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Demographic Changes and Economic Growth in Japan



Fluctuations in distribution, size and composition of population over time, are known as demographic changes. Several factors affect these changes , such as;

  1. Birth rates: The size and age configuration a population can  be influenced by fluctuations in the birth rate. Increase in birth rate can results in growth of population, whereas decrease in birth rate can lead  to aging and decline in population.
  • Death rates: The  age structure of the population  and size can also be affected by fluctuations in death rate. Population growth is the outcome of decreasing number of deaths and vice versa.
  • Age structure: Birth and death rates are a cause of change in the ratio of people in various age categories.
  •  Economic factors: Economic elements such as education level, income and employment level are also the transition agents of demographics.
  • Migration: Demographic changes can be the outcomes of migration of people. Emigration causes brain drain, and decrease in population while immigration results in  cultural diversity and increase in population.
  • Social factors: Social factors  are  also responsible for demographic changes. Cultural norms towards family size and  towards marriage can lead to a change in birth rate. Moreover, gender roles and structure of family also result in demographic shifts.

For the anticipation of population trends, policymakers and researchers are concerned with these factors causing demographic shifts.

Economic Growth:

An increase in productive capacity of a country during a year is given the  name of economic growth. GDP is used as a measure of it.

Economic growth is the main driving force for  innovation, Investment, employment and improving living standard of the people. It means it is deeply linked with lives of people.  For the long term benefit of whole  society, sustainable economic growth is required.

Economic growth is contributed by various aspects, containing:

1: Human capital: Elevated economic growth lead by the increase in productivity is gained by skilled and well- educated workforce.

2: Demographic factors: An optimistic age configuration and a growing population can equip an immense consumer base and an enormous labor force lead to improved economic growth.

3: Investment: Boost in productivity and outputs can be lead by the investment in physical means like infrastructure, machinery and equipment.

4: Innovation and technological progress: The reduction in prices, improvement in quality of goods And services, and increase in productivity  directs the expansion of economic growth is gained by the advancement in technology.

5: Natural resources:Access to natural resources by furnishing the inputs crucial for production can stimulate economic growth

6: Political stability and good governance:A conducive environment for asset and development can be created by useful management and stable political circumstances.

7: Trade: Specialization, efficiency and increased competition that can contributes to economic development can be lead by International trade.

8: Macroeconomic stability: A stable economic environment  that facilitates asset and development can be equipped by a sound fiscal policy, stable inflation and low interest rate

9: Entrepreneurship and small business development:.Rising competition and developing jobs by  the development of small businesses and Entrepreneurial workout  can contribute to economic growth.

10: Infrastructure: .Efficient movement of goods and people and the trade lead to a boost in economic growth, can be promoted by the sufficient infrastructure such as transport webs and communication systems .

Demographic change and Economic growth:

Demographic changes are strongly related to economic growth. Demand level in economy, innovation, labour productivity are affected by demographic  changes which in turn lead to economic growth .

Labour force is the critical factor through which demographics affect economic growth . Age and size of population can change the ratio of working force. A large number of working people can enhance productive capacity i.e. economic growth.

High death rate or low birth rate can create a shortage of working force and hence a decline in economic growth is observed. It can also lead to demand changes and through which a change in growth of  economy.

Similarly, education as demographic characteristics affect economic growth as it can build up human capital or  can decrease it through a lack of it . the productive capacity goes to its peak  with the well educated population.

It is clear from above arguments, demographic changes are strongly linked with growth of economy and these are the considerable factors for government and policy makers in order to gain desirable economic growth.

Demographic Changes and Economic Growth in Japan :

Huge demographic shifts have been observed in Japan since  last decades, including overage population, low birth rates and shortage of working  population . These changes have affected the economy to the greater extent


Shortage of workers is the  biggest challenge for Japan, as it is an obstacle to economic  growth by lowering productivity.

