Japan’s Demographic-Momentum on a Deflationary Spiral Tracing a Path toward Extinction: Ecological Economics of a Declining Population

Abstract

In the future, Japan will suffer an accelerating decrease of the population, which is predicted by a demographic report of the National Institute of Population and Social Security Research (IPSS). The authors have reanalyzed this issue from a viewpoint of ecological economics and resource statistics and have come to confirm that the results of IPSS indicate Japan's population to have entered an "extinction mode". An economic situation called "deflationary spiral" means a vicious cycle in which a decline in income levels causes a general price reduction and this reduction causes a further decline in income levels. In Japan, there is an ongoing cycle of this kind that a population decrease leads to a socio-economic contraction, which in turn will cause a further decrease in population. Such a situation can be called a "deflationary spiral of the population". This research treats this population down-spiral in Japan with an analytical approach considerably different from the usual demography. In the meantime, some UN statistics show that Asian countries are highly liable to face a population decline, which may realize, following Japan, after some decades toward the end of the 21st century. We would like to show that Japan's case can provide an effective and forward-looking suggestion for these countries.