By John S. McClenahen With the right mix of good policy and determined leadership, Japan can overcome its economic problems, contends Thomas J. Duesterberg, president and CEO of Manufacturers Alliance/MAPI, an Arlington, Va.-based business research group. The world's second largest economy is just now showing signs of coming out of its second recession in three years. "In the short- to medium-term, Japan must exit from the counterproductive cycle of deflation, growing fiscal imbalance and growth of the public sector," says Duesterberg. "It needs to return to entrepreneurial, private sector-led growth and market allocation of its vast capital resources." "In the longer run, it must address its demographic and structural issues in a forthright and determined way," he says. Among the specific steps Duesterberg urges are lowering taxes to stimulate the Japanese economy; deregulation of state-owned corporations, construction, finance and telecommunications; fundamental trade liberalization; and opening Japan to immigration. Duesterberg's views are contained in a new Japanese-language book "The Reemerging Japanese Superstate in the 21st Century" (Tokuma Shoten, 2002).