Center on Japanese Economy and Business ANNUAL REPORT 2015–2016 (JULY 2015–JUNE 2016) Table of Contents Letter from the Directors 2 The Battle Against Deflation: The Evolution of Monetary Policy and Japan’s Experience 52 CJEB 30th-Anniversary Featured Highlights 5 Lunchtime “Zadankai” Seminars 53 CJEB’s 30-Year History (Photos) 5 The Effect of Family-Friendly Regulation on Fertility and CJEB’s 30th-Anniversary Event Highlights 11 Work: Evidence from Japan Using Natural Experiments 53 His Excellency Shinzo Abe, Prime Minister of Japan, Abenomics: Politics and Policy 53 Greets Audience at CJEB’s Tokyo Conference 11 For Yaskawa, the Future Is Now 54 CJEB Lecture Featuring Governor Haruhiko Kuroda, Abenomics: Skepticism and Hope 54 Bank of Japan 14 Two Cultures, One Team: Leading a Major Japanese-Owned CJEB Symposium Featuring Hideki Matsui, Bank in the Americas as the First American CEO 54 Jean Afterman, and George Rose, New York Yankees 15 From Japan’s Leading Securities Company to Asia’s Global 30 Years of Visiting Fellows at the Center 16 Investment Bank: History, Challenges, and Ambitions 55 CJEB Team 21 The Silo Effect on Japanese Companies and Elsewhere 55 Leadership and Staff 21 The Latest Landscape of International Finance 55 Core Faculty 24 The Structure and Characteristics of the Japanese Manga Market 56 Research and Faculty Engagement 27 Lessons in Entrepreneurship: Building a Global Business 56 “Japan’s Economy: Moderate Performance, Japan’s Prewar and Postwar Economic Development 56 Puzzles Persist” by Hugh Patrick 27 Current Research Highlights 37 Resources 57 Faculty Engagement 39 Faculty Advisory Committee 57 Research Paper Series 40 2015–2016 Visiting Fellows 58 CJEB Programs 44 Columbia Business School Tokyo Centennial Showcase 59 2016 Annual Visiting Fellow Business Field Trip 59 Program on Public Pension and Sovereign Funds 44 Research Associates 60 Corporate Governance and Stewardship Program 44 Professional Fellows 61 The New Global Financial Architecture 44 International Advisory Board 62 Events 45 Promoting Exchange of Ideas 63 Conferences 45 CJEB in the News 63 U.S.-Japan Economic Relations 45 Enhancing the MBA Experience 64 The Japan Project Meeting with Joint ESRI International Conference 46 Enhancing the Columbia Experience 65 ESRI International Conference: “Aging in Japan: Visits from Japan to Columbia 66 The Impact of the Retirement of Japan’s Baby Boomers” 47 Fellowship and Scholarship Programs 67 Symposia 48 Library and Data Resources 68 Invest Japan Seminar 2015 in New York 48 Discussion Groups 68 Hideki Matsui in the Footsteps of Ruth and Gehrig: Japan Economic Seminar 68 Coming to the New York Yankees from Japan—The Monetary Policy Discussion Group 69 View from the Player and the Front Office 48 U.S.-Japan Discussion Group 69 Is Japan Really Back? 49 Financial Support 70 Operation Tomodachi: What Is the Appropriate Response of a Leader in a Crisis Situation? 49 Corporate Sponsorship Program 70 Roundtable 50 “Japan’s Economy: Moderate Performance, The Investment Environment for Venture Puzzles Persist” by Hugh Patrick (in Japanese) 71 Capital and Life Sciences in Japan 50 Lectures 51 What Now? Abenomics Stage II? 51 How Japanese Cars Changed the World: An Insider’s Look 51 Japan in Search of Foreign Policy Equilibrium: Post–Cold War Dynamics 51 Center on Japanese Economy and Business The preeminent academic center in the United States on Japanese business and economics Established at Columbia Business School (CBS) in 1986 under the direction of Professor Hugh Patrick, the Center on Japanese Economy and Business (CJEB) pro- motes knowledge and understanding of Japanese business and economics in an inter- national context. CJEB is a research organization widely recognized for its symposia, conferences, and lectures held both in New York and Tokyo, which provide prominent speakers from the public and private sectors a forum for collaboration and reflection on Japan, the United States, and the global economy. With the leadership of Professors David E. Weinstein, director of research, and Takatoshi Ito, associate director of research, CJEB supports research projects, stu- dent and faculty scholarship, and library and computer-based resource initiatives. Other CJEB core faculty members are Japan specialists drawn from Columbia’s Business School, Law School, School of International and Public Affairs, Department of Economics, and Department of Political Science. Funding and resources are provided by corporate sponsors, foundations, individuals, CBS, and Columbia University. Since its founding, CJEB has developed, grown, and evolved in order to carry out its mission effectively in a changing Japan and a changing world. In this way, CJEB has been able to build and maintain its status as the preeminent academic center in the United States on Japanese business and economics. Further information about CJEB can be found on the Center’s website: www.gsb.columbia.edu/cjeb. CJEB Annual Report 2015–2016 | 1 LETTER FROM THE DIRECTORS Letter from the Directors Dear Friends, Columbia Business School’s Center on Japanese Economy and Business (CJEB) has had an extraor- dinary year. We celebrated our 30th anniversary by hosting a number of high-profile conferences and gatherings both at Columbia University and in Tokyo, we launched two new programs that will con- tribute to the overall continuance of the Center’s cutting edge research and thought leadership, and we strengthened several of our most successful ongoing initiatives, including our graduate student support and the Visiting Fellows Program. CJEB was founded in 1986 and quickly became the world’s premier research center dedicated to understanding the Japanese economy and its business systems in domestic, East Asian, and global Hugh Patrick, Director contexts, with a special focus on the Japan–United States relationship. The Center has supported several generations of leading scholars in the field and continues to be the place where academics, business people, and government officials around the globe come for expertise, resources, and new ideas pertaining to Japan’s ever-developing businesses, financial markets, and economy. In the 2015–2016 academic year, our 30th year at Columbia Business School, CJEB hosted several particularly strong and wide-reaching events. In November, baseball legend Hideki Matsui visited the School to share his personal story of “Coming to the New York Yankees from Japan” as well as fascinating insight into the culture and business of baseball that has reached across the sea from the United States to Japan and back. Mr. Matsui was joined by Jean Afterman, senior vice president and assistant general manager of the Yankees, as well as George Rose ’00, advisor to the Yankees’ Pacific Rim Operations (see p. 15 for more details). David E. Weinstein, Director of Research In February, as part of our successful zadankai lunchtime lecture series, Gillian Tett, U.S. managing editor at the Financial Times, spoke of the silo effects of Japanese companies and elsewhere (see p. 55), and Tatsuo Yamasaki, former vice minister of finance for international affairs at the Ministry of Finance, gave an overview on the global economy and international finance (see pp. 55–56). Professor Fumio Hayashi, from the National Graduate Institute for Policy Studies, also discussed the prewar and postwar economic development of Japan in April (see p. 56). Bank of Japan’s governor Haruhiko Kuroda delivered a special lecture on “The Battle Against Deflation: The Evolution of Monetary Policy and Japan’s Experience” on April 13, 2016. The audi- ence received a thorough and fascinating assessment of Japan’s history with deflation, the causes and ramifications of deflation, and the current progress being made in Japan to counter it. You can read about these and other outstanding events from the academic year starting on p. 45. One of the standout highlights of 2015–2016 was the CJEB conference in Tokyo in May. The con- ference, “U.S.-Japan Economic Relations,” featured greetings and substantive policy comments by His Excellency Shinzo Abe, Prime Minister of Japan (see p. 11), and a keynote speech by Gerald Curtis, Burgess Professor Emeritus of Political Science at Columbia University. The distinguished panelists included Columbia Business School Dean Glenn Hubbard and Columbia University School of International and Public Affairs Dean Merit E. Janow (please see full conference details on p. 45). Prime Minister Abe spoke at length about Columbia University’s resources and prestige as well as the 2 | CJEB Annual Report 2015–2016 University’s strong and ever-expanding relationship with Japan. He shared his kind praise for CJEB, its directors and faculty, its public program accomplishments, and its ability to engage in and disseminate research on the Japanese business and economy. Following the conference, we were delighted to be invited to join both Prime Minister Abe and Governor Kuroda for a private dinner, where we engaged in a frank and fascinating conversation. As is expected at a world-class research university such as Columbia, one of CJEB’s core mandates has always been the engagement in, support of, and dissemination of research on the Japanese economy and its business and management systems. The Center accomplishes this through projects, seminars, and discussion groups, public programs, and library and computer-based resource initiatives. During this academic year, we launched two new programs to complement our research agenda. The Program on Public Pension and Sovereign Funds (PPPSF) is led by Professor Takatoshi Ito, who has been a close col- league of and contributor to the Center for many years. He also joined the Center as associate director of research in 2015. Professor Ito’s program facilitates in-depth research and focuses on how public pension funds and sovereign wealth funds should be structured and how Japan can learn from other global econo- mies. Professor Alicia Ogawa, senior advisor to CJEB, launched the Corporate Governance and Stewardship Program to examine the effects of Prime Minister Abe’s initiative to encourage Japanese firms to innovate and invest and for shareholders to actively monitor and promote these efforts.