Japanese Prime Minister Taro Aso unveiled an ambitious long-term growth strategy today. He vowed to refashion the world’s second-largest economy and to create millions of jobs, with the first step being a massive new stimulus package. The news of this plan sparked a 3.7% rise in the benchmark Nikkei 225 index.

Japan finds itself mired the deepest recession since World War II. The Japanese economy has fallen because of an unprecedented collapse in global demand for Japanese products such as cars and electronics. It is important to note that in his speech Prime Minister Aso said that Japan’s export-driven growth model is now an unrealistic option.

Prime Minister Aso’s plan for the country calls for Japan to lead the world in energy efficient living and technologies, to expand nursing care and medical services, and to better deploy the global power of Japanese pop culture. Specifically, the goal of Aso’s plan is to boost domestic demand by at least $400 billion within three years and to add between 1.4 million and 2 million new jobs. By 2020, he wants to lift gross domestic product by at least $1.2 trillion and create 4 million jobs.

The prime minister wanted new government spending to exceed 2 per cent of GDP given “the extent of the fall in Japanese economic output recently, which is larger than other advanced economies, and also given the need for international cooperation to revive the world economy,” said Aso spokesman Osamu Sakashita on Wednesday.

So Japan has joined other major economies, such as the United States and China, in an attempt to boost their economies with a stimulus program. As with other countries, such as the United States and various European nations, Japan will turn to issuing more sovereign bonds in order to pay for the stimulus package. Japan’s massive public debt now runs at 170 percent of GDP – the highest level among the industrialized nations.