The Role of Interregional Trade in Generating Change in the Regional Economies of Japan, 1980-1990

Abstract

An earlier analysis (Hewings et al., 1998) revealed the 'hollowing-out' process, a decrease in the level of intraregional intermediation, in the Chicago economy during the period 1975-2011. The main force underlying this structural change has been the change in regional trade patterns in a way that interregional trades across economies has replaced the local purchases of intermediate inputs. The issue addressed in this paper focuses on the decomposition of structural change into changes in interregional trade and in technology, in order to investigate the nature of structural change over time and across sectors. The empirical realization is provided by reference to a series of regional input-output tables for a nine-region division of the Japanese economy (1980-1985-1990). The results revealed that interregional trade has played a key role in determining regional output level while technology itself had a tendency to decrease further.