The Reality of Budgetary Reform in OECD Nations

The Reality of Budgetary Reform in OECD Nations

Trajectories and Consequences

Edited by John Wanna, Lotte Jensen and Jouke de Vries

The Reality of Budgetary Reform in OECD Nations investigates the impacts and consequences of budgetary reform through a comparative assessment of advanced Organisation for Economic Co-operation and Development (OECD) democracies that have undertaken budget reforms over the past two to three decades.

Chapter 7: Budget Reform in Japan: Continuous Efforts but Still a Long Way to Go

Masahiro Horie

Subjects: economics and finance, public finance, public sector economics


Masahiro Horie CONTAINING DEFICITS AND DEBT: REFORM EFFORTS OVER THE LAST 30 YEARS Japan may be considered a latecomer to budget reform, even though it can realistically claim to have made continuous reform efforts over the last three decades. Its budgetary problems have been largely structural (due to structural overspending). Hence, the main objective of these reform efforts has focused on containing and cutting expenditure. However, we must acknowledge that such efforts have been half-hearted and rhetorical, episodic and time-consuming. And results have been rather disappointing. Frequently, by the time we should have been entitled to expect results, reform programs had been suspended or postponed due to factors such as deteriorating political or economic circumstances and for other expedient reasons. A further difficulty for the reform program in Japan is that it has been subject in effect to one-party rule. The ruling Liberal Democratic Party (LDP) dominated politics in Japan, governing for more than 50 years, except for a very short period of less than one year in 1993–94 until the spectacular change in government in 2009. The LDP could not contemplate making drastic changes to a budgetary system it had largely instituted and crafted. Having a revolving door of short-term prime ministers has also not helped the commitment to sustained reform. More recently, though, in the context of lower economic growth, Japanese prime ministers have launched structural fiscal reform programs and reforms to the budgetary system itself, which would seem rather drastic measures in the Japanese context. Furthermore,...

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