The Economic and Social Research Institute published "Economic Analysis No. 210 (Special Planning Issue) - Feature: Future Prospects Using New Long-term Projection Models" in July 2025, a collection of papers on the development and application of new models for analyzing ultra-long-term future prospects of the Japanese economy.
This issue features the results of new model development that enables ultra-long-term economic analysis, moving from conventional short- and medium-term analysis-focused models to address long-term challenges facing the Japanese economy including population decline, technological innovation, and climate change.
Miho Takizawa's paper "Imbalance Between Intangible Asset Investment and Human Capital Formation" identifies an imbalance between expanding R&D and ICT investments and declining corporate education and training expenditures in the Japanese economy. Since human capital has complementary relationships with other capital, its strategic investment is essential for productivity improvement, leading to recommendations for ensuring continuity of educational support and redesigning corporate incentives.
The paper highlights critical insights:
- Growing disconnect between technological investments and human capital development
- Productivity implications of inadequate training and education investments
- Need for complementary investment strategies across different types of capital
- Policy recommendations for addressing investment imbalances
The research emphasizes that sustainable economic growth requires coordinated investments in both technological capabilities and human capital development. Without adequate investment in education and training, firms cannot fully realize the benefits of their technological investments, creating a constraint on Japan's long-term growth potential.