Opening remarks by Angel Gurría,
Monday, 11 April 2016
Nikkei Hall, Tokyo
(As prepared for delivery)
Minister Keiichi Ishii, Dear Colleagues, Ladies and Gentlemen,
I am delighted to be back in Tokyo to launch the 2016 Territorial Review of Japan. Let me begin by thanking the Ministry of Land, Infrastructure, Transport and Tourism, and Minister Keiichi Ishii for helping deliver this review and for co-hosting today’s event. The review also benefited from the support of other Ministries as well as inputs from subnational governments, private sector representatives and experts, our thanks to them also. And to the National Land Council for its excellent discussion in the lead up to this launching event.
The strength of this engagement shows the commitment Japan has made to territorial development, which will be crucial in tackling the urgent challenge of population ageing and shrinking – a challenge which is the main focus of this report.
It’s important to begin by underlining that Japan’s demographic challenges vary across regions and cities, calling for a nuanced regional policy perspective. For example, rural regions are ageing faster than cities and are facing population decline despite their higher fertility rate. Most urban regions are also experiencing a shrinking population. Over the period 2001-2015, only nine of 47 prefectures recorded positive population growth and 77% of the growth occurred in three of them. This demographic pattern has accelerated according to the newly released population census data for 2015 confirming an increase in population in only five prefectures over the last five years.
With the labour force shrinking as a share of the population, output per worker will have to rise even faster if per capita incomes are to increase. At present, the working-age population is falling by about 1% per year, and this will accelerate to 1.7% in the decades to come, meaning that even productivity growth of 2% or more will deliver very low aggregate or per capita growth. In productivity terms, Japan will have to run faster and faster simply to maintain its position in relation to other economies.
Better regional development policies can yield a double dividend, not only addressing the demographic challenge, but also bringing new opportunities and boosting productivity growth.
Let me share with you some of the insights from the report.
First, Japanese cities need to maximise agglomeration benefits. This could be done by combining infrastructure investments, such as the new super-high-speed maglev rail line linking Tokyo, Osaka and Nagoya into a single urban mega-region, with measures to promote entrepreneurship, innovation and venture capital investment.
Second, cities can benefit from better linkages between institutions and improved metropolitan governance. That means co-operating successfully across “thick” administrative borders. This is not just a matter of collaboration among public bodies: business-to-business connections, links between regional firms and nearby universities for example, are critical to knowledge creation, entrepreneurship and innovation. Governance at the metropolitan scale can also increase their productivity by co-ordinating policies, such as land-use, transport and economic development policies.
Third, policies concerned with housing, labour-market, child-care, families, education and skills will have to adapt to demographic change. The female labour force participation rate stands at about 21 percentage points below that of men. The OECD estimates that if female employment rates were to converge to those of men over the next 20 years, the labour supply would decline by only 5%, compared to 17%. Regional policies can help achieve this. For example, large cities which have the lowest fertility rates can improve commuting, housing and child-care. Prime Minister Abe’s “womenomics” to encourage women’s participation in work place will support this effort. I invite you all to read the OECD Better Policies Series report, “Japan: Boosting Growth and Well-Being in an Ageing Society” which I will be launching later today and contains recommendations in this regard.
Ladies and Gentlemen,
Confronting these challenges and providing policy responses will require a long-term perspective and a ‘whole-of-government’ approach. Japan’s new ten-year National Spatial Strategy, adopted last year, is helping to tackle these challenges and lead by example, by putting forward a view of spatial development to 2050. The Strategy looks to seize the opportunities offered by demographic change though a “compact” and “networked” development of cities and regions, enhancing collaboration, and connectivity but also diversity among different regions.
This is the right approach, although it will need to be implemented in different ways in different places. I hope the report will help you, and you can count on the OECD to keep working with you to provide better territorial policies for better lives in Japan.