Regional Revitalization and Japan's Future

KONDO Keisuke
Fellow, RIETI

Japan's government has kicked into gear a regional revitalization strategy since the launching of a revitalization headquarters for cities, people, and creating employment in 2014. Local governments have also started to deal seriously with local revitalization (Note 1). Based on my personal impressions after taking part in a range of RIETI seminars and conducting research in Japan and abroad, this column considers how regional revitalization policies will carve out Japan's future.

Regional revitalization strategy will determine Japan's future

This statement is no exaggeration. A variety of regional revitalization policies that the national and local governments are gradually undertaking in earnest could have an extremely significant influence on Japan decades from now. On the grounds that the policies that we actually implement going forward will have such a major impact, we all should be part of the discussion, and our opinions should be included in the policy-making process.

Think globally, act globally

A major part of the regional revitalization debate is how to encourage young people to stay in rural areas. I agree with the idea of making rural areas attractive enough to draw young people there. On the other hand, sometimes the discussion goes so far as to ask how to keep young people in their rural communities and prevent them from leaving. I fear that this kind of regional revitalization might deprive young people of learning opportunities. We must not block young people from the chance to learn in the outside world just because it means that they would leave the rural areas.

Young people are our future, and, as such, I want them to have another look at our home country and their hometowns by thinking and acting at the global level. Perhaps going into unknown lands and undergoing a variety of experiences will allow them for the first time to understand how wonderful their hometowns are. Rather than just keeping the young generation at home, encouraging them to have new experiences first hand by going out into the world would help shape Japan's future.

Toward global success from both urban and rural areas

Japanese scientists have won Nobel Prizes in recent years, which gives hope for a prosperous future for Japan. It is also remarkable that some of them were educated at regional universities. We need to realize that both urban and rural areas are potential fields where we can be active globally.

The discussion paper that I wrote recently with RIETI Faculty Fellow Nobuaki Hamaguchi provides an important clue to regional revitalization policies (Hamaguchi and Kondo, 2015; RIETI DP 15-E-108). Currently, we live in so-called "a brain power society," where knowledge creation--the ability to come up with new inventions, business ideas, and designs--is taking on an increasingly important role. In the discussion paper, we conducted an empirical analysis on what are the characteristics of the locations where high-quality innovation was taking place by focusing on the quality of patented technology inventions. The results of our analysis showed that the greater the migration flows of university graduates in a region, the higher the quality of the innovation from that region.

The active metabolism of knowledge, which is induced by interregional migration of knowledge workers, plays an important role in high-quality inventions, and considering how a region absorbs fresh knowledge from the outside and converts them into existing knowledge will be important in making regional policy going forward. It would be increasingly necessary for Japan, a country facing population decline, to build a flexible system where people can migrate easily both ways, from urban to rural areas and vice versa.

Recognizing the importance of evidence in the policy-making process

RIETI publishes research outcomes and opinions of researchers from Japan and abroad, reflecting our philosophy of contributing to evidence-based policy. In addition to subjective information such as experience and intuition, we put more value on objective information based on experiments and data analysis, and such trend is growing more prominent around the world. However, a majority of rural areas face the problem of an insufficient environment to conduct statistical analysis of data that are directly linked to those areas. As a consequence, policies are formulated such that even their effectiveness remains uncertain.

How should such problem be resolved going forward? I believe that we should be promoting the concept of academic social responsibility (ASR). Corporate social responsibility (CSR) is already well-established in society today. Even for-profit businesses are willingly pursuing social initiatives, and it is also expected that CSR activities bring about further benefits to their businesses. Surely, creating this kind of positive feedback loop between academic research and policy-making is an important aspect.

I believe that the ultimate goal of economics as a social science is to build a foundation for a happier and more prosperous socioeconomic system by solving society's problems. Our society is still plagued by numerous problems that need to be solved. I hope that a large number of researchers will follow the ASR concept to work closely with real communities to contribute to evidence formation.

Shaping Japan's future: One for all and all for one

We now live in the age of globalization, and global competitiveness is required to achieve long-term economic growth. Thus, we can no longer discuss socioeconomic issues only in the domestic context, and we need to rethink about regional revitalization policies from the perspective of pioneering Japan's future in the world. Some of the global issues go beyond the realm of each local government, and thus, the national government needs to play a central part in a regional revitalization strategy.

Japan is facing a new turning point in demographic transition, which no country has ever experienced before. Unless the whole nation gets involved in shaping Japan's future, we will be unable to solve socioeconomic issues arising from a low birth rate, population aging, and population decline. More than a few scenarios for Japan's future are likely to be discussed under the current institutions. However, the problem is whether it's possible to maintain them under the current Japanese economic situation. I sense that it is time for Japan to overcome the problems with the current institutions and design our future based on new institutions. I expect that a regional revitalization strategy will open the debate on new institutions for Japan's future.

As suggested by the research conducted by the late Masahiko Aoki, the first president of RIETI, if an institution is an equilibrium outcome of a game, it is possible that current institutions have been maintained for a long term by historical path dependence (Note 2). Naturally, it is not easy to change institutions as an equilibrium outcome. If we are unable to achieve a more desirable state (supposing that it exists), it may mean that a big push from the whole nation is required to build new institutions for a sustainable growth model. Instead of merely extending current institutions, a regional revitalization strategy will necessitate a discussion as a whole nation so that we can build new institutions that the nations of the world will look to as the "Japan Model."

October 29, 2015
  1. ^ See also my previous report "Does a Growth Strategy Based on an Agglomeration Economy Conflict with Reviving the Fertility Rate?" posted on the RIETI website on August 15, 2014.
  2. ^ See the handout "Three Decades in Transition: Directions for Japan as Seen from Comparative Institutional Analysis" from the Symposium Commemorating Masahiko Aoki held on October 6, 2015.

October 29, 2015

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