## (Challenges Facing Regional Economies: Population and Industrial Accumulation)

Analysis of the relationship between population density and labour productivity (in the manufacturing industries) suggests that in general, the higher the population density the higher the labour productivity, and that in order to maintain and increase labour productivity, a certain level of accumulated population is required (Figure 25). Given the industrial structure in Japan, there is great potential for added value within the manufacturing industries. The manufacturing capacity is supported by accumulated population and division of labour, consequently Japan must continue to monitor population decreases in the future and deal with the issues of concentration of industrial operations in the regions.

When looking at the actual ongoing changes in population concentration by the shift in population density in municipalities over the past 20 years since 1980, the population density of cities, towns, and villages grew even larger, while the population density of municipalities with lower rates declined even further (Figure 26). By category of square measure where the population density was falling, the population density of the 8th 10 mounds of category started to decline in the 1990s. Amid the slowdown in total population growth, those municipalities with declining population density are increasing. Given the high possibility of total population decline in the future, further decreases in those areas with lower population density may be unavoidable.

## (Outlook for Regional Economies Supported by Industrial Accumulation)

One approach that could be taken to alleviate the effect of falling population on local regions is to take advantage of the accumulation of population and industry in the central cities. From the viewpoint of effective use of social infrastructure, it is useful to have a certain stable group in the residential areas.

Building a rich local community should be based on the development of an industrial infrastructure with a high added-value creative capability. When strengthening industrial competition, it is useful to build up the industrial infrastructure in the core cities of local regions and use them as regional economic centers. There are also regions that can make excellent use of local resources, such as indigenous agricultural products or tourist sites, and offer added value within those areas. Each region is required to have its own future vision that will help it to achieve a self-reliant regional economy, based on their particular traditions and uniqueness. They need to select the strategically important industry in their region, implement a comprehensive approach to the promotion of industry and support of new businesses, and secure and develop human resources. In particular, the municipal government and public employment agency must cooperate in order to secure human resources willing and capable of supporting regional industries. It is also important to enhance the placement function of the public employment agency, through the promotion of wide-ranging employment placements.

## (Outlook for the Elderly and Local Communities)

There is a large population of baby boomers (those between 51 and 53 years as of 2000) in the metropolitan cities, especially in the suburbs (Figure 27). It was common among those who had moved to the large cities during the period of rapid economic growth to buy a house in neighboring towns within commuting distance. This enabled them to work in the large cities after they had married and had had children. The retirement process for this group will be starting soon. These areas, which developed as the dormitory towns of large cities, have not been established as self-sufficient local communities. This gives rise to concern over how these retirees will become assimilated into the local community, and in turn how the local community will adapt to them.