News August 2004

[Research Trends]

[Completed Research Projects]

Research on Population Decline and Comprehensive National Capability

The following are the major results of this research project which commenced in December 2003 and has recently completed.

Japan Facing the Necessity of a Paradigm Shift
Although whether to have a child is an issue of personal choice, the current extremely low birthrate in Japan is a sign of the beginning of a national crisis. If the birthrate remains unchanged until 2500, Japan's population is expected to decline to the level of that in the Jomon Period (before 300 CE). This suggests that a paradigm shift is necessary.

The Decline in Population Will Cause a Decline in Comprehensive National Capability
The decline in population will negatively affect the basic capacity of a nation, referred to in this project as "comprehensive national capability." For example, from the perspective of citizens' lives, inter-generational conflicts may occur. In addition, the populous will be unable to adequately generate "economies of scale" and macro saving rates will decline. There is concern that this situation in turn will result in increased constraints on economic activities. Consequently, Japan may not be able to maintain its voice in the international community.

Two Basic Strategies for Responding to the Decline in Birthrate
When comprehensive national capability declines due to population decline, young people will grow less confident and enthusiastic about having and raising children, thus exacerbating the declining birthrate. In order to end this vicious cycle, basic strategies must be established to slow the decline in the birthrate and to build a society capable of adapting to a reduced birthrate.

The strategy to slow the decline in the birthrate advocates a target of increasing the total fertility rate to approximately 1.6. In order to achieve this target, employment opportunities for young people must be ensured in the hope that marriage becomes a more realistic possibility. In addition, companies must adopt employment systems that are friendly to families, and childcare services must be provided to all families raising children. In order to build a society capable of adapting to a reduced birthrate, the establishment of the "rate of productivity increase," a strategic index to evaluate the improvement in the quality of human capital, has been suggested as a policy goal. Improving education and expanding both domestic and international exchanges are critical to achieving this goal. In addition, establishing social security and financial systems that function effectively irrespective of population size is important.

Under the assumption that Japan's birthrate will return to 1.6 by 2015 and to 2.1 by 2050, the population will stabilize at 90 million over the long term. It is vital for all Japanese citizens to work towards a nation in which "we would choose to be born a second time."

Joint Research on Economic Cooperation among Japan, China, and Korea
- Trilateral Trade and Investment after China's Entry into the WTO (Third Phase)

This research project is the third phase of the joint research project conducted among Japan, China and South Korea to strengthen economic cooperation between the three nations, and which has been conducted in accordance with the agreement reached at the summit meeting held between the leaders of these nations at the ASEAN+3 Conference held in November 1999. The joint research project commenced in 2001 with the participation of the Development Research Center of the State Council (DRC) of China, the Korea Institute for International Economic Policy (KIEP) of South Korea, and the National Institute for Research Advancement (NIRA).

This research project aimed at exploring the optimal form of economic cooperation between the three nations, with consideration of establishing a trilateral FTA as a long term goal. Major issues examined in this project include establishing a long-term scenario for the macro-economy, analyzing the economic effects of the trilateral free trade agreement and conducting a survey on the opinions of the companies of the three nations. At the trilateral summit meeting held between the leaders of Japan, China and South Korea in October 2003, the three institutes presented the research report and policy proposals formulated based on the results of this project. The advancement of this research project was evaluated in the trilateral meeting as shown by the meeting's Joint Declaration, which emphasized the importance of continued efforts to explore the direction for realizing close economic relationships between the three nations.

It has been agreed upon by the three institutes to continue the joint research for several years to establish a long-term economic scenario, to formulate common policies that can be adopted by the three nations and to explore economic development policies capable of covering a wide range of fields. In 2004, efforts have been made to study the impact of the trilateral FTA on individual industries and to conduct policy analyses. Research results accumulated to date will be further explored in order to clarify the optimal course of the trilateral FTA.

[New Research Projects]

Northeast Asia's Economic Indexes - Fixed-Point Observation

With the rapid growth of the Chinese economy, Northeast Asia has emerged as a new growth axis in the global economy, and interdependence within the region has been deepening. A move to achieve economic partnership mainly among Japan, China, and South Korea has also accelerated. Under these circumstances, it is crucial to pay attention to Northeast Asia's potential for sustainable development, conduct research to strengthen regional cooperation and partnerships (including FTAs), and to show medium- and long-term visions including the Grand Design for Northeast Asia.

To respond to the demands of the times, under this project, we will conduct basic research as a preparatory stage for establishing a database including a fixed-point observation system for Northeast Asian nations and regions. Specifically, the project will collect and organize data on Northeast Asia's time-series economic indexes, social development indexes, development plans for the period between 1990 and 2003 and prepare combined indexes (degree of intra-regional trade linkage, degree of dependence on foreign trade, and intra-regional investment ratio). In addition, from the perspective of regional governance, the project will constitute comprehensive indexes regarding the traffic and transport system, energy supply-demand structure, and food supply-demand structure for the whole region, and from these data establish a NIRA-type database for Northeast Asia.

Memorial Event of NIRA's 30th Anniversary:
What We should Do Now to Achieve Northeast Asia's Economic Integration - Asia Economic Forum (provisional title)

NIRA has started this project aiming to consider the feasibility of establishing an "East Asian Economic Community," and to propose a roadmap.

While the movements towards regional integration (e.g. the EU and NAFTA) are accelerating, East Asia has gotten a relatively late start. However, even in East Asia, interest in regional cooperation and integration issues is increasing, and there are various movements to strengthen regional cooperation among the nations concerned. In East Asia, however, due to differences in the political systems and the level of economic development, or even historical concerns, there are many problems and obstacles to promoting regional cooperation and integration. Since the global significance of East Asia is increasing, as represented by China's rapid economic development, it is crucial to strengthen economic cooperation and promote integration in order to secure the region's peace and stability while maintaining sustainable economic development.

This project will focus upon East Asia's aforementioned economic dynamism and explore a model for the region's original economic integration. In addition, in order that the development and prosperity of Northeast Asia (including Russia, Mongolia, and North Korea) will lead to the coexistence of East Asian nations and the formation of a regional economic zone, this project will also attempt to determine the keys for preparing a comprehensive development plan (Grand Design) for Northeast Asia. It also plans to hold an "Asia Economic Forum (tentative title)."

[NIRA Topics]

Introduction of a New Vice President

Yoshio Ezaki

This is the second time in ten years that I will be working at NIRA. During this decade, dramatic changes have occurred one after another: the Great Hanshin Earthquake, the collapse of the bubble economy, a rash of bankruptcies among major financial institutions, restructuring of government ministries and agencies, and structural reforms. During this time, I engaged in the enactment of the Product Liability (PL) Law and the NPO Law, and immediately before returning to NIRA, I did micro-oriented work with the Industrial Revitalization Corporation of Japan in the disposal of nonperforming loans. When looked at from such positions, I actually feel that within these big changes in macroeconomic phenomena, various systems to support them have undergone even greater change, and what is produced by the strength of the free market will be a source of dynamism for the next decade.

I hope to utilize my experience in my administrative capacity and will endeavor, in collaboration with our staff, to forge a NIRA that will actively transmit information to the world. I look forward to having new experiences at NIRA.

Introduction of New Visiting Research Fellows

Tadashi Sugimoto

Research theme: Presuppositions of and Requirements for Establishing an Energy Security Mechanism in Northeast Asia

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