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Chapter 1. Relationships Between Japanese Economy and Land

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Chapter 1. Relationships Between Japanese Economy and Land Part I Developments in Land, Infrastructure, Transport and Tourism Administration that Underpin Japan’s Economic Growth ~ Strategic infrastructure management that brings about productivity revolution ~ Section 1 Japanese Economy and Its Surrounding Conditions I Relationships between Japanese Economy and Land, Chapter 1 Chapter 1 Infrastructure, Transport and Tourism Administration Relationships between Japanese Economy and Land, Infrastructure, Transport and Tourism Administration and Tourism Transport Relationships between Japanese Economy and Land, Infrastructure, Chapter 1, Relationships between Japanese Economy and Land, Infrastructure, Transport and Tourism Administration, on the assumption of discussions described in chapter 2 and following sections, looks at the significance of the effects infrastructure development has on economic growth with awareness of severe circumstances surrounding the Japanese economy from the perspective of history and statistical data. Section 1, Japanese Economy and Its Surrounding Conditions, provides an overview of an increasingly declining population, especially that of a productive-age population, to become a super aging society with an estimated aging rate of close to 40% in 2050, and a severe fiscal position due to rapidly growing, long-term outstanding debts and other circumstances. Section 2, Economic Trends and Infrastructure Development, looks at how infrastructure has supported peoples’ lives and the economy of the time by exploring economic growth and the history of infrastructure development (Edo period and post-war economic growth period). In international comparisons of the level of public investment, we describe the need to consider Japan’s poor land and severe natural environment, provide an overview of the stock effect of the infrastructure, and examine its impact on the infrastructure, productivity, and economic growth. Section 1 Japanese Economy and Its Surrounding Conditions 1 Japan’s Population Conditions and Future Estimates (1) Changes in population and productive-age population Because of the progression of declining birthrate and aging population, the total population of Japan is falling after peaking in 2008, with the productive-age population also decreasing after the peak in 1995. The preliminary figure from the National Census in 2015 showed that the total population of Japan declined for the first time since the quinquennial Census, falling to 127,110,000. According to the projection of the National Institute of Population and Social Security Research (median projection for birth/death), the total population is projected to decline to 116,620,000 in 2030 and 86,740,000 in 2060 (down 32.3% when compared to 2010), with the productive-age population projected to decline to 67,730,000 in 2030 and 44,180,000 in 2060 (down 45.9% when compared to 2010) (Figure 1-1-1). 2 WHITE PAPER ON LAND, INFRASTRUCTURE, TRANSPORT AND TOURISM IN JAPAN 2016 Section 1 Japanese Economy and Its Surrounding Conditions Figure 1-1-1 Changes in Population Structure in Japan (1,000 people) (%) I 140,000 80 Estimates Chapter 1 70 120,000 60 100,000 Relationships between Japanese Economy and Land, Infrastructure, Transport and Tourism Administration and Tourism Transport Relationships between Japanese Economy and Land, Infrastructure, 50 80,000 40 60,000 30 40,000 20 20,000 10 0 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 (year) Aged 0–14 Aged 15–64 Aged 65 and over Ratio of young Aging rate (right axis) Ratio of productive-age population (right axis) population (right axis) Source) “National Census” and “Population Estimates” by the Ministry of Internal Affairs and Communications for dates up to 2010, “Population Estimates” by the MIC for 2015 data (as of October 1, 2015); estimates are calculated by the MLIT from the median estimates of “Japan’s future population estimates” (estimates from January 2012) by IPSS. (2) Severely aging population Note 1 Changes in Population Aging Rate of In addition, Japan’s aging rate , which reached the Figure 1-1-2 Japan and Other Countries record high of 26.7% in 2015 Note 2, is not only at the highest (%) level but also exceptionally high when compared to that of 45.0 other nations (Figure 1-1-2). Furthermore, Japan is 40.0 projected to become a super aging society, with its aging rate topping 30% in 2025 and reaching close to 40% in 35.0 2050. 