Long-term projections of economic growth in the 47 prefectures of Japan: An application of Japan shared socioeconomic pathways

Keita Honjo; Kei Gomi; Yuko Kanamori; Kiyoshi Takahashi; Keisuke Matsuhashi

doi:10.1016/j.heliyon.2021.e06412

Long-term projections of economic growth in the 47 prefectures of Japan: An application of Japan shared socioeconomic pathways

Heliyon. 2021 Mar 8;7(3):e06412. doi: 10.1016/j.heliyon.2021.e06412. eCollection 2021 Mar.

Authors

Keita Honjo¹, Kei Gomi², Yuko Kanamori², Kiyoshi Takahashi², Keisuke Matsuhashi²

Affiliations

¹ Global Warming Countermeasures Group, Center for Environmental Science in Saitama (CESS), 914 Kamitanadare, Kazo, Saitama, 347-0115, Japan.
² Center for Social and Environmental Systems Research, National Institute for Environmental Studies (NIES), 16-2 Onogawa, Tsukuba, Ibaraki, 305-8506, Japan.

Abstract

Assessing climate change impacts on local communities is an urgent task for national and subnational governments. The impact assessment requires socioeconomic scenarios, including a long-term outlook for demographic and economic indices. In Japan, the National Institute for Environmental Studies developed the Japan Shared Socioeconomic Pathways (JPNSSPs) and presented regional population scenarios corresponding to five different storylines. However, there exists no quantitative information about changes in local economies under the population scenarios. This study examines the economic activities in Japan's 47 prefectures using statistical models and calculates changes in the major economic indices (e.g., production, capital stock, and labor population) until 2100. The economic projection is based on ten socioeconomic scenarios generated from the JPNSSP population scenarios and original productivity scenarios. The economic projection results clearly show that Japan's population aging and decline have catastrophic impacts on national and subnational economies. Even in the most optimistic scenario, assuming a massive influx of immigrants and fast productivity growth, the GDP growth rate becomes negative in the 2090s. In the most pessimistic scenario, the GDP growth rate becomes negative in 2028 and continues to decline. As a result, Japan's GDP decreases to the level of the 1970s by 2100. The improvement of productivity cannot offset the GDP shrink caused by demographic changes. Furthermore, the population aging and decline accelerate the wealth concentration in urban areas. The Theil index, calculated using the economic projection results, shows increasing trends in all the scenarios. Tokyo's presence in Japan's economy will continue to increase throughout this century. Meanwhile, Kanagawa and Saitama, which belong to the top five prefectures in terms of economic production, may lose their positions. The Tohoku region, already suffering from population decline, will face severe economic stagnation. Our findings suggest that the depressing future is inevitable unless Japan overcomes the population aging and decline.

Keywords: Economic projection; Population aging and decline; Productivity; Regional disparity; Socioeconomic scenario.