Professor Edman's NHK interview on demographics and the Japanese economy
Professor Jesper Edman gave an interview to NHK for its Saturday night programme, 'Global Debate Wisdom', which aired on January 23 at 11pm. Asked for his opinion about the ability of the Japanese economy to grow in an aging society with decreasing manpower, Professor Edman answered as follows:
"I think an economy can definitely grow with decreasing manpower. Economic growth is basically about producing and selling more value-added goods, and you can still do that with a smaller population.
"One way of doing it is by selling overseas to other markets that have growing populations, and the other way is by selling it locally, to your own population, but getting that smaller group of people to buy more. So, I don't think it's a problem to have a shrinking population.
"Having said that, it's of course challenging, especially the second point: how do you get people to buy more? A country like Japan is very rich, so there are not many people having to buy more things like cars or houses that they don't already have.
"I think in Japan's case, in terms of selling outside the country to emerging markets, that's already a big focus for companies (for example in Africa, South-East Asia and China), and it will continue to be a focal point. The challenge there is that they have to compete with other companies, and if Europe and the US also start slowing down (or their populations start shrinking), and they also start looking to expand their export markets, it will be very difficult, I think, to compete.
"So, for me the real key is getting domestic consumption going. I think that's why it's important to change things in the economy and the structure of the economy, for example through deregulation, so that you can have opportunities for increasing local demand internally. If you can do that, I think a shrinking population is not a problem.