Evidence-based policymaking (EBPM) may sound technical, but it plays a key role in helping governments spend wisely and stay fiscally responsible. At its core, EBPM is about using data, statistics, and research to design, implement, and evaluate public policies—making government decisions more effective, accountable, and transparent. As governments face rising demands and tighter budgets, enhancing EBPM helps improve the quality of public service delivery while ensuring that money is spent where it matters most.

Japan began its EBPM journey as early as 2017, as part of a broader review of its economic statistics. This move came with strong high-level government support and amid trends across OECD countries, where advances in big data, government technology and research techniques were driving a growing interest in EBPM.

What is the progress of the EBPM journey in Japan hitherto and key implementation challenges? What lies ahead in this journey to the center of spending efficiency and fiscal prudence?

The journey so far and key implementation challenges

Japan has made steady progress in applying EBPM. Ministries and agencies are incorporating EBPM into intra-ministerial budget request processes. For example, when proposing new policies, policy units need to submit policy implementation process review sheets and explain how the requested budget supports the expected outcomes. The Ministry of Economy, Trade and Industry (METI) has emerged as a leader in this space. It established the Research Institute of Economy, Trade and Industry (RIETI) in 2001 to promote evidence-based policy research. In 2018, RIETI formed a dedicated EBPM Unit staffed by policy economists. These experts work with METI officers and academics to conduct EBPM-related policy evaluation research, including causal inference methods to help identify the true impact of public policies.

According to Professor Daiji Kawaguchi, EBPM has been applied across various ministries in the Japanese government. It has been used in the Education Ministry to assess impact of smaller class sizes, by the Fair Trade Commission’s to evaluate a merger case, and to study the employment effects of raising the minimum wage.

Despite its progress, Japan still faces key challenges in implementing EBPM more broadly. For many ministries and agencies, the biggest hurdles are related to capacity development and data—issues also faced by some OECD countries. Within government, there is a shortage of economists and statistical experts. Frequent staff rotations and a tradition of hiring generalist officials make it difficult to build and retain in-house technical expertise.

Data availability is another challenge. Policymakers and researchers often lack timely, accessible, and detailed data, especially microdata needed for advanced analysis. Some data are costly to collect or restricted by legal barriers. Moreover, applying methods like causal inference can be technically demanding, limiting how widely EBPM can be used across various government programs.

Toward greater spending efficiency and fiscal prudence

In a short period of time, Japan has made meaningful strides in its EBPM journey. The establishment of the EBPM Center in 2022 under RIETI is a positive step to toward boosting technical capacity. But there is room to do more.

For example, research institutes could play a bigger role by partnering with government ministries and agencies to conduct high-quality research. The development of capacity-building programs for civil servants would help equip them with the statistical and analytical skills needed for EBPM.

There is also growing interest in improving national statistics and using alternative data sources to support evidence-based approaches. Looking ahead, there is strong potential for EBPM to be applied more widely—in areas like healthcare and climate change.

To embed EBPM more deeply across government and policy fields, two key ingredients may be needed. First, it is important to improve the accessibility of research and microdata for universities and research institutions to support independent, robust analysis. Second, establishing a professional body of public-sector economists, similar to those in the UK and Singapore, would help drive cross-cutting empirical research and ensure EBPM receives sustained, high-level government support.

Japan’s efforts to strengthen EBPM are an important step toward better governance, more efficient spending and long-term fiscal sustainability. When combined with medium-term fiscal planning and spending reviews, EBPM can play a pivotal role in ensuring public funds are used effectively—significantly enhancing spending efficiency and fiscal prudence in Japan in the long run.