Bilateral and global cooperation is crucial to kickstarting productivity growth in Australia and Japan

On 25 April 2024, the Australia-Japan Research Centre (AJRC) co-hosted a Public Forum with the Japan Research Institute (JRI) on productivity growth in Australia and Japan at Sumitomo Kaikan in the Izumi Garden Tower, Tokyo.

More than one hundred guests from the Australian and Japanese academic and policy community attended the event to listen to the eight distinguished speakers. The proceedings commenced with an opening address by Katsunori Tanizaki, President, and CEO of the Japan Research Institute, followed by a keynote presentation delivered by Masaaki Shirakawa, Professor at Aoyama Gakuin University and Former Governor of the Bank of Japan. Their remarks provided the framework for presentations and panel discussion with Shiro Armstrong, Professor of Economics and Director of the Australia-Japan Research Centre at The Australian National University; Michael Brennan, CEO of the e61 think tank and Former Chair of the Australian Productivity Commission; Kyoji Fukao, President of the Institute of Developing Economies-Japan External Trade Organization (JETRO) and Professor at the Institute of Economic Research, Hitotsubashi University; Yuri Okina, Chair of the Japan Research Institute and Chief of the Japanese Government’s Tax Commission; Ross Garnaut, Emeritus Professor of Economics at the University of Melbourne, and Director of ZEN Energy and Chairman of Sunshot Zero Carbon Futures.

Professor Masaaki Shirakawa, former Governor of the Bank of Japan, opened the forum with a keynote speech reflecting on the role of productivity, demographics and social choice in maintaining and improving living standards.

Most public commentary on Japan’s lost decades has focused on price levels, with ‘overcoming deflation used almost like a mantra in many official statements of government’, Professor Shirakawa said. But this misses the crucial role of other factors such as the fall in the working age population, which has declined by 15 per cent since its peak in 1994, and the aging of society – both of which have contributed to a broader slowdown in productivity.

But weak productivity growth is not a uniquely Japanese phenomenon. Medium-term prospects for the global economy have fallen, with total factor productivity growing at only 0.2 per cent since the Global Financial Crisis compared with 1.3 per cent in the late 1990s. Australia, too, has not been immune to poor productivity growth and would likely have faced a recession were it not for immigration lifting the working-age population.

Cooperation between Australia and Japan will be a central pillar of their responses to the productivity challenge. Both countries are reliant on international markets for their prosperity, and particularly on bilateral trade with each other given the complementarity of their economic endowments. Today, twice as much of Japan’s energy imports comes from Australia as the next largest supplier.

Contemporary global challenges, such as the move towards net-zero emissions, will require a restructuring of the fundamentally carbon-based trading relationship. If the green energy transition is managed appropriately, it need not come at a cost to productivity. But if it is managed well, it could even be productivity enhancing. Ensuring this opportunity is not missed will require political commitments to appropriately capture the negative externalities of carbon and positive externalities of technological innovation.

Global tensions and an increasingly hostile external environment pose significant risks to trade and the decarbonisation agenda. Australia and Japan can play an important leadership role in multilateral initiatives, fostering the type of productive international engagement necessary to navigate global headwinds.

A full summary of the keynote speech and panel discussions can be found here.

Professor Ross Garnaut also gave an address on Reimagining the Australia-Japan Trade Relationship: Building a prosperous future in our times.

The Public Forum was followed by an ANU Alumni and Friends event, bringing together the extensive network of graduates and friends of the ANU community now residing in Japan.

Alumni and Friends Reception 25 April 2024

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