Numerous rich countries are standing up to  demographic challenges but Japan is dealing with an extreme version of it. At “unprecedented speed”  the population was aging and declining, said by the  prime minister, in an interview with The Economist, Shinzo Abe.The average woman giving birth to a number of children over a lifetime is the fertility rate and that is 1.4 in Japan. The births are 400,000 times less than the deaths in Japan every year. The highest life expectancy in the world is in Japan “the land of rising sun” which is about 84 years, at the same period.The population in Japan that is older than 65 is more than 28% in comparison with other countries like in India it’s just 6%, in Germany it’s 21% while in America it’s 15%. However, the highest aged population of the world exist in Japan.It is expected in Japan that more than half of babies that born today will live for 100 years.

It’s a good news, of course, of having an increase in life expectancy .Living is a desire of vast majority of people.Yet, new issues are initiated due to a declining and aged population. For every job applicant there are currently 1.6 vacancies , as there is an intense labor deficit in Japan.The percentage of active,  young people to the old and aged retired is rapidly decreasing.Rather than paying into the public funds people are consuming the ever more of their lives through pensions and medical care, that are a part of public funds. There is unsustainable social-security system. Government reckons that from the Japanese current ¥121trn ($1.06trn) to ¥190tr, the social welfare cost will risen by 2040 and 250% of the GDP is public debt.

Huge pension obligations and healthcare costs are the outcome of aging workforce.It has build up a pressure on investment resources and government budgets.

Consumer base is affecting by the Japanese aged population, in addition to the shrinking of work force. The decline in consumer spending is lead by the less spendings, tend by the aged people. Economic growth can be further reduced by the decline in consumer spending, as economic workout is driven by the consumer spending.

To cope  up with the situation, various  policies have been implemented by Japanese government to resolve these demographic issues. These policies focus on  encouraging families to have more  children, participation of women in workforce and a liberalise immigration policy.

Despite these efforts, economy of japan is stagnant. For this slow and stagnant growth of economy, demographic changes are responsible. There is a need of more aggressive policies to bring japan’s economy to the road of economic growth.

Overall, the relationship between demographic changes and economic growth in Japan is complex, and ongoing efforts are needed to ensure that the country can continue to thrive in the face of these challenges.


Towards Re-Globalization: Defining a New Social Contract for the Global Economy

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“As the tides of re-globalization reshape our world, a new social contract emerges, illuminating the path towards a reimagined global economy. Through the embrace of collective cooperation and equitable practices, we can forge a future that transcends borders, empowering individuals and fostering a harmonious global community.”

Underlying every economic system is a social contract, which establishes the norms, values, and beliefs of the people involved. This contract dictates how individuals should behave within the economy, defines their reciprocal obligations, and shapes the way the economy operates. In numerous market economies worldwide, including both advanced and emerging nations, there is a prevailing materialistic social contract that is increasingly failing to address the basic needs of its citizens. Globalization, in its essence, is not inherently positive or negative. It possesses the potential to bring about immense benefits. However, to ensure that the globalization process remains balanced and prevents excessive control of financial institutions over the global economy, we need a world governing body that is accountable to the people of all nations.

To those who support globalization, often linked to the embracing of capitalism in an American fashion, it is seen as a path to progress. They argue that developing countries must embrace globalization in order to experience growth and effectively combat poverty. However, many individuals in the developing world have not witnessed the economic benefits that were promised with globalization. In Africa, the lofty hopes that emerged after gaining independence from colonial rule have, for the most part, gone unrealized. Instead, the continent finds itself descending further into distress, with declining incomes and deteriorating living conditions. Even the hard-fought advancements made in life expectancy over the past few decades have started to erode.

The critics of globalization claim that Western countries are guilty of hypocrisy, and their argument has merit. These countries have pressured impoverished nations to dismantle trade barriers, while simultaneously upholding their own barriers. Consequently, developing countries are unable to export their agricultural goods, leading to a detrimental loss of vital export income. The Western countries, even when not engaging in hypocrisy, have played a significant role in driving the globalization agenda. As a result, they have obtained a disproportionate share of the benefits, often at the expense of developing nations. This was not solely due to the refusal of more advanced industrial countries to open their markets to goods from developing countries, while insisting on open markets for their own goods. These advanced countries also persisted in subsidizing agriculture, creating obstacles for developing nations to compete, while simultaneously demanding that these nations eliminate subsidies on industrial goods.

