About Regional Economies Program

Program Director

HAMAGUCHI Nobuaki's photo

HAMAGUCHI Nobuaki(Program Director and Faculty Fellow)

We would like to see production activities performed more efficiently and innovatively to enable people to work and participate in consumption activities with a greater level of satisfaction. Ideally, any structural transformation should ensure that these developments will proceed stably and sustainably over the long term. This sometimes requires policy interventions because there have been market failures whereby the market mechanism has failed to lead society to the most desirable outcome, or where coordination failures have occurred among stakeholders over the type of new technological paradigm that should underpin such a structural transformation.

As part of our policy intervention in market and coordination failures, we need to systematically organize PBPs, which consider the uniqueness of each locale, just like we have industrial policies (INPs), which consider the uniqueness of each industry. INPs and PBPs are used in their plural forms because the uniqueness of industries and locales demands their policies to be diverse as well. The Regional Economies program will examine the PBPs and PBPs+INPs that Japan requires.

The virtuous circle of demand for labor and employment, internationalization, and the interaction between deregulation and knowledge creation, which together lead the Japanese economy, have made progress mostly in cities, bringing little benefit to non-metropolitan regions. This is because such phenomena are based on mechanisms that require proximity, which include economies of scale, network externalities, and knowledge spillovers. In large cities, PBPs are required that utilize the economic advantages of agglomeration based on these mechanisms, while curbing harmful effects caused by congestion. Specifically, we will examine land use, spatial development, traffic, housing, and consumption/amenities, to identify the crucial infrastructure that large cities need to lead Japan's economy in innovation and international competition, as well as the economic actors who need to be actively supported and the form of assistance they require.

In non-metropolitan regions, however, the economic benefits of agglomeration are weak and their economies will contract further because it is expected that they will not only fail to fully catch the wave of economic recovery, but will experience more significant population reduction and birth rate decline before cities do. The PBPs required for non-metropolitan regions must promote a structural transformation toward production activities that can generate high added value via the innovative and sustainable use of each region's locally-specific resources. Toward this goal, we will identify how to design systems that can promote the following: the utilization of inter-corporate or social networks that use leading-edge information and communication/transportation technologies to incorporate global knowledge; the regeneration of communities that have the ability to manage resources, the communication of management resources/traditional knowledge between generations, and the emergence of startups. We will also consider the role of local financial affairs and regional finance.

Furthermore, we will study policy measures that can optimize the balance between large cities and regions. Large cities and regions do not exist independently. They are interconnected and form a system of equilibrium in the country. We will empirically identify the effects of the development of information and communication/transportation infrastructure and uncover the mechanisms by which cities of various sizes form a hierarchical structure.