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Direct and non‐linear innovation effects of demographic shifts

Kohei Suzuki, Assistant Professor at Institute of Public Administration, and two other authors researched the topic of innovation by governments in response to expected population decline.

Kohei Suzuki, Hyesong Ha Claudia N. Avellaneda
03 May 2020

This study researches how anticipated demographic pressures prompt public organizations to innovate. They do so by arguing that innovation is more visible in municipalities facing greater anticipated demographic decline. However, they also argue for a non‐linear relationship in which too strong and/or too weak expected demographic declines lead to less visible innovation (inverted U‐shape effect). These propositions were tested with a data set of Japanese municipalities and employing a dose–response model. Findings show that anticipated demographic declines directly boost innovation visibility. However, too strong and/or too weak unexpected demographic declines make innovation less visible.

According to the World Population Prospect 2019 (United Nations: Department of Economic and Social Affairs Population Division, 2019, p. 12), a growing number of countries are experiencing demographic shifts due to decreasing populations. Between 2019 and 2050, populations are projected to decrease 1% or more in 55 countries or areas, of which 26 may experience at least a 10% reduction. The report highlights that this drop is mainly caused by persistent low fertility levels, which in some areas are reinforced by high rates of emigration due to political or civil conflict and extreme underdeveloped conditions. This shrinking population is compounded by another demographic shift. According to the World Population Prospect 2019, life expectancy is increasing; consequently, the world population is aging.

In response to these trends, governments have started taking action to cope with decreased labour forces and higher demands from senior citizens. Among these actions are adopting innovative administrative structures, governance arrangements, and service provisions. The survival of local governments rests on addressing these demographic pressures. Consequently, innovation should be more noticeable in localities facing greater demographic pressures.

To read the full research, click here. 

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