current prices)


А. Direct

В. portfolio

Total, А+В

Gross domestic investment, С

А:С, %


1 502,4

4 279,1

5 781,5

100 019,6



2 791,3

5 410,3

8 201,6

103 270,0



2 621,4

5 084,1

7 705,5

107 128,3



7 675,0

64 588,4

72 263,4

108 224,1



1st half of the year

5 373,1

24 588.5

29 925.6

107 040, 8


Sources: Statistics of the Ministry of Finance of Japan http://www.mof.go.jp.; National accounts http://www.esri.cao.go.jp.


The huge increase in portfolio assets in 2015 is explained by the fact that Japanese transnational companies carried out the purchase of half a thousand (504) companies and banks abroad through the securities markets. Every fifth transaction was made with companies and banks in Southeast Asia[10]. Some part of the purchased assets will come under the direct control of the companies-buyers.

The demand for investment resources in Japan is declining because of the outflow of capital abroad. Abe's cabinet can not redirect this flow to the domestic market - the government is not able to counteract the objective development of Japanese corporations in a cross-border model.

Social aspects of economic policy.

The stagnation of consumer demand is connected, firstly, with the demographic situation in the country, and secondly, with the state of the labor market.

Currently, 26.7% of Japan's population is over 65 years old. The country has 6 million 800 thousand pensioners, who are not inclined to "loosen up wallets" after the rate of consumer tax was raised from 5% to 8% in 2013. The size of the working-age population will continue to decline due to the aging of the population and a decrease in the birth rate.

Table 12. Demographic forecast to the middle of the XXI century (million people %)


Population, thousand people

Group from 15 to 64 years, %

Group over 65 years,%


127 013




127 043




124 100




116 618




107 276




97 076



Source: Statistical Handbook of Japan, 2016. www.stat.go.jp The data of the population census of Japan in 2015 and the forecast of the National Institute of Population and Social Insurance.

The unemployment rate of 3.1-3.2% of the economically active population is actually equivalent to full employment. With a low level of unemployment in Japan, there is an acute shortage of medical personnel and social workers. Two-thirds of women work on temporary contracts in trade, health and services. They usually work before marriage and birth of children, and then return to the labor market after 40 years, when the children grow up. This resource of the labor market, most likely, will not increase.

The labor market also has a shortage of workers in the field of road transport, retail trade, and particularly in construction. Due to the shortage of construction workers and qualified engineers, tenders for the implementation of state infrastructure projects planned for the Olympic Games in 2020 in Tokyo are delayed.

Thus, the demographic situation and the state of the labor market limit the potential rate of economic growth. The Bank of Japan estimates the potential pace of 0.19-0.21% per year[11]. To accelerate growth, the reduction of the working-age population should be compensated by the growth of labor productivity on the basis of new production and management technologies. But the pace of scientific and technological progress can not be predicted - one can only hope for it. Or it is necessary to increase the number of workers. According to the Japanese Center for Economic Research, in order to overcome the deficit of workers, it is necessary to raise the fertility rate from 1.4 to 1.8 and annually allow 200,000 foreign workers to enter the country[12].

For a number of years the government has been discussing a bill to attract foreign workers (currently there are more than 900,000 people, mostly Chinese), and it concerns people with high professional training. The issue of unskilled migrants is not even being discussed. It is believed that their inflow will deprive the Japanese economy of the advantages in the production of high-tech products and will increase competition with goods from developing countries. The adoption of this bill is postponed from year to year due to fears that crime will grow among visitors, carriers of a different culture, as has already happened in the countries of the European Union. Municipal authorities talk about a heavy burden on local budgets on accommodation expenses for visitors, on their training in the Japanese language, and so on.

Labor market reform, put in place in Japan in 2013, dramatically expanded the possibility for employers to hire personnel under temporary contracts for up to 1 year in industry and up to 3 years in the service sector[13]. The goal of this reform was to give the labor market greater flexibility and efficiency. Historically established, unwritten rules of hiring and firing hamper labor relations in Japan by the tradition of "lifelong hiring" and wages that take into account length of service, rather than qualifications of employees. Fixed-term contracts provide lower wages and do not give employees additional benefits that should be given to established posts. Discrimination of this kind is based on customs, it can not be stamped out, but at the end of 2012 an attempt was made to soften it, at least partially. The new labor contract law allowed companies to transfer employees hired under fixed-term contracts to the regular office staff after 3 years of service. Now entrepreneurs use this law as a bait in order to overcome the deficit on the labor market. In recent years, every third employee in Japan has been working under a fixed-term contract (see table 13). At the same time, they receive 37% less of what they should have received in the regular office[14].