When it comes to economic globalization, one controversial and almost draconian policy of the international financial system led by the International Monetary Fund  (IMF) is the requirement for developing economies to open up their markets to foreign competition, sometimes prematurely. These countries often feel compelled to comply with IMF demands because the provision of IMF funds is contingent upon swift trade and capital market liberalization. In contrast, developed societies, such as the United States, have historically protected industries considered unable to compete with foreign markets, until those industries became strong enough to thrive in a free market economy.

Perhaps most striking is the perceived hypocrisy of Western countries, who advocate for trade liberalization in the products they export, while simultaneously safeguarding sectors where competition from developing countries could potentially threaten their own economies.

For many years, the voices of the impoverished in Africa and other developing nations have often gone unnoticed in the Western world. Those who toiled in these countries were aware that something was amiss as financial crises became more frequent and the numbers of poor individuals grew. However, they had limited means to alter the rules or exert influence over the international financial institutions that dictated them. Those who held democracy in high regard observed how “conditionality,” the conditions imposed by international lenders in exchange for their aid, eroded national sovereignty.

The issue of governance lies at the core of the problems associated with the IMF and other international economic institutions. The decision-making power is primarily held by the wealthiest industrial countries, as well as by commercial and financial interests within these countries. As a result, the policies of these institutions tend to align with these dominant influences. It is often remarked that these institutions lack representation from the nations they serve, and the management positions are typically selected by major developed nations that are mostly driven by their own specific interests. Traditionally, the head of the IMF has always been a European, while the head of the World Bank is always an American. The selection process for these positions occurs behind closed doors, without any requirement for the head to have any prior experience in the developing world.

Economic theory does not guarantee that every individual will benefit from globalization, but rather suggests that there will be overall positive gains, allowing winners to potentially compensate the losers and still come out ahead. However, conservatives have argued that in order to maintain competitiveness in a globalized world, tax reductions and reductions in welfare state provisions are necessary. In the United States, for example, taxes have become less progressive, with tax cuts mainly benefiting those who benefit from globalization and technological advancements. This has resulted in a situation where countries like the US, and others following their lead, have become wealthy nations but with poor people.

The appeal of capitalist economies is often based on the principle of a material social contract, where people support this economic system because it promises higher living standards and greater economic freedom compared to alternative systems. The underlying assumption is that material prosperity can fulfill human needs. However, in many countries, this economic model has resulted in increasing inequality across various dimensions such as income, wealth, education, health, skills, and social esteem. It has also led to reduced social mobility, growing social divisions, and a widespread sense of disempowerment in response to the uncertainties associated with globalization.

In advanced economies, disparities have increased among different generations, with younger individuals falling behind their older counterparts, as well as between metropolitan and rural areas. These inequalities have eroded social cohesion, leading to reduced trust in government, lower civic engagement, decreased political participation, and a rise in support for populist ideologies. Policies such as corporate tax reductions and decreased welfare provisions have benefited a small portion of the population, who have then utilized their newfound economic power to shape the political process and media discourse to their advantage.

The interactions between successful business leaders, politicians, and journalists have contributed to a cycle of inequality, deregulation, and the gradual dismantling of social safety nets. This has been perpetuated through notions of “trickle-down prosperity” and the perception that there is a trade-off between equity and efficiency, suggesting that greater material prosperity can only be achieved at the cost of less material equality. As a result, an increasing portion of GDP growth has been channeled towards the top 1% of the income distribution.

The issue at hand is that economic globalization has progressed at a faster rate than the globalization of politics and mindsets. While our interdependence has grown, necessitating collective action, we lack the proper institutional frameworks to address these challenges in an efficient and democratic manner.

