Study of a Self-supporting Regional Economic System

2009 - 2010

Achievement of regional economic autonomy in an open system requires abilities to utilize regional resources (comparative advantage), to attract funds into the region (export power), and to prevent the outflow of funds from the region (circulatory capacity). Furthermore, regional economic innovation is required for sustainable autonomy. Adopting this perspective, this project will conduct research focusing on the following three areas:

• (1) Analysis of regional agglomeration capable of achieving autonomy: The question of how to obtain funds from outside the region will be analyzed by considering the relation between the role of supply-side inputs and technological progress. The externalities of the following three major factors which can facilitate agglomeration will be quantitatively analyzed by using industry statistics and other microdata: "leakage of knowledge," "associative effects" and "sharing of factors;"
• (2) Analysis of necessary scale in achieving regional autonomy: The NEG model will be used to examine causal factors in regional disparity undertaken separately for market and supply potential. Furthermore, taking into consideration future possibilities for the adoption of a "doshusei" or regional administrative system, the potential impact of regional integration will be estimated; and
• (3) Endogenous resolution of regional disparities: Disparities among regions should be rectified through endogenous resolution based on exchanges of differences derived from comparative advantage between major metropolitan areas and outlying regions rather than relying on the implementation of policies that are exogenous to the region. One source of comparative advantage for the regions would be environmental assets. The project will use the NEG model to undertake simulation analysis and to identify relevant policy implications.

January 20, 2009 - March 31, 2011