Business start-ups in Japan: Problems and policies

This paper argues that the comparatively low levels of business start-ups in Japan need not be a matter of concern in so far as the pattern of growth relying on existing companies persists. But the declining trend of start-lip rates may be worrisome for it may indicate waning entrepreneurship and weakening mechanisms of resource reallocation and economic growth. Policy measures to promote business start-ups are not bused on well-founded studies at an aggregate level, which are lacking in the absence of comparable darn, but rather are inspired by the successful US experience. The paper looks into two specific areas of policy-private equity markets and bankruptcy-where important progress has been made, and points to further scope for improvement.