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Messages from "Economic Trend", February 2009

A Proposal for Urbanization-Conscious Policy

Masahiro SAKANE
Vice Chairman of the Board of Councillors, Nippon Keidanren
Chairman of the Board, KOMATSU Ltd.

While it's very difficult to predict the future, I believe ongoing population growth and urbanization are definite trends into the future.

When population grows and consequent urbanization progresses, demand for electricity and construction and so forth will increase, thereby pushing up the demand for coal, copper and iron. We are already tackling the surmounting task of global warming on the level of governments. In addition, the problems of resources, energy and water are also acute for the global community at a faster-than-projected pace.

Today, industrialized countries are 70 to 90% urbanized, albeit, with some differences in the definition of urbanization. While developing countries are less than 50% urbanized, some governments have advocated their clear goals for 70% or higher. This is because the rate of urbanization represents social and economic efficiencies of given countries.

In Japan, I don't remember whether or not we as a nation have seriously discussed urbanization. While we have a variety of tasks, including privatization of the postal service, discussions on road administration and medical systems, each of them is being treated separately. Rather we need first and ultimately to re-design an ideal image of Japan as a nation. Otherwise, considering the fact that Japan is urbanized at merely 66%, we won't be able to make good progress in those tasks.

While debates on the regional government system are underway, we need to set a specific goal of urbanization ratio, for example, whether 80% is an ideal model or 66% is a good percentage. Only when we promote the privatization of the postal service, road administration and medical system reforms and so forth, under such a premise, we should be able to realize a well planned development of Japan as a country which offers not only administrative structure but also a realistic environment for comfortable living.

The financial turmoil has given a detrimental impact on world economies simultaneously since September last year, overshadowing the global community with a sense of stagnation. When the present situation of panic is over and world economies are heading for recovery, I believe its pace will largely depend on the policies and implementation capabilities of governments.

Looking ahead, I believe that governments must promote a steady investment in their real economies and never repeat excessive financial investment. I would also like to see the Japanese government demonstrate leadership, before other governments, in achieving self-supported recovery. To this end, I would like to propose the need for policies which are developed after considering urbanization ratios.


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