The alarm bells of Nagasaki

Below is an article from Economist.com about the population and apparent economic decline of Nagasaki. Nagasaki since the time of the Edo period has been one of Japan's most open and vibrant cities. While the rest of Japan was closed to foreigners during the Edo period, Nagasaki still engaged in limited trade with the Dutch and Chinese. Is the article's description of the decline of Nagasaki an accurate description of much of Japan today? I wonder if depopulation is necessarily a bad thing if managed right. I'm not sure if Japan will mange it's depopulation right however. The article

The alarm bells of Nagasaki

Japan’s “window on the world” is now a window on what ails the country

AT 60, Hiroshi Ikeguchi wryly describes himself as one of the youngest in his district. He has lived his whole life in Irifune, just above the Mitsubishi Heavy Industries shipyard. But like his ageing neighbours, the Nagasaki suburb is collapsing around him. A dozen houses have been left to rot after their owners have died. Some are piles of timber; in others, katsura trees grow through the roofs. Outside one is a new year’s offering of fruit left by a neighbour who still laments how the death of the “kind old lady” who lived there went undiscovered for a week. Peer through the letterbox, and in the gloom you see a calendar pinned to the wall. The date is September 1988.

In Mr Ikeguchi’s youth, when Nagasaki was rebuilding itself after nuclear devastation in 1945, the streets near his house rang with the sound of shipwrights walking to the Mitsubishi yard each morning. Now Nagasaki’s economy has gone still. The port city’s fortunes show how three forces sapping Japan’s energies—depopulation, overcentralisation and foreign competition—are hurting not just rural backwaters but once-prosperous cities on Japan’s fringe. The phenomenon remains partly hidden. Residents of luxury apartments across the bay complain about Irifune’s shabby appearance. If only they knew, Mr Ikeguchi says, how bad it really is.

The brain drain reinforces a demographic trend. The prefecture’s working-age population has shrunk from over 1m in 1990 to 874,000 in 2008, a result both of the exodus and a declining birth rate. The prefecture of 1.45m is shrinking and ageing so fast that one of Nagasaki’s main department stores, Tamaya, has closed down its children’s department and stocked up on undergarments and hearing aids. With shrinking investment, and fewer jobs and young families, new house-building has fallen by half in the past ten years.Nagasaki’s troubles are self-reinforcing, argues Takamitsu Sato, president of the Nagasaki Economic Research Institute. Since the 1960s a brain drain has sucked people towards Osaka and Tokyo. Young people who left to find jobs elsewhere never came back. Even now, seven in ten college students leave to study, and over half of young people find jobs elsewhere.

So now Nagasaki’s living standards are falling too, a shock in a country where economists said that individuals could be better off even if the overall economy shrank in size. Mr Sato’s institute reckons that if today’s trends continue, GDP per person will fall from ¥3.26m ($28,000) in 2007 to ¥3.14m by 2020. Everything, he says, is going downward.

Can Nagasaki pull out of the spiral? Historically, after all, the city is Japan’s most open, allowing in Dutch and Chinese merchants in the 17th-19th centuries when foreign trade with the rest of the country was banned. Nagasaki is one of the closest cities to China and South Korea, with opportunities for tourism and trade. The museum to the atom bomb and its victims is world famous. Nagasaki is the birthplace of Japanese Christianity. It was a cradle of insurrection against the last shogunate, helping to shove Japan into the modern age with the Meiji Restoration of 1868.

To reverse the decline, Mr Sato has drawn up a plan with local officials that looks for overseas revenues to make up for falling domestic ones. That is hardly revolutionary. Among the goals are doubling numbers of foreign students, to 3,000; turning the shipyard into a tourist site; and bolstering sales of kamaboko, a rubbery fishcake. But asked about bolder measures such as encouraging foreign investment and skilled immigrants, Mr Sato says there is “not the right environment” for that yet.

Meanwhile, Nagasaki’s once-mighty shipping industry has been keelhauled by South Korean and Chinese yards with lower costs and quicker thinking. And Mr Ikeguchi says that even modest government initiatives, like demolishing abandoned houses in Irifune to attract newcomers, take years to grind through city hall.

Like the elders of Nagasaki, the prime minister, Naoto Kan, realises that Japan must look abroad since its own markets are shrinking. At the start of 2011, he declared (143 years after the fact, some might say) that this was the “first year of opening Japan to the outside world” in the modern era. Nagasaki is a good example of why action needs to be swift and bold.