Table 13. Household income, wages, prices of goods, services, and consumer demand








1st quarter


2nd quarter

Number of employees, thousand people

62 220

62 280

63 190

63 570

63 760

66 210

65 540

Number of employees, thousand people. Including those employed under fixed-term contracts, thousand people.

54 880



7 980

54 900



7 690

55 830



19 670

56 450



20 060

52 480



19 800

56 790



19 620

57 030



19 890

Unemployment rate,% to the economically active population















Average monthly disposable income (yen)

510 100

518 520

523 579

519 761

525 699

589 676

589 676

Average monthly household expenditure on current consumption (yen) *

282 968


286 169


290 454


291 194


287 373

300 889 *

261 452 **

Retail Price Index, 2010=100, %








Источник: Annual Report on the Family Income and Expenditure Survey 2014, 2015, 2016. http://www.stat.go.jp.

*Winter bonuses paid in December 2015 are spent in the first quarter.

** Summer bonuses will be paid in July 2016

Crisis of public finances and new risks

Japan's public debt continues to grow (see table 14), but the Ministry of Finance does not consider the budgetary situation to be dangerous, since the financial assets of private corporations (2644 trillion yen) and financial institutions (3202 trillion yen), together with the financial assets of the population (2686 trillion yen) are six times higher than the size of public debt (1049 trillion yen). Household savings amount to 1706 trillion yen, or $15 trillion 603 billion, and 72% of this amount is placed on the accounts of private banks and invested in policies of insurance companies. Personal savings of the Japanese are twice as much as savings of American families ($ 71,1 billion) [15].


Table 14. Public debt and its servicing*








Government debt, billion yen

Gross,% to GDP

Net,% to GDP **

959 950




991 601




1029 957




1053 957




1049 966




Debt service, % to budget expenditures






Profitability of government bonds with 10-year maturity, %






Source: Statistics of the Ministry of Finance of Japan http://www.mof.go.jp

* Central government debt, the data for the financial year (April 1 - March 31). Net debt = gross debt minus the central budget transfers between accounts.


In the long term, public finances and monetary policy will be exposed to new risks. The fact is that the huge personal savings cushion starts to decrease in the country. At the turn of the century, the first wave of "baby boomers" began to retire and pass on savings to their heirs. But the younger generation is not as thrifty as the elders. The saving rate dropped from 7% of disposable income in 2000 to zero in 2013, and in 2014 for the first time it became negative (-1.3%). After a while, family budgets may become scarce.

Gradually this tendency will change the macroeconomic model as a whole. As the population's safety cushion will be deflating, financing of the budget deficit will gradually pass into the sphere of responsibility of private corporations. Foreign holders actively purchase state bonds, like securities of high reliability. The associated risk is not that foreigners will suddenly bring forward promissory notes for paying (Japan is not threatened by the Greek crisis), but in another. Profitability of government bonds, now very low, will start to rise, followed by growth of other interest rates, and economic growth will be inhibited. The whole program of "quantitative easing", built on mass purchase of these bonds by the Bank of Japan, will be questioned.

This is a significant risk, not only for Japan, but for all developed countries that are pursuing a policy of "quantitative easing". The International Monetary Fund in the Global Financial Stability Report pointed out the possible "drying out of market liquidity"[16].

There is no guarantee that the Japanese business, developing according to a transnational scenario and exporting capital abroad, will simultaneously finance investments in the main capital of its country, that is, ensure economic growth, and pay for the budget deficit.

Summing up, it should be noted that the government and the Bank of Japan do not have any viable tools for expanding demand on the domestic market left, except for such a time tested method of adopting additional budgets. Thus, in January 2016, an additional budget of 3,500 billion yen ($29 billion) was adopted to upgrade the system of artificial irrigation of agricultural land, health development and infrastructure investment. An additional budget of 778 billion yen ($7.2 billion) was adopted to deal with the consequences of the earthquake that occurred in April 2016 on the island of Kyushu.

