NRI Papers
No. 159 November 1, 2010
  Direction of Japan's Strategy for Economic Growth towards 2030  
Atsushi OKAMURA, Kentaro ONUMA and Katsutoshi TAKEHANA

The year 2030 will mark a major turning point in the world economy and society. In 2030, the population of East Asia, which is currently continuing to increase, will shift to a declining trend. With rapid economic growth being achieved in this region, new economic powers will appear on the global map and, at the same time, competition for resources such as energy, water and food will intensify.

The Japanese economy and society will also stand at a pivotal crossroads in 2030. Japan's dependent population index that will remain relatively stable at around 80 percent after 2015 is projected to reclimb starting around 2030. Under restrictions imposed by a limited labor force, Japan faces a need to build economic and social systems in the next 20 years that can withstand and overcome the further difficulties that it will experience after 2030.

A new growth strategy that can take on the challenges of an increasingly aging population and a declining working population must be established for the Japanese economy in order to maintain the social security system and to cope with increasing long-term interest rates caused by decreasing household financial assets. Simply following the past policy and strategy will make it difficult to realize the growth that is required to maintain Japan's social systems.

In view of a declining population and a decrease in the number of households, it is unrealistic to expect private consumption expenditure and foreign direct investment in Japan to significantly increase. Accordingly, focus must be given to "overseas demand," rather than "domestic demand," as a principal source and stimulant for the growth of the Japanese economy.

When targeting overseas demand, the basic approach Japan should adopt is to thrive together with other Asian countries. Efforts must be made to use Japan's technology, experience and expertise to promote further growth in Asia and to provide solutions to the issues that will arise as this region matures. In doing so, Japan should build a strategy of being prosperous along with other Asian countries.

I Maturity in East Asia will Mark a Turning Point in World Economy and Society in 2030
II Japan to Face Demographic Crisis in 2030 due to Falling Birth Rates and Aging Population
III Need to Grow beyond the Scenario of Maintaining the Status Quo
IV Limit in Strategy for Economic Growth Led by "Domestic Demand"
V Pursuing Economic Growth Driven by Overseas Demand Primarily in Asian Markets


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