Effect of Central City Revitalization Policy on Commerce: Evidence from Establishment-level Data Analysis in Kumamoto

Author Name HONDA Keiichiro (Prefectural University of Kumamoto) / KAWANISHI Takuya (Prefectural University of Kumamoto)
Creation Date/NO. November 2019 19-J-063
Research Project An Empirical Study on Compact City: Evaluating place-based policies in Japan
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This study verifies the effect of the central city revitalization policy on commerce in Kumamoto. The effects of central city revitalization policy, based on the Act on Vitalization in City Centers amended in 2006, are only followed up in an announcement by the local government, and the announcement is mainly based on simple before and after comparison. By limiting our study to a specific area, we are able to analyze the causal effects of this policy more precisely. We focus on Kumamoto city in this study. Kumamoto city is one of the 12 areas that has been certified by the Cabinet office in all phases of the central city revitalization policy from the first phase to the current third phase. As a representative example of medium-scale local cities and a city that will support the future of the Kyushu economy, empirical verification of the effect of the policy is highly anticipated. We use the governmental statistics of establishment-level micro data and analyze the impact of policy on several commercial outcomes. Using the Difference-In-Differences method, no significant positive effect has been identified for any outcome. Despite the local government announcement claiming positive effects, mainly in terms of increased traffic in the area, it is difficult to support the idea that this effect has led to the revitalization of local commerce.