High in human development index, but an aging and declining population continues to be a challenge
Japan has performed well on various social parameters. The UNDP gave Japan an HDI 2014 rating of 0.890, which puts
the country in the 20th position out of the 188 countries assessed. According to CIA – The World Factbook, life
expectancy at birth was 84.74 years in 2015, which is one of the highest in the world. According to the UNDP, the HDI of
OECD countries stood at 0.88 in 2014, which indicates that Japan is above the OECD average and places the country in
the very high human development category. This is a creditable achievement for the country.
Japan’s aging population has become a major concern for the country. Japan’s dependency ratio (over-65 population as
a share of the working-age (15 to 64) population) is one of the highest amongst the OECD nations. One of the reason is
improved healthcare facilities as a result of which life expectancy has increased in the country. The government’s
expenditure on social security is growing, with most of it going into pensions, medical care, nursing, and welfare. The
country’s healthcare expenditure as a percentage of GDP was more than 10.24% in 2014, according to MarketLine.
Japan is one of the most technologically advanced countries in the world, but government funding for
business R&D is low
Japan’s expenditure in R&D is one of the highest among the OECD countries. According to the OECD, Japan’s R&D
spending—which was at around 3.59% of GDP in 2014—is healthy when compared with the OECD average of 2.38% in
the same year. The expenditure on R&D is highly correlated with the economic growth of the country