Japan: Still an economic leader?

Angel Gurria, secretary general of the Organization of Economic Cooperation and Development (OECD), delivered some serious advice to Japan on her visit their today.

Gurria acknowledged that Japan is still a global economic leader, but cautioned Japan to reform its ways if it intends to remain near the top of the global economic system. Specifically, Gurria urged Japan to implement tax reform, enhance productivity of its service sector, and improve its labor market.

The tax reform suggestions included lowing the corporate tax rate while simultaneously spreading the tax burden across a larger number of businesses. Currently, Japan has the highest corporate tax of the 30 OECD countries, but nearly 2/3rds of the business are exempt, placing a very high burden on a minority of businesses.

Other recommendations included enhancing the services industry by promoting competition through lessened government regulations. Also, creating more employment opportunities for the young and women to replace an aging population.

These suggestions came on the heels of Standard and Poor's report that said China could surpass Japan's economic standing within five years.