A new additional budget of 28 trillion yen ($276 billion) is being prepared for September 2016, which is expected to be spent on capital investments in infrastructure, construction of a railway line for magnetic-pillar trains, as well as on the event that was discussed, but was not held in 2002: the monetization of public debt. Namely, it will be used to transfer part of the public debt to banknote issue and distribution of cash benefits to low-income families (10,000 yen per family) [17]. This money is intended for 22 million of Japanese, who are exempt from payment of the municipal tax on residents[18].

The government also plans to carry out a full review of the tax system. But so far the tax reform has been postponed: an increase of the consumer tax from 8% to 10% was postponed to October 2019. An effective rate of tax on profits will be reduced to 29.71% not earlier than in April 2018. At the same time, in order to reduce outflow of capital abroad, the Ministry of Finance proposed to raise the tax on income of holding companies that are operating offshore in 40 countries and where rates of tax on profits are lower than in Japan. The press reports that the business community intends to protest. In response, the Ministry is ready to offer transnational companies a two-year grace period for restructuring the corporate strategy[19].

In the next two years, profitable companies will receive budgetary subsidies of 420 billion yen ($3.85 billion) to invest in the economy and raise salaries. It is assumed that these subsidies will force companies to retreat from various ways to evade taxes[20]. Large unprofitable companies (there are 6,400 out of 29,000) will pay income tax on a simplified formula[21], and small businesses with an annual income of up to 8 million yen - at a reduced rate of 15%.

In September 2015, Shinzo Abe was re-elected as Leader of Ruling Liberal Democratic Party. Assessing the situation in the country and taking into account its political interests, the government revised priorities of its economic policy and timing of its activities and published a new, second reform program.

The new program contains a new hierarchy of priorities. The recovery of economic growth is declared to be a more important priority than the improvement of public finances. All attention of the new program is focused on stimulating domestic demand.

This program has an ambitious goal - to stop the decline of the Japanese population. To do this, it is planned to raise the fertility rate to 1.8 (although 2.1 is needed to stabilize the population), create a wide network of municipal kindergartens (this measure is advertised as care for future generations of Japanese) and increase the number of working women, although they already make up more than half of the employed population.

This program has a clearly expressed populist nature and for its implementation it will require a radical increase in social expenditures of the state budget. In the budget for the 2016/2017 financial year, 33% of expenditures are aimed at social needs, but while public debt service "eats" 24.4% of the expenditure budget, such a solution of the demographic problem is currently unlikely[22].

Another important part of this program is the new industrial policy aimed at attracting investments to the domestic market. As it can be seen from the official text of the program, above all, investments in R&D are meant. Japan Science and Technology Agency included in the list of priority areas technologies of the production and consumption of energy from renewable sources, the latest information and communication technologies, robotics, the development of new medicines, machine pattern recognition, etc[23]. The agency manages budgetary subsidies for the development of these areas.

In most developed countries, technological progress goes precisely in these directions. But this part of the program has not been worked out yet, a new plan for supporting R&D has not been developed and forms of stimulating new directions have not been determined. Only a general quantitative benchmark has been set: at a nominal growth rate of over 3% and a real growth of 2%, the GDP of the country should be brought to 600 trillion yen. ($ 4.94 trillion.) However, according to the above mentioned estimate of the Bank of Japan, in the current demographic situation, the potential growth rate of the Japanese economy does not exceed 0.21% per year.

According to the forecast of the Cabinet, it will be possible to reach the primary state budget deficit (net excess of expenditures over revenues without servicing accumulated debt) only in 2020. To do this, it will be necessary to compensate for the revenues falling out due to the tax reform amounting to 9.4 trillion yen ($75.1 billion).

Japan connects hopes of stimulating economic growth with the conclusion of a multilateral agreement on the establishment of the Trans-Pacific Partnership (TPP) in late September 2015. The free trade agreement of 12 countries[24] covers the region, which accounts for 40% of world GDP. It opens the market for the import of cheap food, which threatens Japanese farmers, but is beneficial to consumers. Under the TPP agreement, Japan will gradually cancel tariffs for 95% of its imports, including 100% industrial and 88.4% agricultural products, except rice, beef, pork and dairy products. In addition, the TPP envisages reduction of barriers to foreign investment and opening for competition those sectors that are under protection (in Japan this is agriculture), as well as the protection of intellectual property rights in innovative industries (for example, in pharmaceuticals). According to the Peterson Institute for International Economics, Japan will receive the largest, in comparison with other countries, benefits from participating in this partnership. Due to participation in the TPP at its second stage, by 2025, exports and imports of goods will grow by $140 billion per year, and national income by more than $100 billion[25].


