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2016 Vol.4
The Effect of Population Decrease on Regional Economies

Declines in the Commerce and Manufacturing Sectors as well as the Service and Agricultural Sectors as the Key to Economic Revitalization


Japan faces an era of significant population decreases, with regional economies experiencing the most serious impact. A shrinking retail market is unavoidable. Firms are increasingly relocating overseas as the expected growth rate of the domestic market falls. Consequently, strategies to attract factories, which have been for a key factor in revitalizing regional economies, are starting to stall. At the same time, the share of the service sector in the Japanese economy is becoming larger for reasons including changes in people’s lifestyle (as reflected in increasing employment among women) and expansion of outsourcing. The service sector has the potential to create new jobs, and regional economic revitalization hinges on how each region can expand its service sector. Additionally, the regions experiencing severe depopulation are highly dependent on agriculture, which is partially due to a lack of a core industry in those regions. For such regions, re-establishment of agricultural activities is the most urgent issue in their overall effort to revitalize their economy. Changes are already being seen in industrial structure as a consequence of depopulation. The growth patterns of regional economies, which were rather uniform in the past, will change according to how these economies adapt to population declines. An important issue will be how to create policies that will smooth changes in industrial structure.