What is the passage about?
a) How Japan is handling its aging population, the percentage of which is quite
high as compared to those of the young.
b) Japan‟s economy is regressing badly as the maximum population is old and
cannot contribute to the growth of the economy.
c). Japan is a techno- friendly economy and the old people have not failed to
embrace technology.
d). Japan sells more diapers for the babies than for old.
e) Japan has progressed so much in terms of technology that it is giving a huge
challenge to developed countries like the U. S. and the U.K.
Answers
Answer:
TOKYO REPORT | ECONOMY | EAST ASIA
How Does Japan’s Aging Society Affect Its Economy?
The aging crisis will have major impacts on Japan’s economy. What can the Abe government do to mitigate the damage?
By Simran Walia
November 13, 2019
How Does Japan’s Aging Society Affect Its Economy?
Credit: Wikimedia Commons/ Thomas E. Smith
Japan, the world’s third largest economy, has been experiencing the issue of population aging to an unprecedented degree. More than 20 percent of Japan’s population is over 65 years old, the highest proportion in the world. By 2030, one in every three people will be 65 or older, and one in five people 75-plus years old. The rapid aging process in Japan is striking because of the high rate of economic growth and changes in family and social structures in the post-war period.
The decline in Japan’s fertility rate has been attributed to several factors such as changing lifestyles, people marrying later in life or not marrying at all, and the economic insecurity of younger generation. Increasing life expectancy is another driving force behind the aging trend. Fifty years ago, life expectancy at birth was about 72 years; it has since climbed to 84 years.
There are two fundamental aspects behind Japan’s aging population. One aspect is the increase in the proportion of the elderly in the total population. The other is the slower growth of the population, arising directly from the declining fertility rate. The former affects Japan’s economic performance by increasing the social security burden and benefits. The latter has a direct impact on economic growth by reducing the labor force, which is a major factor in production. “A rapidly aging population and shrinking labour force are hampering growth,” warned the IMF in its latest country report on Japan. The IMF also calculated that the impact of aging could drag down Japan’s average annual GDP growth by 1 percentage point over the next three decades.
The causal effect of aging is leaving its mark on the macroeconomy of Japan, especially the labor force and capital accumulation. Due to the nation’s aging and shrinking population, there is an increased need to address the labor shortage. People eventually retire and leave the workforce as they start aging, and at present, there are not enough young people in Japan to fill this vacuum owing to the decline in the fertility rate as well. This further implies that some of Japan’s big industries — like motor vehicles and electronics — do not possess the manpower to continue at the current level of production. If Japan cannot maintain its levels of production, it may subsequently lose its spot as the third largest economy in the world.