Transcript Negative Population Growth in Japan: An Economic Crisis

Negative Population
Growth in Japan: An
Economic Crisis
Ethan Cohen & Steven Feddick
Environment 111 – Final Project
April 14th, 2006
Japan
Introduction: The Demographic
Transition


Recently, the world has
experienced a massive
demographic revolution.
Since the dawn of the
19th century, world
population has increased
many folds.
What had been a billion
people around 1800
became 1.6 billion by
1900, 2.5 billion by
1950, and then 6.1
billion by the year 2000.
(Engelman, Halweil, & Nierberg, 2002)
The Demographic Transition
Introduction



In an effort to combat
this rapid population
growth, the Japanese
government advocated
the use of contraceptives
as early as the 1970s.
Despite their efforts,
however, Japan’s
population continued to
rise, so the Japanese
began to alter their
culture even more
drastically to favor
families with fewer
children.
Children came to be seen
as an economic
hindrance. (Ausubel, 1998)
Introduction


In combination with the
increasing business savvy
nature that became
Japanese culture in the
late 20th century was an
admittance of women to
this intense businessoriented way of life.
This resulted in very
effectively bringing down
the fertility rate in Japan
as women began to
marry and have children
much later, if at all. (Ausubel
et al., 1996)
Introduction


As a result, by the mid-1990s Japan started to experience
catastrophic depopulation.
In fact, based on the current numbers, Japan’s population
is projected to shrink by approximately 14 percent by the
year 2050 (United Nations, Highlights of the World Population Prospects, 2001)
Population Aging
Population Aging



Today, Japan is the country with the oldest population
followed by Italy, Switzerland, Germany, and Sweden.
In Japan, there are at least 1.5 persons aged 60 or above
for every child aged 0-14.
(United Nations, Highlights of the World Population Prospects, 2001 )
Population Aging





The Oldest Old, people
aged 80 and above
Japan currently has 4.8
million people over 80
years of age, and is
expected to have over
10% of their population
over 80 by the year 2050.
Centenarians, people aged
100 and above.
By the year 2050, Japan is
projected to have the
largest number of
centenarians with
approximately 1 million
people aged 100 and
above.
(United Nations, Highlights of the
World Population Prospects, 2001 )
Population Aging: Life Expectancy
Economic Instability: A Failing
Pension Plan
Failing Pension Plan

Japan today is facing
a national pension
emergency as their
elderly population is
now the largest in the
world (its median age
is 43 years) supported
almost solely by a
significantly smaller
working population
(United Nations, Highlights of the
World Population Prospects,
2001)
Graph depicting a comparison between Japanese
and US median population ages from 1975 to the
present as well as a projected continuation of
these trends until the year 2024 (Source:
http://www.goldeagle.com/editorials_05/to081205pv.html).
Failing Pension Plan




“in the year 2020, there will be nearly 40 persons aged 65
and over for every 100 aged 15-64” (Jones, 1988).
Investment funds?
Domestic savings?
Will the elderly be able to retire?
Failing Pension Plan



Simply put, such trends
indicate that there won’t
be enough workers to
support not only
themselves financially, but
not the extrapolated
number of retirees either.
Even assuming that the
pension eligibility age is
raised to 65 years – as has
been proposed by the
Japanese government –
Japan’s projected
household savings rate is
still projected to decline by
as much as one-half during
the next 40 years.
(Jones, 1988)
http://gojapan.about.com/library/photo/bltok
yo_stockexhange7.htm
Failing Pension Plan


Therefore, these
decreased household
savings combined with
Japan’s resulting current
account surplus, may
very well lead sooner or
later to an actual
shortage of investment
funds which could very
easily spark national
economic problems to
surge through the
world’s leading
economies.
(Jones, 1988)
http://www.fotosearch.com/CSK401/ks95850/
Economic Instability: Destruction of
the Global Economy
Ethan Cohen & Steven Feddick
Destruction of the Global Economy


The world’s leading
economies are
becoming more and
more dependent on
each other to sustain
their massive national
systems.
Marginalizing the
distances between the
world’s foremost
economies.
http://www.fotosearch.com/DSN006/1770589/
Destruction of the Global Economy


