Abstract
This chapter provides an overview of the regional economic structure. Japan continues to experience migration and a spatial concentration of economic activities in the Greater Tokyo Area. The theory on agglomeration economies explains that this population inflow enhances the Greater Tokyo Area’s increasing returns to scale. In other words, as population inflow in the Greater Tokyo Area increases its economies of scale, the gaps in the economic performance between the Greater Tokyo Area and local areas are expected to widen, and the regional disparities in gross value added (GVA) per capita should expand. However, regional disparities in GVA per capita have been shrinking rather than expanding since the 1990s. Conventional theories do not explain this phenomenon well. This chapter provides evidence of economic growth in local areas and the potential for economic advance. Notably, this chapter reveals that social overhead capital, industrial structure, and fiscal transfer have enhanced the economic power of local areas and helped reduce regional disparities. Japan’s experiences provide valuable insights into regional development policies aimed at achieving compatibility between economic growth and equitability.
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