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How the Declining Population Affected GDP of Germany and Japan

Many developed countries face declining birth rates with aging populations, causing a massive workforce shortage and straining economic issues. This paper will compare and contrast Germany and Japan’s shared problem in a declining population crisis. The two countries had long feudal hierarchies, stressed obedience, went to war under dictators, and ultimately created extreme nationalism. Neither country embraced democracy until after the Allies occupied and imposed it on them after WWII. Germany and Japan are both faced with declining birth rates and an aging population crisis leading to serious labor market issues. However, their approach to solutions are quite different. This paper will examine some of the variable factors that may have influenced each country, which will then answer how immigration policies have affected the economic climate, as measured by the Gross Domestic Product (GDP) of Germany and Japan.

Social and Economic Factors

The social dynamic of each country has had a significant impact on their respective economies. Cultural traditions and the embracement of the diversity of foreign nationalities challenges both nation’s identity. Simultaneously, several economic factors have also greatly influenced economic development correlating with the decline of the population. There have been many social developments that have positively impacted directly by reducing the birth rate following the baby boom post-WWII.

Analyzing Germany and Japan’s population trends, they are identical in the total fertility rate (TFR) per woman. Historically, the economic and social landscape reveals several factors contributing to the general population’s decline. These include declining birth rates, increasing life expectancy, and the acceptance of immigrants and refugees. In 2005, Germany’s population began to decrease up to 0.2 percent annually. With a TFR between 1.3 and 1.4 children per woman from 2005 to 2017, the country is significantly below the replacement rate fertility of 2.1 children per woman. Between 1950-1960 post-war Germany saw an increased baby boom; like other countries, the TFR peaked between 1960-1965 at the TFR of 2.66. The rate later declined from 1970 through the 1990s and became fixed in the early 2000s. (Evanick, 2017)

Since then, the overall population has declined to coincide with life expectancy, increased health care advances, and food security demonstrates Germany’s steady economic development. This decline has raised concerns about care for the elderly and the promotion of family policy to increase birth rates. On the other hand, acceptance of immigrants and refugees have also contributed to the offsetting of Germany’s declining population.

In contrast to Japan, Germany has still demonstrated consistent economic growth in the wake of declining fertility rates. The Population Bulletin by the United Nations has shown an increase in the gross domestic product (GDP) over the last forty years while this has also correlated with a declining fertility rate. Due to the population decline, the German government’s current concerns have been the increasing cost of elderly care and social security pensions. Germany provides an extensive health care system that includes long term care. The system currently operates on a pay-as-you-go funding structure. As the percentage of elderly citizens increases, the burden on tax structure also increases.

Japan, unlike Germany and resembling a similar pattern to the United States, a smaller baby boom occurred in the 1970s, with TFR reaching 2.5 in 1974. Since 2006, Japan’s population has declined annually. With low TFR combined with the world’s highest life expectancy, Japan now has its oldest population. (Evanick, 2017)

Approaches in Policies and Migration

Germany has made great efforts to not repeat the Nazi government’s policies to increase birth rates. Their new approach is focused on enhancing parental work leave, child care provisions, and earning substitutions. While these policies have encouraged fathers to take family leave, easing financial stresses on families, the implemented systems have had minimal impact on the total fertility rate. (Ostner, 2010)

Germany has experienced significant immigration since the 1950s. About 20 percent of the population has a migrant background, primarily from Europe and the Mediterranean regions. Immigration and acceptance of immigrants have been on Germany’s political agenda since the 1960s. “In 2000, Germany began enabling dual citizenship for foreign nationals born in Germany.” (Evanick, 2017)

Although there is debate over their motivation, German political parties promote varying support levels for immigration, with widespread support for integrating migrants into German society. As Chancellor of Germany, Angela Merkel has made Germany’s open asylum policy her personal political project arguing that her country is strong enough to help all those in need.

Massive government-funded integration classes have been available to help immigrants learn the German language and the legal system. Despite efforts at integration, poverty, and unemployment rates are highest among populations with a migrant background. Increasing immigration numbers have not alleviated a declining population in Germany. In the period from 2006 to 2017, Germany’s population declined annually while maintaining consistent GDP growth. Though numerous factors drive GDP growth, Germany’s migrant population helped stimulate strong GDP growth in the country during the period while partially offsetting population decline. (Evanick, 2017)

The issue of declining population is multidimensional for Japan, and the solutions are incredibly complex. The government rejected immigration as a solution to replenish the declining population. Japan’s official policy has focused on looking at technology, specifically humanoid robots, on addressing the declining population problem. (Milly, 2014) Japan differs from Germany in its approach to international immigration. Historically, Japan is a closed society with restrictive immigration policies. Japan’s homogeneous ethnicity is nearly 98.5 percent. It clearly reflects the restrictive immigration policies, with the majority of immigration being employment-based immigration in only limited specialized employment sectors. The topic of international immigration did not receive debate at the national level until the early 2000s. The ongoing discussion has yet to garner significant legislative changes; however, Japan is now considering broadening immigration policy to offset population decline. (Milly, 2014)

Conclusion

From a globalization perspective, developed countries with a declining birth rate and an increasingly aging population, welcoming immigrants are rational solutions to address the gap in labor markets. Although Germany has embraced international migration, they have rising extreme nationalism and the possibility of history repeating if not navigated constructively. Identity is a historical, cultural, and emotionally charged topic that all countries contend with.

The gross domestic product is only one indicator of a country’s economic strength, their immigration policies have been the most impactful component on the overall economic climate. Although the declining population has affected overall gross domestic product, Germany has been able to successfully overcome the economic stress over Japan by being more accepting of foriegn migration.

Work Cited

Andrea Schmelz, “Immigration and Integration Policies and Practices in Germany,” in Immigration Worldwide: Policies, Practices, and Trends, ed. Uma A. Segal, Doreen Elliott, and Nazneen S. Mayadas (New York: Oxford University Press, 2010), 63 –78.

CIA, World Factbook, accessed October 23, 2017, https://www.cia.gov/library/publications/the-world-factbook

Deborah J. Milly, New Policies for New Residents: Immigrants, Advocacy, and Governance in Japan and Beyond (Ithaca: Cornell University Press, 2014)

Evaniuck, Jayson. “Aging Populations: A Comparison between Japan and Germany.” Association for Asian Studies, 20 Apr. 2020, www.asianstudies.org/publications/eaa/archives/aging-populations-a-comparison-betwee n-japan-and-germany/.

Ilona Ostner, “Farewell to the Family as We Know It: Family Policy Change in Germany,” German Policy Studies 6, no. 1 (2010): 211–244.

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