Thus, the situation of 2015-2016 showed how much the open economy of Japan depends on external conditions and how fundamentally the passive resistance of the main social groups - entrepreneurs and households - hampers the implementation of the reform program adopted by Abe's office in early 2013. The current situation does not provide grounds for questioning the resilience of the Abe government yet. On the one hand, the social situation in the country is quite stable, the unemployment rate is only 3.1-3.2%, and the real incomes of families in 2015 decreased only by 2.2%, which is not very noticeable for the Japanese with their huge savings . On the other hand, S. Abe, a strong leader, does not have any noticeable rivals on the political field.

The mandate and political horizon of Shinzo Abe himself as a leader of the Liberal Democratic Party of Japan is limited to the period until the elections to the lower house of parliament in September 2018. But political morals in this country are very strict, and if the rating of this cabinet goes down, other politicians will have to solve accumulated problems.

[1] Trends in Overseas Subsidiaries. Ministry of Economy, Trade and Industry, June 2015. http://www.meti.go.jp.

[2] Not more than 5% of assets per day can be transferred from accounts in offshore banks to the Japanese market. It's not so much a quantitative limit (in 20 days the entire amount can be transferred "home"), but information for tax control.

[3] Estimation of Boston Consulting Group. Цит. по: The Nikkei, October 4, 2015.

[4] Calculations through payment terminals, consumer loans, cafes and restaurants, information services, leasing, after-sales service of household appliances, etc.

[5] The share of exports through the added-value chains is very different across countries. Thus, in 2009 it was 50% for Singapore, 41-42% for Taiwan and South Korea, 38% for the Philippines and Malaysia, 35% for Thailand and 33% for China. But in developed countries it is lower: 25% for Germany and France, 20% for Italy, 17% for the UK and the USA, and only 15% for Japan (ibid., P.8 Calculated by the author on WTO statistics)

[6] Willem Thorbecke. Understanding the Flow of Electronic Parts and Components in East Asia RIETI Discussion Paper Series 16-E-072, 2016 http://www.rieti.go.jp.

[7] There is a chain of UNIQLO stores in nine shopping centers in Moscow.

[8] Morikawa Masayuki. "Factoryless Goods Producers in Japan". RIETI Discussion Paper, Series 16-E-065, 2016.

[9] Morikawa Masayuki, op. cit.

[10] The Nikkei, August 2, 2016.

[11] Data for the 1st quarter of 2016. www.boj.or.jp July 20, 2016.

[12] "Vision 2050. Maintain Position of a First-Tier Nation". www.jcer.or.jp, 2016.

[13] It is allowed to hire engineering personnel, doctors and nurses, trade employees - Japanese and foreigners under fixed-term contracts.

[14] The Nikkei, May 15, 2015.

[15] Flow of Funds - Overview of Japan, the United States and the Euro Area. The Bank of Japan, June 2016.

[16] International Monetary Fund. Global Financial Stability Report, October 15, 2015. http://www.imf.org.

[17] These are the so called «money that will fall from the sky, dropped out of the helicopter». This idea was once proposed by the American economist Milton Friedman: "Imagine that one day a helicopter flies over the terrain and drops thousands of dollar bills from the sky ..." Friedman, Milton (1969), "The Optimum Quantity of Money", in Milton Friedman, The Optimum Quantity of Money and Other Essays, Chapter 1, pp.1-50, Adline Publishing Company, Chicago.

[18] The Nikkei, July 27, 2016.

[19] The Nikkei, July 1, 2016.

[20] Corporate profit tax is paid only by 30% of companies (in the USA and Great Britain - 59%).

[21] Pro forma standard taxation - simplified profit and loss account, net of incidental and irregular expenses.

[22] Highlights of the Budget for FY2016. http://www.mof.gj.jp.

[23] Science and Technology Basic Plan. http://www.jst.go.jp.

[24] Negotiations on the TPP began in 2012, Japan joined them in 2013, 12 members of TTP - Australia, Brunei, Vietnam, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, Chile and Japan.

[25] Quotation if publication in the newspaper The Nikkei, November 27, 2015.