Japan and South Korea face serious demographic crises. Japan has the oldest population in the world and South Korea is one of the most rapidly aging. Together they top the list in terms of proportion of elderly by 2050, with 40.1% and 35.9% respectively being 65 and over, according to a U.S. Census Bureau forecast. Both nations are seeing shrinking working-age populations, with their birthrates among the lowest in the world. This puts them at great risk as they struggle to find new engines of economic growth.

Some experts argue that Japan and South Korea should encourage immigration. The former head of Tokyo's Immigration Bureau, Hidenori Sakanaka, said that "we need an immigration revolution to bring in 10 million people in the next 50 years, otherwise the Japanese economy will collapse." Jongryn Mo, a professor at Yonsei University in Seoul has written a book, "Strong Immigration Nation," urging a similar policy for South Korea.

Japan and South Korea are already supplementing their shrinking workforce with foreign labor, mostly unskilled migrant workers from China and Southeast Asia doing jobs that locals shun.

But it is time to attract more skilled workers. In Japan, only 18.4% of foreign workers were technicians or professionals in 2015, while the figure in Korea is just 7.8% this year. Skilled foreign workers can fill many jobs from staffing hospitals to working as technicians in middle-tier companies and software engineers in large ones.

The challenge, however, is that both countries remain exclusionary, closed societies despite a substantial rise in the numbers of foreigners. Politicians fear losing votes from workers worried about foreigners taking their jobs.

According to a recent report by the French business school INSEAD, Japan and South Korea are ranked 53rd and 61st, respectively in their level of tolerance for immigrants. Most foreign skilled workers have little intention to settle down in Japan or South Korea on a permanent basis, although unskilled ones might be more willing to stay.

Maria, a Guatemalan professional, decided to leave South Korea after working for six years in the overseas marketing department of a large Korean corporation. "Some Koreans complain that foreigners leave after a few years, but we leave because we're never included in the first place. Korean companies pay a lot to bring foreigners here. And then they don't even ask these people about their opinion."

Srey, a Cambodian student studying in Japan, said, "The Japanese are very helpful and very friendly, but at the same time they look at me as a 'gaijin' no matter how good I am at Japanese or able to speak to them. I am not planning to work in Japan."

Bridging strategy

South Korea and Japan need to find a more creative strategy in utilizing foreign talent. In particular, they should pay close attention to their transnational networks rather than pushing for permanent migration. Not only should both countries focus on the knowledge and skills of foreign labor talent, but also the social networks they can possess.

This calls for a particular type of social capital: transnational bridging. A person who has social ties in more than one place can serve as a bridge between those different places. Such bridging can be performed within a city or a country or across borders, but the latter is becoming more important with globalization. By bridging distant networks, people can connect disparate cultures, build trust and facilitate cross-national cooperation that are essential in business transactions. Many Indian and Chinese entrepreneurs and engineers working in Silicon Valley are active in transnational bridging with their home country.

Transnational bridging can be a good new strategy for South Korea and Japan in attracting foreign skilled labor since they can offer valuable experiences and networks as advanced economies, if not permanent places to live. They can help foreign talent to build social ties while studying and working and encourage them to serve as a bridge between South Korea and Japan and their next destination once they leave in what could be called "brain linkage."

They can still contribute to South Korea or Japan even after they depart. Maria said she was willing to do business involving both South Korea and her home country. Srey is also eager to do business with Japan after graduating, even though he will not work in the country.

South Korea and Japan should adopt a policy of "Study-Work-Bridge" rather than the "Study-Work-Migration" pathway commonly encouraged by settler societies. This new policy framework would establish programs providing systematic networking opportunities for skilled foreigners while in Japan or South Korea. It would upgrade the quality of campus life for foreign students and work environments for foreign professionals so they leave with positive experiences.

Most importantly, it would provide institutional support to help maintain transnational networks between foreigners and South Koreans and Japanese.

