Industrial Policy for Industrial Clustering: Evaluation of the "Industrial Cluster Policy" in Japan in the 2000s

Author Name OKUBO Toshihiro (Keio University) / OKAZAKI Tetsuji (Faculty Fellow, RIETI)
Creation Date/NO. December 2015 15-J-063
Research Project Historical Evaluation of Industrial Policies
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In 2001, the Ministry of Economy, Trade and Industry (METI) launched the Industrial Cluster Policy, which aimed at promoting innovations and vitalizing regional economies by creating firm networks. The model envisioned by METI in drawing up this policy was the Silicon Valley in the United States. For that purpose, METI designated 19 industrial clusters and their members, including local small and medium-sized firms and universities, and supported the network creation of the members. In this paper, we identified the member firms from the original information provided by METI and matched it with the Tokyo Shoko Research (TSR) database. We used the dataset to evaluate how participation in the industrial cluster affected the transaction network, sales, and employment of each member firm.

It was revealed that participation in the industrial cluster has a positive impact on the extent of transaction networks, especially that with firms in Tokyo. Also, participation in the industrial cluster increases the sales and employment of each member firm. It is remarkable that the cluster policy contributes to expanding the extensive margin of the local firms with transactions with firms in Tokyo. This extensive margin effect is larger for firms whose main banks are the first-tier regional banks.

The English version of this paper is 16-E-071.