Academic journal article Asian Perspective

The Abe Effect and Domestic Politics

Academic journal article Asian Perspective

The Abe Effect and Domestic Politics

Article excerpt

EXAMINING THE CAUSAL LINKS BETWEEN DOMESTIC POLITICS AND INTERnational trade negotiations has been a predominant research approach to understanding the dynamics of regional integration. The power of domestic politics in pushing particular interests forward to the negotiating table, while accommodating competing demands from negotiating counterparts, can be viewed as one of the key junctures in the regional integration process. Even major powers such as China and the United States inevitably confront domestic pressure at those negotiations, occasionally requiring the deregulation of rules and laws.

My article illustrates how Prime Minister Abe Shinzo and his administration have promoted two major national and international economic policies-"Abenomics," his platform, and involvement in the Trans-Pacific Partnership (TPP)-by focusing on domestic political struggles that are relevant to the international negotiations. I delineate how the Abe administration has sought to suppress opposition by the most powerful bureaucracy, the Ministry of Finance, which insisted on increasing the consumption tax to offset the Abenomics effect, and by the most influential pressure group, the Central Union of Agricultural Cooperatives (JA Zenchu). Abe's decision in December 2014 to call for a snap election in the lower house became pivotal in gaining public support for constraining the mounting influence of the tax-increase faction, represented by the Ministry of Finance, and for depriving JA Zenchu of its political power. I examine why both agendas have become significant from an international perspective, chiefly in the face of China's regional engagement- Beijing's feasibility study for a Free Trade Area of the AsiaPacific (FTAAP) and its proposal of an Asian Infrastructure Investment Bank (AIIB), which could potentially diminish Japan's sphere of influence. My article demonstrates the inextricable links between international affairs and domestic politics, a combination essential for grasping the "Abe effect" in foreign policy.

Abenomics and the TPP

Abe's main political gain from his victory in the snap election of 2014, which secured his Liberal Democratic Party (LDP)-led coalition's right to govern for another four years, is public support for the implementation of Abenomics. That support is thought to have stemmed from Abe's economic program that combines monetary easing, fiscal stimulus, and structural reform-the "three arrows" that Abe says constitute the only way to overcome deflation in the Japanese economy. The election victory reassured Abe, his administration, and economic policy advisers of both the progress of Abenomics and its positive impact on economic growth. In fact, since Abe came to power in 2012, Japanese stock prices have doubled in value, reaching ?20,000 in the Nikkei Stock Average in April 2015 for the first time over the last fifteen years. The yen has dropped by approximately one-third against the dollar since 2012, from roughly ?80 to ?120. This twopronged improvement was expected to revitalize Japan's export industries.

As Abe admitted during the election campaign, Abenomics contributed little to less export-oriented and small and mediumsized enterprises, while real wages decreased for twenty-two months on end by April 2015. Opposition parties criticized Abenomics because the weaker yen, which spurred inflation due partly to the more costly energy and fuel imports occasioned by the 2011 Fukushima disaster, did not contribute to an increase in real wages (Yomiuri Shimbun 2014). Abe, however, repeatedly claimed that the weaker yen strengthened the Japanese economy as a whole and that Japan should not wish to return to the high yen era of the previous Democratic Party of Japan (DPJ)-led government, when the yen appreciated by as much as seventy-five against the dollar and made it difficult for exporting companies to win price competition in overseas markets. In this sense, yen depreciation is clearly one of Abenomics' fundamental principles. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.