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2010 2015 2020 2025 2030 2035 2040 2045 2050(year) Japan South Korea Indonesia Singapore U.K. France Germany U.S. China India (Note) The populations of Japan and countries other than Japan in 2010 are actual figures and after 2010 figures are median estimates. Source) For Japan: “Population Projections for Japan” (Estimated in January 2012) by IPSS. For countries other than Japan: Developed by MLIT from United Nations” World Population Prospects: The 2015 Revision” Note 1 The ratio of elderly (65 years old and over) population to total population. Note 2 “Population Estimates” (as of October 1, 2015) by the MIC WHITE PAPER ON LAND, INFRASTRUCTURE, TRANSPORT AND TOURISM IN JAPAN 2016 3 Section 1 Japanese Economy and Its Surrounding Conditions (3) Difference in demographic shift by region I According to projections of population distribution by region, over 60% of residential areas are projected to see their population decline by half and about 20% will become nonresidential areas during the period from 2010 to 2050 (Figure Chapter 1 1-1-3). Also, projected changes in population by smaller municipality units show that the smaller the size of municipality is, the higher the rate of population decline will be; municipalities with populations less than 10,000 are projected to see their population decrease by about half during the period from 2010 to 2050. Population increases are projected only in limited regions including the Tokyo and Nagoya areas, and depopulation is expected to become more severe across Japan. Relationships between Japanese Economy and Land, Infrastructure, Transport and Tourism Administration and Tourism Transport Relationships between Japanese Economy and Land, Infrastructure, In depopulated areas, not only the younger population but also the elderly population is about to start declining. Figure 1-1-3 Population Distribution Forecasts <Population change in 2050 with the 2010 population as 100> Number of Points Classified by Rate of Population Rise/Fall The population is expected to decline to less than half of the current level in more than 60% (63%) of locations. Uninhabited Decline by more than 50% Decline by 0% or more but less than 50% 19% 44% 35% Increase: 2% 0 20 40 60 80 100 (%) 20 % of residential areas become uninhabited Legend: Ratios vs 2010 Rate of population decline by the size of municipality population Decrease by 50% or more (including uninhabited) 0% or more but less than 50% Increase Rate of population decline (%) 300,000 or above 100,000–300,000 50,000–100,000 10,000–50,000 Government-ordinance-designated cities, etc. 10,000 or less 0 Municipality population −10 size −15 −20 National average rate −21 of decline: −30 −25 −28 about 24% −40 −37 −50 −48 Source) Developed from “National Census Report” by the MIC and estimates of the MLIT 4 WHITE PAPER ON LAND, INFRASTRUCTURE, TRANSPORT AND TOURISM IN JAPAN 2016 Section 1 Japanese Economy and Its Surrounding Conditions (4) Depopulating society and Japan’s economic growth with higher productivity While it was pointed out that population declines will Estimates of Future Population and real Figure 1-1-4 I lead to a smaller size in the overall economy of Japan, the GDP growth rate report by the Council on Economic and Fiscal Policy, (%) Chapter 1 Expert Panel, Committee for Japan’s Future expects that 3.0 downward pressure is expected to be put on economy in the 2.5 2030s and 2040s, as population of working generations will Productivity increase with flat population start declining at a faster pace. A decreasing population, 2.0 Administration and Tourism Transport Relationships between Japanese Economy and Land, Infrastructure, and consequent stagnation of the economy, would send it 1.5 into negative growth in the 2040s, a situation we might find Productivity increase with population decline difficult to get out of once falling into it Note 3. 1.0 On the other hand, even with population declines, there Productivity slowdown with flat population will be a 1%-odd difference in real GDP growth rates 0.5 1%–odd between the production increase scenario and the flat productivity scenario (Figure 1-1-4). If increased 0.0 productivity can compensate for the negative factor of a Productivity slowdown and population decline -0.5 2011−2020 2021−2030 2031−2040 2041−2050 2051−2060 declining workforce, economic growth is considered (fiscal year) (Note) Scenario assumptions achievable even with a declining population going forward. Flat population: (i) Total Fertility Rate increases to 2.07; (ii) population in 50 years’ time is maintained at 100 million Population decline: (i) Total Fertility Rate declines to 1.33; (ii) population in 50 years’ time decreases to 85 million Productivity increase: TFP increases to around 1.8% by the beginning of the 2020s Productivity slowdown: TFP increases only around 1.0% at the beginning of the 2020s (the average level of 2000–2005) Source) Developed by the MLIT from the report by the Council on Economic and Fiscal Policy, Expert Panel, Committee for Japan’s Future <reference materials> Note 3 According to the report by the Committee for Japan’s Future, it supposed two population scenarios, the case of population becoming flat at around 100 million and the case of population continuing to decrease, as well as two scenarios for productivity, on in the case of increased productivity through improvements and one in the case of a slowdown in productivity.
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