Impacts of New Agro-Based Food Industry Cluster with Digital Technology on Regional Economies Under Declining Population in Japan

Demographic changes such as a decline in the labor force and increase in the elderly population in Japan since 2005 have not been uniform across regions. These population dynamics are issues of concern because such dynamics restrain regional industries and impede the regrowth of regional economies in Japan. Based on the degree of depopulation, we divide the time span from 2005 to 2030 into periods of mild (2005–2015) and rapid (2015–2030) depopulation. This demographic change has a significant impact on primary and food/beverage industries. The domestic supply of Japan’s primary and food/beverage industries declined between 2005 and 2015 during the period of mild depopulation. In this chapter, we evaluate the impacts of the decline in labor force, domestic market, and total-factor productivity (TFP) on the primary and food/beverage industries and regional and international economies during mild and rapid depopulation periods. As a countermeasure to the rapid decline in population and TFP in Japan’s declining population society in 2015–2030, the policies of demand-side consumption tax reduction and supply-side new agro-based food industry clusters with digital technology are proposed, and their economic effects are empirically analyzed using the four-region computable general equilibrium (4SCGE) model. We found that the long-term sustainable economic development of primary and food/beverage industries and regional economies under rapid depopulation requires a demand-side consumption tax reduction policy to stimulate short-term domestic demand as well as a supply-side new agro-based food industry cluster policy under the digital technology transformation (DX) to expand long-term domestic production.