The main obstacle to successful globalization reforms lies not only within the institutional structures but also in the mindsets of key decision-makers. It is crucial to prioritize concerns such as environmental sustainability, ensuring the participation of marginalized communities in decision-making processes, and promoting democratic principles and fair trade. However, the challenge arises from the fact that these institutions often reflect the priorities and mindsets of those in positions of power. Typically, central bank governors are more focused on inflation statistics rather than poverty statistics, while trade ministers prioritize export numbers over pollution indices. This misalignment of priorities hinders efforts to fully realize the potential benefits of globalization.

Establishing a new social contract that is grounded in sustainable principles can help reconnect economic activity with the fulfillment of essential human needs. This redefined contract requires a fresh understanding of the responsibilities of businesses, households, and governments. It is evident that globalization can undergo change, but the crucial question is whether this change will be driven by a crisis or the result of deliberate, democratic deliberations. If change is crisis-driven, there is a risk of generating a negative backlash against globalization or haphazardly reshaping it, which could lead to potential problems in the future. On the other hand, taking control of the process offers a potential avenue to reshape globalization, enabling it to truly live up to its potential and promise of improving living standards for all individuals in the world.

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Why BRICS matters for Pakistan



BRICS represents Brazil, Russia, India, China and South Africa, encompassing 41% of the global population and 24% of the global GDP. The 15th BRICS Summit being held from August 22 to 24 in Johannesburg, South Africa. About 40 countries participated in this year’s BRICS summit where some key decisions were made adding six new members namely Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. The new membership will be effective from January 1, 2024.

In a historic first, Pakistan’s participation in the BRICS’s seminar, ahead of the summit, was encouraged by Beijing, which wants to integrate Pakistan into the alliance. However, Pakistan surprised the international community for not being the part of BRICS’s summit in Johannesburg. By joining BRICS, Pakistan could potentially benefit in multiple ways.

First, BRICS is the emerging power Centre of the world. Joining BRICS could open up economic opportunities for Pakistan. The country could engage in trade with other member states, benefiting from their growing economies. Pakistan’s exports could find new markets within the framework of BRICS. Muhammad Karim Ahmed analysed, “These BRICS countries are emerging economies and they have improved their country, their economic conditions, manufacturing, and found markets for themselves through joining the bloc”. Certainly, the economic prosperity will minimize unemployment, poverty and illiteracy in Pakistan.

Moreover, developing nations are dissatisfied with the stringent conditions imposed by western-dominated financial institutions like International Monetary Fund (IMF). BRICS has also created two new financial institutions, the New Development Bank (NDB), also known as the BRICS Bank and the Contingent Reserve Arrangement (CRA). CRA, which has a capital of more than USD 100 billion, can help member states withstand any short-term balance of payment crises. Pakistan if allowed in BRICS, can easily access the USD 100 billion CRA as well as the comparatively lenient loan conditions of NDB, without improving the functioning of the Pakistani state.

Second, BRICS membership could boost Pakistan’s geopolitical leverage by providing a platform to collaborate with other emerging powers on global issues. Pakistan has always been blackmailed by its traditional allies. Becoming a BRICS member could offer Pakistan an opportunity to diversify its diplomatic relationships. As a BRICS member, Pakistan could potentially demand for reforms in global governance structure. This could lead to a more equitable international order.

Third, some political analysts suspected that Pakistan’s inclusion in BRICS may generate disturbances with India, leading to a defunct group. However, it appears that India’s opposition to Pakistan joining the bloc is dying down. Recently, Indian Prime Minister Modi has supported BRICS expansion. South African president also welcomed Modi’s remarks, who remarked, “delighted to hear India supporting expansion of the BRICS”. Senator Mushahid Hussain Syed told Arab News that “First of all, Pakistan should apply for membership in BRICS, where the lead role is with China and where India is the weakest link due to its proclivity to be part of the West’s new Cold War against Beijing.” So, BRICS membership will certainly increase Pakistan’s diplomatic leverage with regard to India in the region.

Fourth, BRICS membership could also alleviate Pakistan stature in other regions of the world. For example, in East Asia there’s Regional Comprehensive Economic Partnership (RCEP), again China is in the lead there, but Pakistan isn’t ‘Looking East’! Why? Somewhat inexplicable, not seizing opportunities when these arise.

