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Japan's Economic Prospects

Japan's Economic Prospects

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Published by: Saif Musabah Saif Al-Mutairi on Mar 08, 2012
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07/27/2013

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Japan's Economic ProspectsAuthor(s): Saburo OkitaReviewed work(s):Source:
Foreign Affairs,
Vol. 39, No. 1 (Oct., 1960), pp. 123-131Published by:
Stable URL:
Accessed: 08/03/2012 11:36
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JAPAN'SECONOMICPROSPECTS
BySaburoOkitaJAPANattractedworldattentioninJunei960whenlargescaledemonstrationswereconductedinoppositiontoratificationofthesecuritypactwiththeUnitedStatesandtothevisitofPresidentEisenhower.Untilthen,mostpeoplehadthoughtofJapanasastableandprosperousnationmakinggreat
economicprogressunderaconservativeandpro-Westerngovern
ment.Theywereundoubtedlyshockedbytheunexpectedincidents andtheymusthaveaskedthemselves:WhereisJapanheading?ThequestioncannoteasilybeansweredevenbythoselivinginJapanandwithcloseknowledgeofcurrentevents.Theanswermustbefoundnotinshort-termbutinlong-termconsiderations,andamongthesewillbetheprobablefuture economictrendsandconditionsinJapan,whichinturnwillinfluencethesocial andpoliticalclimate.AstudyrecentlycompletedinJapan predictsarather fundamentalchangein the nation'seconomicstructureinthenext10
to20yearsfromalabor-surpluseconomycontainingmanyunder
developedelementstoalabor-shortageeconomythatcanbedescribedashighlydeveloped.1Percapitanationalincomeisexpectedtorisefromthepresentlevelof$300(estimatedfori960)toalevel ofabout$800by1980.ThiswouldberoughlyequivalenttothecurrentlevelofpercapitanationalincomeinWestern
Europeancountries.
Insupportof theabovepredictionthereare,firstofall,demographicfactors.Therewasarapidincrease inpopulationbeginningwith themodernizationofJapan'seconomyintheearlyMeijiperiod.As thedeathratedeclined andthebirthratecontinuedatahighlevel,Japan'spopulationincreasedrapidlyfromabout35,000,000inthe1870stoabout85,000,000bytheearly1950s.After1950,therewas asharpdeclineinthe birthrateandinspiteofaconcurrentdeclinein thedeathrate,thenetincreaseinpopulationbecamesmallerthanintheearlieryears.Japannowhas reachedastageofdemographicdevelopmentsimilarto
1InMay i960,acommitteeattachedtothe EconomicPlanningAgencyandchairedbyProfessor SeiichiTobatapublishedareportonthe"ProspectsofJapan's Economyin1980."ThePlanningBureauoftheAgency,headedbytheauthor,workeddirectlywiththatcommittee.ThefollowingdiscussiononthefuturecourseofJapan'seconomyisbasedmainlyonthatreport.
 
124
FOREIGNAFFAIRS
thatfoundamonghighlyindustrializedcountries. Herrateofnetincreaseinpopulation(thedifferencebetweenbirthrateanddeathrate)isnowroughlyhalfthat ofmanyAsiancountries.2Theprospectis thatJapanwillfinallybefreed fromitspastproblemofchronicpopulationpressure.Until about1970, however,therewill beaperiodofrapidincreaseinthework-agepopulationbecauseof thehighbirthrateandthe suddendropin thedeathratein thepostwaryears.Theannualincreaseinthework-agepopulation(15to59 yearsofage)isexpectedtobeabout1.3to1.4million.After1970,it isexpectedtodeclinetoalevelof0.5to0.6millionayear.Obviously,thiswillgreatlyreduce thepressureonemployment.Thesecondreasonfortheexpectedchangeinlaborsupplyistheprobabledeclineinthelabor-participationrate,thatis,theratio of laborforcetothetotalwork-agepopulation.Thisrateisnowabout65 percentinJapanwhereasin theWesterncountriesgenerallyit is about55to60percent.Withrisinglevelsofincome,therewillbelessneedtosupplementthe incomeof thefamily'sprincipalincome-earners,andtherefore fewerpeopleareexpectedtoseekemployment.Higherincome of theparentswillalsoenablealargernumberofyoungpeopletoenterhighschoolsanduniversities,and thiswilllower theparticipationrateoftheyoungeragegroup.Moreover,theexpecteddeclineintheagricultural
populationbothinabsolutenumbers andas apercentageof the
totalpopulationwill further reducethetotallaborforce,sincethelabor-participationrateamongfarmfamiliesisatpresentveryhigh.Adeclineinthelabor-participationratefrom65to60per
centwillmean adecrease of about3,000,000inthelaborforce.
The thirdfactoraffectingthelaborsupplyisthereductioninworkhours. Sofar,becauseofthelowlevelofincomes,workersusuallyhavepreferredalargerpay-checktoshorter hours.Now,however,thedemandforshorteningtheworkweekisbecomingahot issueinJapananditismostlikelythat thedemand will berealized,thoughgradually.Ifwe assumethat thepresentaverageof about48hoursaweek is reducedto40in thecourseofthecoming10to20years,the result willbeareductionbynearly20percentinthepotentiallaborsupply.
2Criticismshave beenheardtothe effectthataconsiderablepartofthe decline inJapan'6birthratewasbroughtaboutbymeansofinducedabortion. Inrecentyears,however,thenumberofcasesofabortionhas declined whiletheuseofcontraceptiveshasbecomemorewidespread.Itmayalsobepointedoutthatinothercountries,whereabortion isillegal,thenumber ofcases canneverbe obtainedwithanyaccuracy;inJapanrelativelymorereliablestatisticsareavailable.

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