Survival, Emergence, and Disappearance of Manufacturing Firms in the First Phase of Regional Revitalization

Author Name NAKAMURA Ryohei (Faculty Fellow, RIETI)
Creation Date/NO. August 2023 23-P-016
Research Project Verification of regional revitalization and regional and urban economies after the Coronavirus Pandemic
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In many non-metropolitan municipalities, in addition to the revitalization of existing firms and the birth of new business establishments, attracting manufacturing firms with large shipment volume is still an important measure for regional development. Although the job creation effect is smaller than it used to be, manufacturing plants remain key in rural regions. However, unlike the attraction of heavy and large-scale industries during the high economic growth period, there is a tendency to attract firms that exhibit regional comparative advantages. In this paper, we will identify what kinds of manufacturing firms disappear, withdraw, appear, and survive in what kind of regions during the first phase of regional revitalization, and analyze their factors.

Looking at the distribution of value-added productivity in a comparison of manufacturing firms in 2014 and 2019, the labor productivity of manufacturing firms that existed in both 2014 and 2019 was the highest, followed by manufacturing firms that existed in 2019. The lowest was for firms that existed in 2014 but did not exist in 2019. Also, from the results of the logit analysis, it was presumed that there was a tendency to remain viable if productivity was high and the size of the firm was large, and that there was a tendency towards dissolution if the degree of urbanization was high. On the other hand, for newly established manufacturing firms, regression analysis by municipality showed a positive effect for both the agglomeration of the same industry and urban agglomeration measured by population size.