While interesting, generally well written and scientifically sound, several suggestions should be considered before further consideration.
I don’t really doubt the empirical findings of the paper (which I see as support for the hypothesis in Japan and possibly in Korea), but I dislike the approach of spending a lot of space on various, often pointless, tests. There should be one detailed analysis based on adequate tests, and a discussion about the results. After all, government expenditure is a political decision.