Proposal to Classify Areas by the Characteristics of their Existing Firms for Better Planning of Regional Industry Policy

Characteristics of local companies, such as the proportion of those which utilize local resources, their transactions, and the ratio of local capital companies and outside-of-prefecture capital companies, may vary significantly by prefecture. Such characteristics are expected to have a big influence on the invigoration of the area. In order to show the direction of the vitalization policy of local governments, we analyzed the characteristics of manufacturing companies in each prefecture using cluster analysis. The result shows that prefectures are classified into four types: 1) outside-of-prefecture capital dominant, 2) utilizing primary products, 3) local capital dominant, and 4) hybrid. The outside-of-prefecture capital dominant type is seen often in the Tohoku region and near the mega cities. Its economy is mainly led by invited companies. On the other hand, the local capital dominant type is seen in the Setouchi and adjacent areas. Many companies in these areas are in healthy financial condition and use traditional regional resources. We applied this analysis method to three regions of Fukushima prefecture (Hama-dori, Naka-dori, and Aizu). Hama-dori and Naka-dori can be classified into the outside-of-prefecture capital dominant type, and Aizu can be classified into the local capital dominant type. This result shows the development possibility of the Aizu area with local resources in the future, and suggests that different vitalization strategies from the Aizu area can be effective in the Hama-dori and Naka-dori areas.