Fifth, BRICS membership will also introduce correctness in Pakistan’s foreign policy objectives. International community brands Pakistan as a terror sponsor state. Through joining BRICS, Pakistan could divert its security-oriented approach in foreign policy in line with BRICS manifesto. Even India used BRICS forum in Xiamen to condemn Pakistan-based militant groups like Lashkari Tayyaba. So, Pakistan could also use BRICS forum to project its soft image in the world.  

In the past, Pakistan has suffered immensely by aligning itself with one group against other.  There appear clear indications that Russia and China have shown clear intent to use BRICS to counter G-7, the grouping of powerful wealthy western nations. By orienting its foreign policy away from block politics, Pakistan could potentially get more economic benefits.

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The Concept of Sustainability for the World’s Cotton Industry Amidst Geopolitical Challenges

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The textile industry is one of the industries that contributes to the largest air pollution in the world. Responsible for 10% of global carbon emissions and 20% of global water waste, the fast-fashion phenomenon also contributes to this problem. If this is allowed to continue, the effects of global warming will get worse. The concept of sustainability itself can also be a polemic for the textile industry because they are experiencing global fluctuations caused by high inflation, weakening demands, and large inventory amounts.However, high global warming will also backfire on them and weaken this industry. Cotton, which is the raw material for making textile fabrics, deeply requires water and fertile soil. With the upcoming heatwaves that will occur, many dry lands will cause difficulties in world cotton production. The United States, as one of the largest cotton producers in the world, is starting to worry about this issue. Moreover, the energy crisis adds further complexity to this problem.

The textile industry itself is trying to revive itself due to many geopolitical problems such as the trade war between China and the United States, the post-Covid-19 situation, and the war between Russia and Ukraine. Even though the Government has been aggressive in advancing green transformation, many customers’ behavior places their spending on assets, automotive, housing, and so on. The problem of inventory buildup is due to textile production continuing to run and increasing but customer enthusiasm is always decreasing, coupled with the thrifting phenomenon which is currently rising.

To focus on green sustainability is a long homework for the textile industry. Although the textile business remains slightly positive in general in the first half of 2023, there are still fears of a global recession as the Federal Bank continues to raise interest rates. However, concerns about the issue of inventory buildup have begun to be resolved. In Cotton Day 2023 held by the United States non-profit organization Cotton Council International in Jakarta, Indonesia, one of the speakers, namely Bruce Atherley (Executive Director of CCI), stated that textile business actors have begun to be careful and control the turnover of textile commodity inventories, and this has resulted in decline in world cotton demand. However, he also stated that this effort could be a good thing and there is optimism about the stability of the textile industry ecosystem. With inventory being depleted across the supply chain, it can be expected that the cotton and textile industry will return to normal and positive demand.

Referring to sustainability and green transformation programs, many textile industry business players have made a commitment to only use sustainably grown cotton by 2025. They have also made a commitment to carbon reduction. This is contained in the regulations of the European Union and the United States, Investment Groups, as well as Focus Media and Non-Governmental Organizations. CCI also stated that the trust protocol will drive continuous improvement in key sustainability metrics by leveraging quantifiable data and variable data while delivering unparalleled visibility into supply chains for brands and retail members.

The concept of circularity must also be considered in green transformation efforts in the world textile industry. Circularity is the concept of minimizing waste and reusing resources. The circular model aims to create production and consumption that can be recycled (closed loop). Circularity is the solution for sustainability. Circular strategies include eco-friendly recycling, easy-to-reset designs, products as a service (PaaS), and increased producer responsibility. The benefits we will get from this concept are reducing the amount of waste, maximizing resource conversion, increasing investment, reducing carbon emissions, increasing economic opportunities, and improving brand reputation. However, this concept can also give rise to challenges such as technological limitations in developing recycling technology, supply chain complexity in traceability and transparency, complicated regulatory framework which includes supporting policies and regulations, and unpredictable consumer behavior. Hopefully more textile and cotton commodity industry players will pay more attention to the importance of the concept of sustainability in their production processes so that carbon emissions and pollution can be reduced which then prevent the worsening condition of global warming.

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