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In Search of New Growth Areas: Population Flows in Japan
- Beyond the "stagnation" of population flow-

November 10, 2009

Overview

This article examines the movement of population across regional and national borders (population flow) and attempts to predict future directions of population flow and the issues that these are likely to raise.

Until the summer of 2008, population flow in Japan was characterized by a significant inflow into major cities, including Tokyo and, especially over the three years leading up to that time, the net inflow into the Tokyo area and Aichi Prefecture was at its highest level in the past two decades.

Since the autumn of 2008, however, the nationwide economic downturn has slowed the flow of population towards the major cities, and the net inflow into the Tokyo area and Aichi Prefecture has also fallen. However, this does not imply that the net inflow into other specific prefectures and areas has increased. Against a background of economic atrophy, population flow appears to be stagnating.

Population flow across national borders has, until now, been characterized by a long-term upward trend in outflow of Japanese nationals from Japan. Over the 12 months from October 2007 to September 2008, the rise in the number of Japanese nationals leaving Japan, whether to take up permanent residence overseas or for other purposes, was greater than the rise in the number of company employees returning to Japan, resulting in the greatest net outflow in the last 20 years. Data on emigration by age group indicates that, in recent years in particular, there has been a rise in the number of people from younger generations leaving Japan to take up permanent residence or for study purposes.

Meanwhile, the trend in the number of resident foreign nationals entering and leaving Japan appears to have felt the full force of the recession that is affecting manufacturing industry and, since the autumn of 2008, there has been a net outflow, centering on Brazilians of Japanese descent.

However, the stagnation of population flow seems unlikely to be prolonged. Business enterprises and people normally move to new growth areas, the former in search of new markets and more advantageous business environments, the latter in search of new employment opportunities and higher incomes. Given this assumption, the medium-to-long term directions of population flow are likely to be as follows.
(i) There is likely to be an increase in the number of people from younger generations, whether Japanese or foreign nationals, going overseas in search of employment opportunities. At the same time, the shrinking of the domestic market and other factors are likely to speed the outflow of enterprises from Japan, and the outflows of people and companies may spiral.
(ii) A breakdown of the outflow of Japanese nationals from Japan by region reveals that the outflow from the Tokyo area is particularly high and, for this reason, there is a risk that Tokyo will cease to act as a dam for population flow but will continue to suck up population from provincial cities and come to play the role of a pump, causing the population it attracts from those cities to flow overseas.
(iii) In areas other than Tokyo, a lack of effective means of preventing population outflow, whether overseas or to other areas, means that population decline and degeneration must inevitably accelerate.

To avoid falling prey to a vicious circle of population outflow and economic shrinkage, it is vital that Japan should not only establish conditions that attract investors and talented human resources from overseas but also set out growth strategies, at both national and regional level, to aid the survival and growth of businesses currently operating in Japan and create employment.

For more information on the content of this report, please contact Takumi Fujinami, the Japan Research Institute, Limited.

Tel: 03-3288- 5331
E-mail: fujinami.takumi@jri.co.jp

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