Publication

This paper describes how Japanese Prime Minister Junichiro Koizumi has been successful at achieving economic growth by breaking the structural trap of political constituencies defending old and unproductive economic sectors and by adopting a two-pronged, macro-micro approach to make reforms unavoidable. This paper argues that Europe should follow a similar strategy whereby financial market integration, and not the EU bureaucracy and grandiose political declarations, should be the main driving force of national economic reforms, pressuring liberalization in goods and services markets and making labor market reforms unavoidable.