The assassination of former Japan Prime Minister Shinzo Abe has understandably shocked Japan and the whole world. Japan’s political culture has been generally peaceful and civil; few people could have anticipated such a violent act.
But Abe’s legacy to the global economic order and politics is nothing short of impressive.
Abe was the longest-serving Japanese prime minister. His first stint in the role came between 2006 and 2007. But his most significant contribution to his country’s economic and political life came between 2012 and 2020, when he resigned for health reasons.
He continued to be influential within Japan’s ruling Liberal Democratic Party and in Japanese politics.
After decades of Japan accepting to be a rule-taker in the global economy, Abe took initiatives that brought unusual political stability and optimism to his country, even if his actions were highly controversial.
The transformation in Japan’s economic policy is arguably Abe’s most remarkable achievement. His name will always be linked to ‘Abenomics’– a band of active monetary policy still largely followed by his successors in Japan.
Abenomics has as its rock base the belief that Japan need not settle for economic stagnation that had become endemic in the country following the bursting of the bubble economy of the late 1980s.
In the last three decades, Japan’s economy suffered three powerful headwinds: deflation, debt and demographics.
Abe proposed a three-pronged economic strategy to shake his country’s economy out of its endemic stagnation.
The first strategy was the adoption of aggressive monetary easing to stimulate demand.
The second was a flexible fiscal policy to promote economic growth, while the third strategy prioritised deregulation and other structural reforms.
It would be wrong to conclude that Abenomics was wholly successful. The strategy made sense at the technical level but failed in the implementation stage.
Japan’s economy still suffers from slow growth, deflationary pressures and structural inefficiencies partly because of the impact of COVID. Still, while Abe’s successors were incapable of keeping up the positive momentum initially created by the introduction of Abenomics, Japan benefitted from what it got. Unemployment was halved during his tenure.
Another achievement of Abe occurred in 2013 when he negotiated Japan’s entry into the Trans-Pacific Partnership, the comprehensive, high-standard trade agreement that the US was then negotiating with 10 other Asia-Pacific partners.
When Donald Trump pulled the US out of the agreement in 2017, Abe played an even more crucial role in salvaging the essential elements of the agreement by setting up a new one that left the door open to an eventual US entry.
Abe’s political initiatives were not always welcome. A committed nationalist, he often offended the victims of Japan’s military atrocities in World War II by trying to reinterpret sensitive historical realities.
In 2015, he gave a new interpretation of Japan’s post-war pacifist constitution when he argued that Japan could maintain military forces for “collective security” with allies. With geopolitical tensions growing, Abe’s shift to closer relations with the US and Australia, combined with his wariness towards an assertive China, shows that he may have had more foresight than many are prepared to admit.
Current geopolitical tensions are exerting immense pressure on the global economy as the US has pulled back from its traditional role as a shaper of international economic and political order.
Abe’s economic and political legacy may still help to inspire global leaders to hammer out viable solutions to the current daunting challenges.