Japan – what can we learn? - Construction Labour Research

decreased by 37.5 percent in 2004. Because the huge investment ofthe second stage caused the worst and unprecedented scale ofgovernment debt, government could not but recognise its defectivefunction in economic and financial policy. Setting the recovery ofnational and local government functions as the emergent theme, thepolicy turned to financial reduction. It now began to concentrate oneffective utilisation of the public works budget with various attemptssuch as cutting down the expenditures of each order, introducing acompetitive bidding system, readjusting estimate standards, orpreparing for the policy of more flexible labour market. Thesechallenges for reducing construction investment stood at the core ofthe structural reform of the Koizumi administration. The expansion ofthe huge markets both of the U.S. (increasing consumption withresidential boom) and China (expanding economy with investmentboom) also supported Japan’s economic recovery. There is at least thesign of a departure from Japan’s habitual reliance on public projects.- The fourth stage is in progress. The trend seems to be expansion inthe construction market by private initiative. Although the impetus isstill weak, the different phases show the germs of a new order.Contrary to private investment, public investment continues to reduce.The new market is supported by private initiative constructioninvestment markets so that policy is less visible compared togovernment policy. The government actually takes different measureson investment. That is, it concentrates on direct projects in themetropolis such as an international hub airport, port, highway, orrailway, while promoting PFI (Project Finance initiatives) andderegulation policy for urban renewal on the other. These largeprojects with government measures intensify the trend of absorbingand inducing additional private funds. This is the transformationtoward a software-like policy.As seen above, Japanese construction has been in dramatic five yearcycles, the first quinquennial was public-private expansion, the secondpublic expansion with private cut back, the third public-private cutback, the fourth public cut back with private expansion.3. Structural Change in Construction InvestmentI want to point out some of the structural characteristics inconstruction investment in Japan with several explanations for each.CLR News No 2/200621