Transforming the three C's into Urban Advantages: Population concentration and infection risks

FUJITA Masahisa
Adjunct Professor, Institute of Economic Research, Kyoto University

Program director / Faculty Fellow, RIETI

COVID-19 infections are primarily spreading through urban metropolises. This paper considers Japan's urbanized society characterized by its excess concentration in Tokyo and the COVID-19 crisis from a spatial economics perspective.

Spatial economics is a new field of economics that pays attention to agglomeration forces (improvement in utility, productivity, and creativity) arising from the proximity of diverse human activities and through the complementary relationships among them and analyzes dynamic changes in intercity, interregional and international spatial economic systems that accompany a decline in traveling costs for people, goods, money, and information, or more broadly defined transportation costs.

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To understand the current COVID-19 crisis, we must acknowledge an inconvenient truth for humans that the decline in transportation costs that allowed for the development of cities makes the domestic and international spread of viruses easier. This pandemic is peculiar to the current Brain Power Society that still requires close face-to-face communications despite being supported by information and communications technology.

Japan's postwar economic development accompanied excess concentration of population and industry in Tokyo. The spread of COVID-19 has been helped by such a spatial structure.

The figure indicates each prefecture's share of the total increase in Japan's number of COVID-19 infections during the infection spread period between March 23 and April 23 on the vertical scale and each prefecture's share of Japan's total population at the end of 2018 on the horizontal scale. It suggests that an increase in infections in each prefecture was influenced by population scale effects. In particular, Tokyo accounted for 11% of Japan's population and 31% of the increase in the number of infections in Japan, meaning that population scale effects in Tokyo were nearly three times greater than its share of Japan's total population as a percentage. In the initial infection period before the infection spread, however, no population scale effects were seen.

Figure. Each Prefecture's Share of Total Population and Share of the Total Increase in the Number of Infections
Figure. Each Prefecture's Share of Total Population and Share of the Total Increase in the Number of Infections

The so-called Three C's (closed spaces, crowded places, and close-contact settings) are the key to understanding why population scale effects work during a rapid infection spread. The government's Expert Meeting on the Novel Coronavirus Disease Control pointed out that avoiding the Three C's is the key to preventing infections from spreading. Spatial economics, on the other hand, views the concentration of various factors as the attraction, or source of vitality, of cities in normal circumstances. In the COVID-19 crisis, however, the concentration of various factors that should be the source of vitality in cities is the cause of the rapid spread of the infection.

Let us consider Tokyo, Japan's largest metropolis. The attractiveness of Tokyo that has caused its population to increase by luring many young people from throughout Japan is its extremely diversified, multi-layered concentration of human contact scenarios that occur within the Three C's environments, which are beneficial to economic and social activity. For example, its share of the number of university students and teachers, live performances, and restaurant sales are proportionally two to three times higher than its share of Japan's population. The concentration of the population works to increase the number of close human contacts several times beyond what would be expected by simply considering its share of the total population. The spread of COVID-19 infections at a similarly high concentration is understandable.

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Why has the concentration of these various factors been realized in Tokyo? The fundamental reason is that humans, who are social animals seeking opportunities for mutual communication, can attain higher satisfaction levels (regarding utility, productivity, and creativity) through the concentration of various factors by living in cities where a highly diverse population is concentrated in high proximity for industrial, administrative, academic, living, entertainment, medical and other operations. Per capita income in Tokyo, which features the highest concentration in Japan, is the highest among the prefectures in Japan and some 1.7 times higher than the nationwide average.

Why do people concentrate in cities even at a time when ICT, which can be used almost irrespective of distance, has advanced to such a high degree? The key to answering this question is the well-known fact in spatial economics that ICT and face-to-face communications are complementary to each other in human communications. A central activity in the knowledge-creating society in the 21st century includes the creation and spillover of new information and knowledge in each economic or social domain.

While explicit knowledge for such activity can be communicated through ICT, face-to-face communications are indispensable for quickly combining implicit knowledge in an individual's brain into new information or knowledge for sharing. Therefore, the central activity in the knowledge-creating society has been conducted through close conversations among people in closed, crowded offices.

This time, the government has requested that people change their behavior to avoid the Three C's. The changes included a switch from office work to telework. For enterprises that were very reliant on face-to-face communications in their office work before the COVID-19 crisis, the switch to telework has been difficult. As long as the difficulty remains, enterprises will need to go back to office work to restore the Three C's in central Tokyo immediately after the telework request is eased.

Metropolises that have taken advantage of the Three C's for their development are now paradoxically required to avoid the Three C's in response to infection risks. The key to meeting the requirement would be arrangements that allow office work and telework to operate more complementarily than alternatively.

To this end, the evolution of the ICT environment should be combined with the transformation of intra- and inter-enterprise systems and social systems for enterprises. This would contribute to the work-style reform required for a population-decreasing society to avoid daily commuting, to utilize more diverse human resources, and to flexibly respond to employees' various life events.

Spacious housing is required to secure the workspace that would allow for more effective telework. The choice to relocate to rural areas and maintain multi-base lifestyles should be made easier. In addition to telework, online learning and diagnosis should be spread to comprehensively promote the development of new communications systems and the transformation of social systems, through the optimum combination of ICT and face-to-face communications.

If the requirement for face-to-face communications is reduced, Tokyo would not have to maintain its present scale or size. The government should give renewed priority to the correction of the excess concentration in Tokyo that has long been advocated as a response to large-scale disasters and to revitalize rural regions.

Problems regarding the excess concentration in Tokyo are not limited to vulnerabilities to infectious diseases and large-scale disasters. We must pay attention to the fundamental problem that the economy and society in Japan as well as Tokyo would lose diversity under the excess concentration in Tokyo. Without a reversal of the concentration, other areas will lose diversity as people leave.

Tokyo features the highest per capita income in Japan. In a per capita gross domestic product ranking among the members of the Organization for Economic Cooperation and Development, however, Japan fell to 19th place in 2019 from second in 2000. To achieve high creativity in the knowledge-creating society of the 21st century, Japan must create new economic and social systems to promote diversity.

During the current COVID-19 crisis, prefectures have proposed their original countermeasures and models to take leadership in responding to the crisis, prompting the central government to take actions. Decentralization must be promoted further to improve economic and social diversity. We hope that a new Japan that is rich with diversity will be developed by utilizing ICT and creatively decentralizing authority.

>> Original text in Japanese

* Translated by RIETI.

July 8, 2020 Nihon Keizai Shimbun

November 11, 2020