In Japan, a Study-Work framework has already begun to take shape. Among foreign students seeking employment in Japan in 2013, approximately 24% found jobs. According to the country's ministry of justice, 10,696 of 11,698 foreign students are successful in applying for a change of visa status after graduating from college. This is very encouraging. Still, foreign students feel that Japanese companies are reluctant to embrace their full potential and largely expect them to assimilate, often leading them to stay in Japan only for a short time.

In South Korea, with a shorter history of foreign student intake, a Study-Work framework has yet to emerge. While 64.3% of South Korean companies say they need and want to hire foreign students, only a very small portion of foreign students work in South Korean companies after graduation, perhaps as low as 1%. South Korea's immigration laws for foreign students have eased slightly in recent years, but there is an urgent need to develop solid, institutionalized support for responding to the substantial demand by foreign students who wish to find employment after their studies.

Challenges ahead

Both countries are moving in the right direction, but until they are ready to embrace a more comprehensive migration policy down the road, they should develop the "bridging" component of a Study-Work-Bridge framework as an interim strategy. That means considering how foreign skilled labor can contribute to their economies even if they stay only temporarily.

This non-migration-bridging concept can be also appealing to foreign workers who like to move on after gaining valuable experiences and networks. By activating the social networks they have left behind, foreigners can later become powerful "transnational bridges." With economic globalization, such linkages will be all the more important.

Research shows that science and engineering majors may have more to contribute as human capital, but business and social science majors are more inclined to play a bridging role. Universities and corporations should establish diversity offices, as seen in the U.S. and elsewhere, to promote a culture of tolerance and non-discrimination.

The challenges associated with aging, depopulation and a shrinking workforce are expected to intensify in the coming years. Yet foreign talent is readily at hand for both countries. They need to look no further than the skilled foreigners who already have connections with South Korea or Japan either through schooling or employment and to continue to cultivate such connections through a Study-Work-Bridge approach.

Gi-Wook Shin is director of the Walter H. Shorenstein Asia-Pacific Research Center at Stanford University and co-author of Global Talent: Skilled Labor as Social Capital in Korea. Rennie J. Moon is an associate professor at the Underwood International College at Yonsei University in Seoul.

This article was originally carried by Nikkei Asian Review on Aug. 31 and reposted with permission.

Japan must transform its economy in a way that mirrors the innovation ethos in places like Silicon Valley and Stanford University, Japanese Prime Minister Shinzo Abe said Thursday during a speech on campus.

As an example of how to encourage such creativity, Abe hailed a new partnership starting this fall with Stanford that will train the next generation of biomedical experts. In doing so, he urged a "fundamental change" in how Japanese society views the process of innovation, from how ideas originate to competition in the marketplace.

Japan Biodesign will be launched in collaboration with the Stanford Biodesign program and five higher education and research institutions in Japan. Faculty members will work together to create new interdisciplinary systems based on Stanford Biodesign. Stanford leaders will train and mentor their Japanese colleagues.

Abe, who is the first Japanese prime minister to visit Stanford, marveled at how the tech sector in the United States has "consistently evolved at top speed."

He said, "I want the best and brightest Japanese talent" to learn about Silicon Valley.

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Abe shared the Bing Concert Hall stage with Stanford President John Hennessy and George Shultz, the former U.S. Secretary of State and distinguished fellow at the Hoover Institution. Abe's talk, titled "Innovation, Japan and Silicon Valley Symposium," included an introduction and remarks by Hennessy and Shultz. The event drew a full house of invited guests and members of the Stanford community.

"It is a great honor" to be at Stanford, Abe said in beginning his remarks.

He noted that Japan is revisiting its regulatory and tax systems in order to encourage more economic dynamism and competition. "The Japanese people will benefit from innovation," he said.

The challenge, he acknowledged, has been the slow pace of innovation in Japan. Today, however, the Internet economy and big data are creating "enormous changes" in his country's economic approach, he said. "We have to catch up, or otherwise Japan will lose vitality," Abe added.

Cultural connections

In his introduction of Abe, Hennessy chronicled Stanford's long history and friendship with Japan and its people.

