A New Perspective on Agglomeration Economies in Japan: An Application of Productivity Analysis PDF
Preview A New Perspective on Agglomeration Economies in Japan: An Application of Productivity Analysis
New Frontiers in Regional Science: Asian Perspectives 20 Akihiro Otsuka A New Perspective on Agglomeration Economies in Japan An Application of Productivity Analysis New Frontiers in Regional Science: Asian Perspectives Volume 20 EditorinChief YoshiroHigano,UniversityofTsukuba ManagingEditors MakotoTawada(GeneralManagingEditor),AichiGakuinUniversity KiyokoHagihara,BukkyoUniversity LilyKiminami,NiigataUniversity EditorialBoards SakaiYasuhiro(AdvisorChiefJapan),ShigaUniversity YasuhideOkuyama,UniversityofKitakyushu ZhengWang,ChineseAcademyofSciences YuzuruMiyata,ToyohashiUniversityofTechnology HiroyukiShibusawa,ToyohashiUniversityofTechnology SaburoSaito,FukuokaUniversity MakotoOkamura,HiroshimaUniversity MorikiHosoe,KumamotoGakuenUniversity BudyPrasetyoResosudarmo,CrawfordSchoolofPublicPolicy,ANU Shin-KunPeng,AcademiaSinica GeoffreyJohnDennisHewings,UniversityofIllinois EuijuneKim,SeoulNationalUniversity SrijitMishra,IndiraGandhiInstituteofDevelopmentResearch AmitrajeetA.Batabyal,RochesterInstituteofTechnology YizhiWang,ShanghaiAcademyofSocialSciences DanielShefer,Technion-IsraelInstituteofTechnology AkiraKiminami,TheUniversityofTokyo AdvisoryBoards PeterNijkamp(Chair,ExOfficioMemberofEditorialBoard),TinbergenInstitute RachelS.Franklin,BrownUniversity MarkD.Partridge,OhioStateUniversity JacquesPoot,UniversityofWaikato AuraReggiani,UniversityofBologna New Frontiers in Regional Science: Asian Perspectives Thisseriesisaconstellationofworksbyscholarsinthefieldofregionalscienceand inrelateddisciplinesspecificallyfocusingondynamisminAsia. Asia is the mostdynamic part ofthe world.Japan, Korea, Taiwan, and Singapore experiencedrapidandmiracleeconomicgrowthinthe1970s.Malaysia,Indonesia, and Thailand followed in the 1980s. China, India, and Vietnam are now rising countries in Asia and are even leading the world economy. Due to their rapid economic development and growth, Asian countries continue to face a variety of urgentissuesincludingregionalandinstitutionalunbalancedgrowth,environmen- tal problems, poverty amidst prosperity, an ageing society, the collapse of the bubbleeconomy,anddeflation,amongothers. Asian countries are diversified as they have their own cultural, historical, and geographicalaswellaspoliticalconditions.Duetothisfact,scholarsspecializing in regional science as an inter- and multi-discipline have taken leading roles in providingmitigatingpolicyproposalsbasedonrobustinterdisciplinaryanalysisof multifacetedregionalissuesandsubjectsinAsia.Thisseriesnotonlywillpresent unique research results from Asia that are unfamiliar in other parts of the world becauseoflanguagebarriers,butalsowillpublishadvancedresearchresultsfrom thoseregionsthathavefocusedonregionalandurbanissuesinAsiafromdifferent perspectives. The series aims to expand the frontiers of regional science through diffusion of intrinsically developed and advanced modern regional science methodologies in Asiaandotherareasoftheworld.Readerswillbeinspiredtorealizethatregional andurbanissuesintheworldaresovastthattheirestablishedmethodologiesstill have space for development and refinement, and to understand the importance of the interdisciplinary and multidisciplinary approach that is inherent in regional scienceforanalyzingandresolvingurgentregionalandurbanissuesinAsia. Topics under consideration in this series include the theory of social cost and benefit analysis and criteria of public investments, socio-economic vulnerability against disasters, food security and policy, agro-food systems in China, industrial clusteringinAsia,comprehensivemanagementofwaterenvironmentandresources inariverbasin,theinternationaltradeblocandfoodsecurity,migrationandlabor marketinAsia,landpolicyandlocalpropertytax,InformationandCommunication Technology planning, consumer “shop-around” movements, and regeneration of downtowns,amongothers. Moreinformationaboutthisseriesathttp://www.springer.com/series/13039 Akihiro Otsuka A New Perspective on Agglomeration Economies in Japan An Application of Productivity Analysis AkihiroOtsuka AssociationofInternationalArtsandScience YokohamaCityUniversity Yokohama,Japan ISSN2199-5974 ISSN2199-5982 (electronic) NewFrontiersinRegionalScience:AsianPerspectives ISBN978-981-10-6489-0 ISBN978-981-10-6490-6 (eBook) DOI10.1007/978-981-10-6490-6 LibraryofCongressControlNumber:2017952056 ©SpringerNatureSingaporePteLtd.2017 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpartof the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilarmethodologynowknownorhereafterdeveloped. