Implementing Structural Reforms in Abenomics: How to Reduce the Cost of Doing Business in Japan

The importance of business environment in creating better economic outcome is widely accepted, but how to improve the business environment is far from settled. Among the available tools to use is the World Bank?s Doing Business project. While many governments aim to achieve higher standing on the Doing Business Ranking, the actual process to achieve the goal is less clear. For example, the Abe Administration aims to improve Japan?s rank to one of the top three among high-income OECD countries. This paper clarifies what it takes for Japan to achieve this goal. By looking at details of the World Bank Doing Business ranking, we identify various reforms that Japan could implement to improve the ranking. Then, we classify the reforms into six groups depending on whether the reform requires legal changes and on political resistance that the reform is likely to face. By just doing the reforms that do not require legal changes and are not likely to face strong political opposition, Japan could improve the ranking to 13th if the conditions in the other countries did not change. To be in the top 3, Japan would need to implement all the reforms that are not likely to face strong political resistance, but the reforms that would be resisted strongly are not necessary, if the other countries do not reduce the cost of doing business. The experience of the past years shows that this assumption is unrealistic. Thus, in order to be one of the top three countries among OECD countries in terms of ease of doing business, Japan would most likely need to carry out all the reforms including those with high political resistance. The methodology in this paper can be also applied to other countries.