Japan’s economic woes and xenophobia

Japan’s economic woes and xenophobia

The general consensus amongst economists is that opening one’s doors to foreigners will stimulate a country’s economic growth. Governments can do so either by introducing foreign direct investment or easing their immigration laws. By opening up their economy to foreigners and global corporations, countries can increase their population size, standards of living and output per capita. Additionally, they can also benefit from the creation of jobs, as well as the exchange of technology and expertise.

However, while economic growth is seen as favourable, a rapid development can present adverse consequences and backfire on the government’s goals. This is because the influx of foreigners into the country can put a strain on its resources, for example, housing and public transport. Crime rates may also increase. Consequently, this impinges on the quality of life of existing residents, leading to resentment  towards migrants. In some cases this may manifest into xenophobia. Furthermore, cultural difference may enhance such animosity. Perversely, the xenophobia could even hamper the very economic benefits that migration can produce.

Japan is a leading example. This mature economy is highly racialy homogeneous, in fact, 98.5% of the population is ethnicly Japanese. The nation has been experiencing low birth rates and the effects of an ageing population. The combined effect has been a consecutive decline in population since 2006 and it is set to contract by 30 percent in 2060. This poses a pressing dilemma for the government – should Japan ease up on its trade and immigration policies or maintain its status quo?

Recently, when Shinzo Abe, Japan’s Prime Minister, made headlines for his free trade plans, it was met with oppositions. This is of course understandable. Japan is renowned for being fiercely protective of its agricultural industry; permitting trade may well cause the industry to lose out to foreign competition. However, reservations about the free trade proposal have to take a backseat while negotiations are currently underway. While we should all laud Mr. Abe’s efforts to open its economy to foreign trade, can Japan succeed in overcoming its xenophobia?

The issue of xenophobia in Japan is dire and grim. A minister was forced to step down when it was revealed that he had accepted political donations from a foreigner in 2011. The media is also held accountable for fanning xenophobic sentiments. An article has reported that the media attention on crimes committed by foreigners had generally heightened distrust towards foreigners. Additionally, a glimpse into Japan’s work culture where the keiretsu system exists can prove a challenge for foreign organisations to venture into. The keiretsu system consists of a group of close-knitted organisations who band together to protect their interests and gain competitive advantage over their rivals. As such, this might deter foreign firms from foraying into the Japanese market.

Moreover, I believe that without loosening its immigration policy, Japan’s efforts to permit foreign trade is a mere gesture. Currently skilled foreign workers are required to pass the de facto language exam in order to work in Japan. Such rigid policy discourages foreigners from working in Japan and can be counter-productive.

In retrospect, the fact that Mr. Abe has proposed free trade despite nation-wide dissent has demostrated that the Japanese government is aware of the prevailing issue of its population, as well as the possible consequences that may arise in the long-run. However, I believe that Japan’s deeply-ingrained attitude towards foreigners can pose a significant barrier to the government’s plans for economic growth and may instead agitate anti-immigrant sentiments if the government mishandles the issue.



Better late than never: Give Japan’s new leader the benefit of the doubt on free trade. (2013, March 23). The Economist. Retrieved from http://www.economist.com/

Cai, C. (2011, March 11). Xenophobia a costly legacy for Japan. Global Times. Retrieved from http://www.globaltimes.cn/

Japan’s population logs record drop. (2013, January 2). CBC News. Retrieved from http://www.cbc.ca/

Kakuchi, S. (2007, April 30). Labour-Japan: Xenophobia may hamper economic growth. Inter Press Service News Agency. Retrieved from http://www.ipsnews.net

The World Factbook: Japan. (2013). In Central Intelligence Agency. Retrieved March 30, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html