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexempt fromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformationinthis book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained hereinor for anyerrors oromissionsthat may havebeenmade. Thepublisher remainsneutralwith regardtojurisdictionalclaimsinpublishedmapsandinstitutionalaffiliations. Printedonacid-freepaper ThisSpringerimprintispublishedbySpringerNature TheregisteredcompanyisSpringerNatureSingaporePteLtd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Preface This book clarifies the role played by agglomeration economies in regional econ- omiesandexploresthefeasibilityofusingregionaleconomicgrowthindeclining populationareasofdevelopedcountries.Wherequantitativeeconomicexpansionis increasingly difficult, improving productivity is necessary to realize sustainable regional economic growth. One of the sources of agglomeration economies is the creationoftechnologicalknowledge(innovation)anditsspillover,whichisimpor- tantfordeterminingthecompetitiveadvantagesofaregion.Therefore,inthisbook, the focus is on agglomeration economies, the driving force behind regional eco- nomicgrowth,andtheactualconditionsofagglomerationeconomiesinJapan.The effects of agglomeration economies are comprehensively determined by both the effects of their productivity and productive efficiency. As such, the analytical approachproposedinthisbookusesproductivityandproductiveefficiencyanalysis methods. Through their application, readers will be able to identify desirable policies for regional economies that promote agglomeration economies and con- tributetotherealizationofregionaleconomicgrowth. Manystudieshaveinvestigatedtheroleplayedbyagglomerationeconomiesin cities and regions in various countries around the world, adopting a traditional analytical approach using the production function. Many researchers have subse- quently attempted to improve this approach, directing the stream of research accordingly.However,mostofthesestudiesfocusonastaticapproachthatassumes perfectcompetition,andtherearefewexamplesthatadopttheanalyticalapproach that focuses on the dynamic changes of agglomeration economies. A dynamic analysisisessentialtoconsidereconomicdynamism,orthesustainablegrowthof regional economies. Despite this, while a theory of agglomeration that assumes imperfect competition has been constructed in spatial economics, no empirical model assumingimperfect competition asitsmicroeconomicfoundationhas been constructed.Toaddressthisissue,thisbookproposesanovelanalyticalmethodthat quantitatively clarifies thedynamiceffectsthatagglomerationeconomieshave on regionaleconomicgrowth. v vi Preface The research objectives of this book are as follows. First, it proposes a new approach that uses a productivity analysis method to determine the actual condi- tions of agglomeration economies in Japan, from the perspectives of both regions and industries. Second, it proposes a novel empirical model that takes imperfect competitionintoconsiderationand,therebymoreaccuratelyestablishestheactual conditions of dynamic external economies, specifically dynamic externalities. Third, it ascertains the impact of agglomeration economies on regional economic growththroughproductiveefficiencyusingmultipleproductiveefficiencyanalysis methods. The main feature of this book is that it proposes numerous new analytical approaches. The first is an analytical approach that uses the Solow residual to deal with the estimation-relation problem of the production function, which has becomeanissueinthetraditionalanalyticalapproachofagglomerationeconomies. This method avoids the problem of endogeneity, which is a weakness of the traditional approach. Second, it reveals a new empirical model that assumes imperfectcompetition.Sincemostfirmsinthemarketdofaceimperfectcompeti- tion,thismodelmorerealisticallydeterminesthedynamiceffectsofagglomeration economies. Third, to comprehensively understand the effects of agglomeration economiesonproductivitychanges,itproposesananalyticalapproachthatutilizes stochastic frontier and data envelopment analyses. Applying growth accounting techniquesmakesitpossibletoquantitativelyascertaintheeffectsofagglomeration economiesoneconomicgrowth. Consequently, readers will be able to learn about novel analytical approaches andseeexamplesoftheir application throughtheempiricalanalysisofagglomer- ation economies. This knowledge will make it possible to clearly define the roles playedbyagglomerationeconomiesinthedevelopmentofregionaleconomies,and to quantitatively understand both the effects of productivity and productive effi- ciency on regional economic growth. Through these methods and the analytical findings,readerswillbeabletoproposeregionaleconomicpoliciesthatwillbenefit economieswithdecliningpopulations. Theintendedreadersaremainlygraduatestudentsandresearchers(scholars)in thefieldofregionalscience,butitwillalsobeusefulforpolicymakers.Thisbookis anadvancedattemptatintroducingnewanalyticalmethodstoaidinunderstanding agglomerationeconomiesandtoprovideexamplesoftheirapplication.Tothebest ofmyknowledge,thereisnootherpublicationthathascomprehensivelyanalyzed this topic with these approaches. Because of its originality, there are few other