As in the GIS map
before these
developed nations
have come to
comprise much of the
world wealth, as
much as 70% by
some estimates, and
are further connected
through the NYSE
(New York Stock
Exchange) and other
such global
enterprises.
ArcGIS generated map of the world displaying the concentration
of per capita Gross Domestic Product (GDP) by country/region.
Accordingly, the countries in green – those in the higher GDP
(http://en.wikipedia.org/wiki/D
group – have come to be denoted as the world’s developed
istribution_of_wealth)
nations, whereas those countries that remain gray are commonly
denoted as the world’s developing nations (Source: Cohen &
Feddick, ArcGIS, 2006)
Destruction of the Global Economy
Bell Laboratories-Lucent Technologies


Japan “accounts for more than 60% of the value of all the goods
and services produced in Asia” thus, the ramifications of an
economic collapse in Japan would hurt the entire continent.
Moreover, as many foreign investors from North America and
Western Europe have made lucrative profits by investing in
Japan’s regional economic prowess, they too will fall hard when
Japan’s economy collapses.
(Mitchinson, 1998)
Solutions


International
migration, perhaps
the most widely used
technique of the
current negative
growth populations
around the world, has
been shown to help
balance out population
and then stimulate an
increase in fertility
rates.
(United Nations, Highlights of the
World Population Prospects, 2001)
Solutions


Recently, the United States, in a similar position after slumping to
a fertility rate of about 1.7 in 1976, has managed to remain
nearly constant at about a 2.1 fertility rate throughout the 1990s,
largely due to a set international migration quota that they have
met every year since. (Ausubel, 1998)
If Japan were to adopt a similar attitude toward international
migration that could significantly help their labor shortage, overall
economic structure, and low fertility rates.
Conclusion

Undoubtedly, Japan’s negative population growth
rate is a very real and very imminent problem.
Few can discount the figures leading Japan down
a path to a disappearing population in the not too
distant future. At the forefront of Japan’s
concerns are its economics. Today Japan’s
economy is the second largest in the world with
several of the world’s largest investment banks
and insurance companies based in Tokyo. Thus,
considering Japan’s major role in globalized
economics, an economic crisis in Japan has the
potential not only to destroy Japan’s own
economy, but to filter out economic instability to
many other of the world’s leading economies
causing a worldwide economic crisis of
tremendous proportions.
Conclusion

Graph of the correlation between population aging and
economic loss [CAGR is the compound annual growth rate,
which is the year-over-year growth rate of an investment
over a specified period of time – assuming that the
investment is growing at a steady rate] (Source: http://www.goldeagle.com/editorials_05/to081205pv.html)
Conclusion


As Japan's most widely read daily paper, Yomiuri
Shimbun, commented in the late 1990s, "Is the
Japanese economy destined to share the fate of
the Titanic?...unless some effective measures are
taken, Japan...could even trigger worldwide
economic chaos“. With international migration
policies looming on the horizon as a feasible
solution to many of these problems, Japan’s
leaders in every area – national government,
private business, and local domestic government
– must act quickly and decisively, without
deviation or hesitation, to affect significant
change thereby achieving a sustainable future.
(Mitchinson, 1998)
Works Cited








