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Can the Tokyo Olympics Help Fix Japan?

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By Scott Seaman

There is much talk about the 2020 Summer Olympics providing momentum behind efforts to generate growth not only in Tokyo as the host city, but throughout Japan. And many people hope that the Olympics will buttress Prime Minister Shinzo Abe’s ambitious plans to lift Japan’s economy out of two decades of doldrums using a cocktail of monetary easing, fiscal stimulus, and structural reform initiatives collectively known as “Abenomics.” Abe himself has highlighted the economic benefits of the Olympics by including some infrastructure spending for it in the five trillion yen ($50 billion) package of offsets the government plans to roll out to soften the contractionary impact of a consumption tax hike next spring.

But plenty of people also question whether the Olympics will end up being a net positive, referencing the history of economic booms in host countries that preceded the Olympics and busts that followed—including in the case of the 1998 Winter Olympics in Nagano. Japan’s ongoing struggle to get a handle on its huge and growing public debt adds to the salience of these cautionary tales. And the voices of Olympic skeptics are joined by others arguing that the games should be used not simply as an opportunity to build up Tokyo over the next seven years, but as a chance to transform the games into a vision of what Japan wants to be in the future and by doing so, produce benefits long after the athletes return home.

Demographic challenges

One way to help keep spending on the Olympics under control and generate novel approaches to cooperation that pay long-term dividends would be to build the games around a theme of addressing Japan’s demographic challenges. This would involve placing individuals in prominent leadership roles related to the games from groups that—given the country’s aging and shrinking population—must play a larger role in Japanese society, politics, and business. The key actors here would be the elderly, women and, potentially much more problematic, permanent foreign residents and citizens with non-Japanese ethnic backgrounds.

Japanese have long known that a critical factor in their country’s social and economic well-being in the future is the degree to which older people and women participate in the workforce. Abe’s government has made promoting employment opportunities for members of both groups an important component of its Growth Strategy and efforts to cope with ballooning social welfare costs. The games offer an excellent chance to put older people and women in high-profile positions responsible for Olympics-focused activities in the private sector, non-profits, and government. Though much of the formal leadership structure for the games is already in place, Japan has seven years to add more older people and women to that and many other facets of the organizing process.

Putting permanent foreign residents and Japanese citizens with non-Japanese ethnic backgrounds into the Olympics organizing mix would prove more challenging, but could create just as many long-term benefits. Plans to enhance foreign-language skills and cultural sensitivity among Japanese in Tokyo and elsewhere to help make the Olympics more comfortable for both hosts and visitors are important. But asking permanent residents and citizens who speak foreign languages and possess unique cultural knowledge because of their non-Japanese ethnic backgrounds to help lead hosting efforts would provide even more bang for the buck. And such an initiative would undoubtedly promote deeper and expanded discussions on badly needed immigration policy reform.

Leverage the opportunity

In my experience, the greatest source of skepticism among foreign investors and businesspeople in Japan’s ability to return to better economic times and stay there—even assuming that Abenomics is generally successful—is doubt about Japan’s ability to overcome its demographic problems. Devising solutions to these problems requires cultivating and more fully utilizing the talents and energies of Japan’s elderly, women, and groups with ethnic backgrounds that offer expertise and experience the rest of the population lacks.

If Japan wants to make both domestic and foreign investors more optimistic about the country’s future, it must work harder to convince them that it is committed to making the most of what people living there can offer as well as bringing in more people from the outside who offer other assets. To strengthen confidence inside and outside the country in the notion that “Japan is back,” Tokyo should make its hosting of the Olympics an exercise not only in building cutting-edge physical capital, but new, innovative human capital as well.

Scott Seaman is an Asia Analyst at Eurasia Group.