APARC and Korea Program Director Gi-Wook Shin recently joined the Japan Economic Foundation (JEF) to discuss his research project "Talent Flows, Brain Hubs, and Socioeconomic Development in Asia." The conversation was published in the May/June 2023 issue of the Japan SPOTLIGHT, the online journal of JEF.
JS: How do you see the different situations vis-à-vis demography among Asia-Pacific nations? Some countries like Japan are suffering from depopulation while some are seeing an increase in population. How do you assess the political and economic implications?
Shin: As you mentioned, Japan and South Korea are going through very serious demographic crises with low birth rates, aging populations, and declines in the working-age population. On the other hand, India and many countries in Southeast Asia have very young populations, and we might expect an increase in talent mobility within the Asia-Pacific region. In the past, a lot of Chinese, Indian, and Korean students came to the United States and Europe. But now more people are going to Japan and South Korea. Their level of education has improved; the quality of universities in advanced Asian countries is quite good. We should think about the policy implications of the increase in regional talent mobility in the Asia-Pacific region.
JS: For example, India and Japan are referred to as complementary because India has lots of young people and Japan does not. Would you say that if Japan expanded opportunities for immigrants, it would make the relationship between Japan and India more complementary? Of course, India-Japan relations can be discussed in the context of skilled immigrants but there is still some disagreement on the issue of immigration of unskilled immigrants.
Shin: In the past, Japan and South Korea accepted largely unskilled labor from China and Southeast Asia. This unskilled migration will continue, but at the same time, Japan and South Korea need to accept more skilled migrants. India can be a good source. It is encouraging to see more foreign students who come to Japan, for example, for college and then stay to work. However, most foreigners leave after a few years of work. If you look at Australia, in contrast, many international students go there for college, stay, and eventually naturalize as Australian citizens. One may point out that Australia is very different from Japan or South Korea, which I partially agree with. However, until the 1970s, Australia was also promoting racial homogeneity. Under their “White Australia” policy, they were accepting only white Europeans, but couldn’t sustain the economy with the low population growth. They had to open up, promoting multiculturalism. This has led to an increase in immigrants from Asia, such as from China and India. Going back to your question, Japan and India can be complementary to each other: one needs talent, the other has a strong supply of IT workers.
JS: As you have just explained, the economic implications of this depopulation could cause us a shrinking economy. We should perhaps encourage the flow of talent to supplement the stagnant economy with immigrants – but what do you think about the political implications of this declining population in terms of security concerns?
Shin: Let me give you an example from South Korea. This is a big issue for South Korea because it maintains a large military. On the one hand, there is no way to maintain the military’s current size or level due to a shrinking population but on the other hand, I don’t think you can bring immigrants into the military. It’s not like bringing immigrants into a company. Another political implication is the change in the voting landscape as the proportion of older people or senior citizens is really increasing. They tend to be more conservative, in favor of conservative parties. This may not be an issue for Japan because the Liberal Democratic Party (LDP) gets a lot of support from senior citizens anyway, but in South Korea and other countries where there is a regular change of power, this has potentially huge political implications.
JS: Looking at the possible merits of depopulation, some economists would say that of course depopulation has demerits, but it may still have some merits because individual wealth may increase. What is your perspective on this notion?
Shin: Some jobs can be replaced by robots or AI, and then not only may we not need so many people, but there may be less competition for jobs. Still, I think for any country to maintain the scale of its economy you must maintain a certain level of population. It is not only about production but also consumption. If you have a declining population then consumption will decline in tandem, which will negatively impact the economy. Japan has a fairly large population and the market may be good enough to be self-sufficient for now. But should the population become half of what it is today, then it probably may not be able to sustain the current scale of the economy. While overall you don’t want too many people, South Korea and Japan should be concerned about their declining populations.