RIETI Symposium

Fiscal Reform of Japan: Redesigning the Frame of the State

Project Paper - Session 6

"Redesigning the Fiscal Structure of Local Governments: From the Point of View of Local Governance Reform" (Abstract of Discussion Paper 04-J-017)

KITAMI Tomitaro (RIETI Consulting Fellow / Deputy Director, Industrial Organization Division, Economic and Industrial Policy Bureau, METI)

This paper analyzes the major role played by local governments in relation to Japan's fiscal problems, based on the theoretical framework of corporate governance, while proposing a set of policy responses to facilitate local governments' shift over to a desirable model of governance. The first section of this paper explains the significance of utilizing corporate governance theory and its theoretical framework thereof. The second section empirically examines the effectiveness of having a governance mechanism for local governments by means of individual stakeholder monitoring, making distinctions between governance under ordinary conditions and that under cases of emergency. In the third section, the paper examines an ideal governance model for Japanese local governments and lays out a road map and strategic policy measures to be taken in adopting it.

Original discussion papers in Japanese [PDF:472KB] >>