Japan, he said, is home to more Stanford alumni than any other Asian country, and when the university's doors first opened in 1891, the pioneer class included a Japanese student. Currently, 139 students from Japan are enrolled at Stanford.

Hennessey described Abe as focused on revitalizing Japan's economy and stewarding it toward a greater global role.

Shultz, who knew Abe's parents, shared recollections of poignant moments between Abe's politically prominent family and his own.

Abe joined a roundtable discussion after his speech with Michael McFaul, director of the Freeman Spogli Institute for International Studies; Stanford Board of Trustees Chair Steve Denning; Stanford School of Medicine Dean Lloyd Minor; Stanford political science Professor Emeritus Daniel Okimoto; Yahoo co-founder Jerry Yang; and Twitter co-founder Jack Dorsey, among other scholars and dignitaries. He also met with Stanford students before leaving campus.

Afterward, McFaul wrote in an email, "I think it is fantastic that Prime Minister Abe came to Stanford and Silicon Valley after his very successful visit to Washington. He demonstrated that deepening U.S.-Japanese relations requires not only strong government-to-government ties, but also deepening ties between our societies, including educational institutions like Stanford."

Abe's state visit to the United States this week included the first address by a Japanese leader to a joint session of Congress. Abe served as prime minister of Japan in 2006-07 and returned to the position in 2012.

'Working together'

On Tuesday, U.S. President Barack Obama said after a meeting with Abe that the two countries had made progress in trade talks on a massive 12-nation trade deal that would open markets around the Pacific Rim to U.S. exports. Both nations face domestic political obstacles to concluding the Trans-Pacific Partnership agreement.

"This agreement would expand the coverage of the free trade agreements for both Japan and the U.S. substantially," said Stanford economist Takeo Hoshi, director of the Japan Program at the Shorenstein Asia-Pacific Research Center, in an interview. "The U.S. and Japan have been working together to maintain peace and sustain economic growth in the Pacific Asia."

Hoshi said that Abe's visit to the Silicon Valley confirms that Japan is serious about transforming its economy from one based on exports to one focused on innovations.

"Going forward, we can learn a lot from Japanese experience and their reform attempts," said Hoshi, who is also a senior fellow at the Freeman Spogli Institute.

Hoshi spoke with The Associated Press just before Abe’s arrival to California, citing Silicon Valley as the ideal place for Japan to learn about innovation. He also joined KQED’s Forum to discuss the current state of the U.S.-Japan alliance. Later, he was interviewed by BBC Business about Abe's visit to Stanford.

Stanford Biodesign

Founded in 2001, Stanford Biodesign has pioneered a new training methodology in which interdisciplinary teams of engineers and physicians go through a rigorous process of carefully characterizing unsolved clinical needs before jumping to technology solutions.

For the Japan Biodesign program, the bulk of the educational activities will take place at the campuses of the partner Japanese universities.

Clifton Parker is a writer for the Stanford News Service.

Tokyo-based reporter Jacob Schlesinger will receive award for his journalistic work and achievements spanning three decades

Stanford University’s Walter H. Shorenstein Asia-Pacific Research Center (APARC) is pleased to announce Wall Street Journal reporter Jacob Schlesinger as the 2014 recipient of the Shorenstein Journalism Award.

Schlesinger has been selected for his excellence in reporting on Japan’s economy, trade and politics, over a more than three-decade career in journalism. A Japan watcher since the late 1980s, Schlesinger incisively covered the nation at its economic height, the ‘boom’ period, through its ‘bust,’ as the financial system collapsed in the 1990s, and now, into an era that has seen signs of economic revival.

Commenting on the selection of Schlesinger for the award, Professor Daniel Okimoto, one of the leading American experts on Japanese political economy and a former director of Shorenstein APARC, said:

 “Through the years, followers of Japan have had the benefit of being kept informed by a succession of first-rate journalists based in Tokyo, such as Bill Emmott (The Economist), author of “The Sun Also Sets,” and Gillian Tett (Financial Times), author of “Saving the Sun.” No foreign journalist has covered Japan longer, or understood its political economy more deeply, than Jacob M. Schlesinger (Wall Street Journal), author of “Shadow Shoguns.”

