Designing the "New Public" Legal Framework for Local Governments and Promoting Regional Economic Development

As the role of local governments in developing regional economies is very important, the effectiveness of public works as a fiscal economic stimulus conducted by local governments such as cities and villages, coupled with their recent fiscal difficulties, is being put under more careful scrutiny. The local administrative outsourcing under the "New Public" framework, which brings complex regional economic effects, is a prospective alternative for local economic stimulus policy.

First, this paper overviews the historical development of the legal framework for local administrative outsourcing in the post-World War II local administrative reforms in Japan and traces how the legal framework for local administrative outsourcing changed from that for procurement to "New Public." Second, it offers structural and functional models of the present legal framework for local administrative outsourcing, and also shows institutional diversification of administrative outsourcing policies in individual local governments. Third, the paper fulfills regression analysis to estimate the relationships among administrative implementation forms (direct implementation by public officers, outsourcing, subsidizing, public works, and social income reallocation) and short-term and long-term regional economic improvements.

The results show that the indexes of regional economic improvement have strong correlation with the outsourcing ratio to local governmental expenditure but only limited correlation with the public works ratio to local governmental expenditure. This implicates possible regional economic policy compatible with administrative and fiscal reforms at the fundamental governmental level.