Ausubel, Jesse H. Reasons to Worry About the Human Environment. COSMOS
(Journal of the Cosmos Club of Washington, D.C.) 8:1-12, 1998. The Program for the
Human Environment, The Rockefeller University, New York.
<http://phe.rockefeller.edu/reasons-to-worry/>
Ausubel, J.H., Marchetti, C., & Meyer, P.S. Human Population Dynamics Revisited with
the Logistic Model: How Much Can Be Modeled and Predicted? Technological
Forecasting and Social Change 52:1–30, 1996. Elsevier Science Inc., New York, NY. <
http://phe.rockefeller.edu/poppies/>
Cobo, Felipe P. Solutions to the Social, Political, and Economic Crisis Facing Japan
Nowadays. Business Management and Practices in Japan. Osaka. July, 2003.
<http://www.casaasia.es/pdf/302051753351107449615840.pdf>
Distribution of Wealth. Wikipedia Online Encyclopedia. January, 2006.
http://en.wikipedia.org/wiki/Distribution of wealth
Edwards, Linda N. Equal Employment Opportunity in Japan: A View From the West.
Industrial and Labor Relations Review, vol. 41, No. 2, January 1988. Cornell
University. <http://www.jstor.org/view/00197939/di009055/00p00073/0>
Engelman, R., Halweil, B., & Nierberg, D. Rethinking Population, Improving Lives.
Chapter 6, State of the World. 127-148. WorldWatch Institute, 2002. <
http://globalchange.umich.edu/globalchange2/index.html>
Fougère, Maxime & Mérette, Marcel. Population Ageing and Economic Growth in
Seven OECD Countries. 1998-2003. Economic Studies and Policy Analysis Division
Department of Finance, Canada. <http://epe.lacbac.gc.ca/100/200/301/finance/working_papers-ef/1998/1998-03/98-03e.pdf>
Gladwin, T. N. “Global Change II.” University of Michigan, Ann Arbor. 31 Mar. 2006.
Works Cited (cntd.)






Henry K. Demographics Do Matter. Vronsky and Westerman. August 12, 2005.
http://www.gold-eagle.com/editorials_05/to081205pv.html
Highlights of the World Population Prospects: The 2000 Revision. Population Division
Department of Economic and Social Affairs United Nations New York, NY 10017.
February,
2001.<http://domino.un.org/UNISPAL.NSF/561c6ee353d740fb8525607d00581829/7
9804d1a04ed96de85256a03006e4646/$FILE/population%20report%20highlights.pdf
>
Imai, Takashi. Issues for Japan in the Twenty-First Century – The Political and
Economic Situation in Japan. Keynote Statement to the 36th Japan-U.S. Business
Conference. Ritz-Carlton, San Francisco. Monday, July 12, 1999. <
http://www.keidanren.or.jp/english/speech/spe021.html>
Jones, Randal S. The Economic Implications of Japan’s Ageing Population. Asian
Survey vol. XXVIII, Issue 9, p. 958-969, September 1988.
<http://www.jstor.org/view/00044687/di014465/01p01976/0?frame=noframe&userI
[email protected]/01cc99334100501c2e836&dpi=3&config=jstor>
Kosai, Saito, & Yashiro. Declining Population and Sustained Economic Growth: Can
They Coexist? The American Economic Review, vol. 88, No. 2, Papers and
Proceedings of the Hundred and Tenth Annual meeting of the American Economic
Association. p. 412-416. May, 1998. < http://www.jstor.org/cgibin/jstor/printpage/00028282/ap000002/00a00780/0.pdf?backcontext=page&dowha
t=Acrobat&config=jstor&[email protected]/01cce44035350c109e017af1
1&0.pdf>
Mitchinson, Phil. Sun Setting on Japanese Miracle: The World’s Second Largest
Economy on the Verge of Collapse. May, 1998.
<http://www.marxist.com/Asia/japan.html>
Works Cited (cntd.)








Statistical Handbook of Japan. Statistics Bureau and Statistical Research and Training
Institute. Ministry of Internal Affairs and Communications. Ch. 2 Population. Ministry
of Health, Labour and Welfare. <
http://www.stat.go.jp/English/data/handbook/pdf/c02cont.pdf>
Taeuber, Irene B. Japan’s Increasing People: Facts, Problems, and Policies. Pacific
Affairs, vol. 23, No. 3. p. 271-293. Sep, 1950. < http://www.jstor.org/cgibin/jstor/printpage/0030851x/dm994495/99p0120r/0.pdf?backcontext=page&dowha
t=Acrobat&config=jstor&[email protected]/01cce44035350c109e017af1
1&0.pdf>
http://www.traveladventures.org/continents/asia/japanesepeople09.shtml
http://www.fotosearch.com/CSK007/pr80815/
http://gojapan.about.com/library/photo/bltokyo_stockexhange7.htm
http://www.fotosearch.com/CSK401/ks95850/
http://www.fotosearch.com/DSN006/1770589/
Bell Laboratories-Lucent Technologies