The Shorenstein Journalism Award, launched in 2002, is given to journalists who are outstanding in their reporting on Asia, and who have contributed significantly to Western understanding of the region. The award was originally designed to honor distinguished American journalists for their work on Asia, but since 2011, Shorenstein APARC re-envisioned the award to encompass Asian journalists who pave the way for press freedom, and have aided in the growth of mutual understanding between Asia and the United States. The award alternates between Western and Asian journalists.

The most recent award recipients were Aung Zaw, the founder of Burmese publication the Irrawaddy, and a pioneer of press freedom in that country, and Barbara Demick, the Los Angeles Times correspondent in Beijing and the author of ground-breaking studies of life in North Korea.

Schlesinger has covered Japan for the Wall Street Journal for nearly a decade. He is currently the Senior Asia Economics Correspondent and Central Banks Editor – Asia for the Journal, based in Tokyo. He came first to Japan as a reporter in the late 1980s, covering tech, trade and politics, and then reporting on Japan’s stock market crash and financial crisis, and the fallout that carried on through the mid-1990s, a period known as “the lost decade.”

Schlesinger then worked for 13 years in the Journal’s bureau in Washington DC, covering politics and the U.S. economy. He was part of the Journal’s team that was awarded a Pulitzer Prize in 2003 for the “What’s Wrong” series about the causes and consequences of the late-1990s financial bubble.

Schlesinger returned to Japan as the Japan editor/Tokyo bureau chief in 2009, overseeing the coverage of the historic transfer of power to the Democratic Party of Japan, and the triple disaster of the massive earthquake of March 2011 and the tsunami and Fukushima nuclear disaster that resulted. He has since closely followed the return to power of the conservative Liberal Democratic Party, and its leader Shinzo Abe, and his administration’s economic stimulus policy, known as ‘Abenomics,’ as well as growing tensions within the region.

Schlesinger is the author of the book, “Shadow Shoguns: The Rise and Fall of Japan’s Postwar Political Machine,” widely recognized as one of the most important works on Japan’s politicians, parties and the dramatic changes in its political order. Published in 1997, the book was hailed by Foreign Affairs as “a fascinating and penetrating tale.” He wrote the book while a visiting fellow at Shorenstein APARC.

Schlesinger will receive the award at a special ceremony at Stanford’s Bechtel Conference Center on March 9. He will also lead a panel discussion earlier that day examining the coverage of Japan’s economy, from boom to bust and back again, with Susan Chira, a former Tokyo correspondent and now deputy executive editor of The New York Times and Professor Takeo Hoshi, a prominent economist and director of Stanford’s Japan Program.

Please click here for the full press release.

Contact: Lisa Griswold, communications coordinator at Shorenstein APARC, with any questions about the award or the March 9 events.

Japan is often cited for failing to capitalize on its innovative technologies and design aesthetics in global markets, but the advent of cloud computing provides new opportunities, says Kenji Kushida, the research associate for the Japan Program at the Walter H. Shorenstein Asia-Pacific Research Center (APARC), in a new coauthored op-ed.

In Nikkei Asian Review, Kushida writes with Martin Kenney, a professor of community and regional development at the University of California, Davis, that Japan’s market has a strong record of developing high-quality hardware and services, particularly in the consumer electronics and digital content industries, but a majority remains domestic.

Often referred to as the “Galapagos syndrome,” Japan is a technology leader but its output is largely confined to its own borders. The term compares the country’s industry to the Galapagos Islands, located off the coast of Ecuador, where geographic isolation has led to unique evolutionary development.

Kushida, who heads a new research project on Silicon Valley-Japan relationships, and Kenney note that many of the high-end core components in products from U.S. and Asian manufacturers are Japanese, despite loss of visibility on the final product.

The authors also say the rise of global cloud-computing services offers an immense opportunity for Japan, and a way to escape the Galapagos syndrome and enhance its global competitiveness.

The full op-ed can be found on Nikkei Asian Review online.