Spatial Economic Analysis of Natural Disaster Restoration

Author Name FUJITA Masahisa (Konan University) / HAMAGUCHI Nobuaki (Faculty Fellow, RIETI) / KAMEYAMA Yoshihiro (Saga University)
Creation Date/NO. April 2017 17-P-014
Research Project Regional Economies in the New Era of Globalization and Informatization
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Spatial economics views a country's domain as a system of cities and regions, which shows stickiness and historical path-dependence. This paper shows that spatial economics provides a suitable framework for natural disaster restoration. To achieve creative restoration of each damaged area in an era of a declining and aging population, stimulating innovation throughout all regions of Japan will be a key issue. In this vein, spatial economics, which encompasses the monopolistic competition model based on product differentiation/diversity and the innovation model based on human diversity, can provide an appropriate framework of analysis and present useful policy recommendations.

Damaged by a huge tsunami during the Great East Japan Earthquake, the Sanriku coastal area has experienced similar damages caused by disasters repeatedly in the past. The region invariably achieved restoration with the support from strong natural agglomeration forces. To reinvigorate this regional economy that is already in a declining trend, policies must be made to change the direction from simply restoring back to the pre-disaster situation to promoting self-management and taking advantage of the intrinsic natural agglomeration forces while fostering the endogenous agglomeration forces based on scale economies and diversity. This paper discusses the roles that urban planning, transportation policy, local industry clusters, regional inter-municipal cooperation, and universities may play in contributing to a novel creative restoration.