publicationsthatcouldcompetewithit. Thisbookisorganizedintotenchapters.Somechaptersarepreviouslypublished journalpapers.IwouldliketothanktheeditorialboardinRegionalStudies,Papers inRegionalScience,TheAnnalsofRegionalScience,TheEconomicReview(The Keizai Kenkyuu), The Economic Analysis (The Keizai Bunseki), Journal of Applied Regional Science, and Okayama Economic Review for permitting me to reusethesearticles.Inaddition,somechaptersofthisbookhavebeenpublishedas part of a Japanese book. In writing this book, I have received reprint permission fromUniversityEducationPressCo.,Ltd.Theoriginalmanuscripthasbeengreatly Preface vii revised and updated. I thank Professor Mika Goto, Professor Toshiyuki Sueyoshi, andNorihikoYamanoasco-authorsofsomeoftheoriginalarticlesforencouraging me to proceed with the research. A draft of the third chapter is published as a discussion paper in the Regional Economics Applications Laboratory (REAL), University of Illinois. I am grateful to Professor Geoffrey J. D. Hewings and the REALstafffortheirvaluablecommentsandsuggestions.Inaddition,Iwouldlike tothankProfessorShojiHaruna,fromwhomIhavereceivedvaluableadviceonmy researchforalongtime. This book was written as a part of a research activity at Yokohama City University. I have received a Grant-in-Aid for Young Scientific Research by YokohamaCity University. Iwould liketothankthe foundersofYokohama City University and President Yoshinobu Kubota. This work also has supported by a Japan Society for the Promotion of Science (JSPS) Grant-in-Aid for Scientific Research(KAKENHI)15K17067.Partsofthisbookarebasedonresearchresults fromtheCentralResearchInstituteoftheElectricPowerIndustry.WhenIworked at this laboratory, I received helpful comments and suggestions from the laboratory’sstaff.Iwouldliketothankthem. Finally, I would like to thank my wife Harumi Otsuka for her dedication in supportingmeduringthewritingofthisbook.Ihopethisbookwillbeacornerstone forourfutureresearch. Yokohama,Japan AkihiroOtsuka Contents 1 IntroductionandSummary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 EmpiricalKnowledgeofAgglomerationEconomies. . . . . . . . . . . . 13 3 ATraditionalApproachtoAgglomerationEconomies. . . . . . . . . . 33 4 ANewApproachtoAgglomerationEconomies. . . . . . . . . . . . . . . 53 5 DynamicExternalities:TheoryandEmpiricalAnalysis. . . . . . . . . 69 6 ANewApproachtoDynamicExternalities(I). . . . . . . . . . . . . . . . 97 7 ANewApproachtoDynamicExternalities(II). . . . . . . . . . . . . . . 117 8 MarketAccess,AgglomerationEconomies,andProductive Efficiency(I). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 9 MarketAccess,AgglomerationEconomies, andProductiveEfficiency(II). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 10 MarketAccess,AgglomerationEconomies, andNewFirmFormation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 ix Chapter 1 Introduction and Summary Abstract This chapter describes the research background three objectives of this book. The first objective is to clarify from multiple perspectives how industrial agglomeration influenced thegrowthoftheregional economy inJapanduringthe 1980sand1990s,whenglobalizationofeconomicactivityandthehollowing-outof industries were in progress. The second is to shed light on the industrial agglom- eration effects from a dynamic perspective by looking at industrial development. Thethirdobjectiveistoproposeanewanalyticalapproachusingthetechniquesof productiveefficiencyanalysis.Thisbookiscomprisedoftenchapters.Asummary ofeachchapterisdescribedinthischapter. Keywords Industrial agglomeration • Agglomeration economies • Regional science•Japan 1.1 Research Background Since the collapse of the bubble economy, the business environment surrounding firmshasexperiencedmajorchanges.Thedecadeofthe1990sisoftenreferredtoas “the lostdecade” for itsunremitting longperiodofloweconomicgrowth.During this period, many domestic firms were unable to escape from the experience of their past successes and felt increasingly trapped. On the other hand, the world economyrapidlyexpandeditssphereofeconomicactivityduringthisdecade,asit becameprogressivelymoreborderlessinresponsetotechnologicaldevelopments. Along with the development of the world economy, big firms facing global com- petition internationalized their operations. Japan’s foreign direct investment increased from 1.6 trillion yen in 1985 to 10.1 trillion yen by the year 2012, and the trend of globalization has continued.1 As a result, the production scale of Japan’s domestic manufacturing industry has followed a downward trend. After thetotalshipmentvalueofmanufacturedgoodspeakedat341trillionyenin1991, bytheyear2010,ithaddeclinedto289trillionyen.Likewise,whilethenumberof 1BankofJapan,Foreigndirectinvestment,fromtheBalanceofInternationalPaymentsMonthly. ©SpringerNatureSingaporePteLtd.2017 1 A.Otsuka,ANewPerspectiveonAgglomerationEconomiesinJapan, NewFrontiersinRegionalScience:AsianPerspectives20, DOI10.1007/978-981-10-6490-6_1
The list of books you might like
