Regulatory reform is at the heart of Japan's strategy for economic recovery and long-term growth. Identified as a priority by the Japanese Government as early as 1994, considerable progress in regulatory reform has already been made. But today it is essential that regulatory reform be deepened and accelerated. This report calls for a "sharp break" with the regulatory practices and doctrines of the past. Energetic measures, including both sectoral reform and reform of framework conditions, need to be adopted quickly to complete the transition from a state-led growth model, now largely ineffective, to a market-driven growth model, the only model capable of laying the foundation for sustainable competitiveness and prosperity in Japan. This report presents an integrated assessment of regulatory reform in framework areas such as the macroeconomic context, the quality of the public sector, competition policy and enforcement; and integration of market openness principles in regulatory processes, and in sectors such as electricity and telecommunications.