Depopulation and ageing present a dual challenge for rural places. This dual challenge limits access to human capital and skills, partly due to the difficulty of delivering services for an increasingly ageing population in low-density areas, and partly because high-skilled labour tends to migrate to cities for educational and employment purposes. Concurrently, rural Japan is undergoing sectoral transformation in employment, with the agricultural sector experiencing the largest job losses, and some reports underlining that low productivity remains a challenge in a landscape of land-intensive agriculture with a large share of small farms.
Amid demographic decline and structural change, innovation adoption becomes even more critical for firms, communities, and governments, not just because of the challenges of smaller labour forces but also because of the eventual impact population and ageing will have on larger structural challenges such as lower fiscal revenues. The combination of both demographic trends inevitably results in higher unit-costs of delivering services, making rural places increasingly dependent on fiscal redistribution. This underscores the importance of innovation in the provision of services, as well as place-based innovation opportunities that require more horizontal and vertical government coordination, government support for bottom-up and community-driven initiatives and work in collaboration across administrative delineations to increase the scale of rural places. Focusing on such governance mechanisms and policies fit for innovation in rural areas can help to start addressing some of the challenges of doing more for the rural communities, with less resources.
High-tech innovation alone, which is a narrow view of innovation, cannot address the main challenges facing rural Japan. Initiatives to support innovation that go beyond science and technology and to adapt policy and governance to the context of rural places are critical to sustaining services and well-being in rural places. Innovation in rural areas needs to be broader than high-tech innovation, science and technology, and in particular, in the case of Japan, it needs to also consider how to adapt rural land-use policies to better align with the changing needs of rural communities that are moving away from traditional sources of labour such as agriculture to trade and services or manufacturing activities.
As such, policies for rural innovation need to include i.) community-based and public sector innovation to better deliver programmes fit for rural communities, iii.) entrepreneurship support that includes innovation initiatives targeted at rural firms and demographics and iv.) innovation in land use to accompany transformation rural places.
