Shinzo Abe’s Legacy as Champion of the Global Economic Order

It is difficult to make sense of the shocking news of the assassination of Japan’s former prime minister Shinzo Abe. I lived in Japan for more than 10 years and can barely remember a media report about gun violence there. Moreover, Japan’s political culture in recent decades has generally been peaceful and civil, and such a violent act is unthinkable.

Abe was the most consequential politician in modern Japanese history. His legacy—while not without controversy—includes a broad range of accomplishments, from strengthening Japan’s defense to reinvigorating its diplomacy to making Japan a more open and accessible country. But it is in economic policy—especially his efforts to update and uphold global economic rules—that Abe arguably made one of his greatest marks.

Even before he resumed office in late 2012, Abe had signaled that domestic economic revival—a subject he had largely ignored in his first, unhappy stint as prime minister in 2006–2007—would be a top priority of his new administration. For more than two decades since the “bubble economy” of the late 1980s burst, Japan had faced slow growth and three powerful economic headwinds: deflation, debt, and demographics (an aging and declining population). Abe proposed a three-pronged economic strategy—quickly dubbed “Abenomics” by pundits—featuring aggressive monetary easing, flexible fiscal policy to bolster growth while containing debt, and deregulation and other structural reforms.

Abenomics made sense as a strategy but largely failed in implementation. Abe’s pick as central bank governor, Haruhiko Kuroda, injected the promised monetary stimulus (and continues to do so even as the yen plummets and other central banks raise interest rates), but the other two “arrows” of Abenomics failed to take flight. Japan’s economy still suffers from tepid growth, deflationary pressure, and structural inefficiencies.

Abe’s efforts in the international economic realm have been far more impactful. Less than two months after returning to office, Abe visited Washington in February 2013, making a memorable speech at CSIS in which he declared that “Japan is back.” The new prime minister noted that as he spoke, his officials were negotiating the terms of Japan’s entry into the Trans-Pacific Partnership (TPP), the comprehensive, high-standard trade agreement that the United States was then negotiating with 10 other Asia-Pacific partners.

Abe’s TPP announcement had ripples as far away as Beijing, where it sparked serious debate among officials and scholars in early 2013 about whether China should also apply for TPP membership and use the agreement’s high standards to drive economic reform at home. While new leader Xi Jinping had other ideas, and reform momentum in China soon reversed, Japan’s entry into TPP in mid-2013 galvanized high-standard, market-oriented rulemaking across the Asia-Pacific region for the next several years.

In addition to kickstarting TPP, Abe played an even more critical role in salvaging the agreement after Donald Trump, in one of his first acts as president, pulled the United States out of the agreement in early 2017. Against all odds, Abe rallied the 10 other TPP member countries and ultimately won their support for a Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that largely kept the previous agreement intact and left the door open to an eventual U.S. return.

But it was not just in trade policy that Abe left an important legacy in global economic rulemaking and norm-setting. In May 2015, Abe announced a new “Partnership for Quality Infrastructure” featuring high standards for labor, environment, and debt sustainability in infrastructure projects—a none-too-subtle response to China’s ambitious Belt and Road Initiative and establishment of the Asian Infrastructure Investment Bank. As host of the G20 summit in Osaka in 2019, Abe won endorsement—including by China and other large emerging markets—of a set of “quality infrastructure principles” to govern the trillions of dollars of investment in roads, hospitals, and digital infrastructure needed in the Asia-Pacific region alone.

A third example of Abe’s impact in global economic rulemaking is in the critical area of data governance. The global economy is increasingly digitized, with massive amounts of data created every minute, yet there are no internationally agreed rules on the privacy, security, and flows of these data. Speaking at the World Economic Forum in Davos in January 2019, Abe proposed the concept of “data free flow with trust” (DFFT) as the organizing principle for global rulemaking in this area. Again, Abe won G20 endorsement of this concept, and the current Kishida administration is reportedly planning to make realization of DFFT rules and norms a priority for Japan’s G7 host year in 2023.

For decades, Japan was essentially a rule taker in the global economy, often assuming a defensive posture in international trade and rarely taking risks to champion new rules and norms. Abe changed all that, as his bold efforts on TPP, quality infrastructure, data governance underscore. At a time when the global economic order is under stress and the United States has pulled back from its traditional role as shaper of global economic rules, Abe’s leadership was pivotal. His legacy will long outlive his tragic end.

Matthew P. Goodman is senior vice president for economics at the Center for Strategic and International Studies (CSIS) in Washington.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Matthew P. Goodman

Matthew P. Goodman

Former Senior Vice President for Economics