Tokyo Development Learning Center Policy Paper Series 2: CASE STUDY ON TERRITORIAL DEVELOPMENT IN JAPAN © 2017 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff of the World Bank Group. The World Bank Group refers to the member institutions of the World Bank Group: The World Bank (International Bank for Reconstruction and Development); International Finance Corporation (IFC); and Multilateral Investment Guarantee Agency (MIGA), which are separate and distinct legal entities each organized under its respective Articles of Agreement. We encourage use for educational and non-commercial purposes. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Directors or Executive Directors of the respective institutions of the World Bank Group or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. Rights and Permissions This work is product of the staff of the World bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors, or the governments they represent. Nothing herein shall constitute or be considered to be a limitation upon or waive of the privileges and immunities of the World Bank, all of which are specifically reserved. Contact: World Bank Group Social, Urban, Rural and Resilience Global Practice Tokyo Development Learning Center (TDLC) Program Fukoku Seimei Bldg. 10F, 2-2-2 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011 Japan Phone: +81(3)3597-1333 Fax: +81(3)3597-1311 Web: http://www.jointokyo.org About Tokyo Development Learning Center (TDLC) The Tokyo Development Learning Center (TDLC) program is a partnership of Japan and the World Bank. TDLC supports and facilitates strategic WBG and client country collaboration with select Japanese cities, agencies and partners for joint research, knowledge exchange, capacity building and other activities that develop opportunities to link Japanese and global expertise with specific project-level engagements in developing countries to maximize development impact.   Authors Research Institute for Urban and Environmental Development (UED) Vibhu Jain, Consultant, TDLC, World Bank Yuko Okazawa, Urban Specialist, TDLC, World Bank Peer Reviewers Somik Lall, Lead Urban Economist, World Bank CONTENTS Executive Summary 4 1. Japan’s Post-War Economic and Demographic Development and Changes 6 Historical Trend of Japan’s Economy 6 Population Dynamics of Japan 6 From Concentration in the Three Largest Metropolitan Areas to Concentration in Tokyo 8 2. Spatial Development Policies and Comprehensive National Development Plans 9 Comprehensive National Development Plans 10 The 1st Comprehensive National Development Plan 13 New (the 2nd) Comprehensive National Development Plan 15 The 3rd Comprehensive National Development Plan 17 The 4th Comprehensive National Development Plan 19 The 5th Comprehensive National Development Plan - Grand Design for the 21st Century 22 Change in the Outlook towards the Territorial Development Policy 26 3. Economic and Administrative Policies and Concepts Impacting Spatial Developments 28 Investment in Social Overhead Capital 28 Reform of the Planning System 29 Promotion of Underdeveloped Areas 30 Decline in Regional Income Inequality 30 4. Key Message on Territorial Planning 31 EXECUTIVE SUMMARY Word War II left Japan crippled, affecting strong connectivity between places, and in high its economy, governance, demography, living standards and human capital investments settlements, social well-being, and others. everywhere. This may be one reason Japan has However, Japan used this as an opportunity the second lowest regional income inequality to restructure itself to become a progressive, in the OECD. The spatial polices in Japan have balanced, and well-rounded country. For about mostly fluctuated between “promoting balanced 15 years post war, economic recovery and development” and “harnessing concentrated expansion was at a rapid rate of approximately growth” 10%, which stabilized to 3-5% post that period but dropped to 0-1% between 1990s and 2000s. During the period of Japan’s rapid economic Currently, the economy is stable but hasn’t growth and the stable growth that followed, regained the same vitality as before owing to Comprehensive National Development Plans various demographic factors like declining (CNDPs) were formulated almost every ten and aging population, lower fertility rates, and years to define long-term future directions shortage of working-age population. Population and policies for the balanced development in Japan had been growing at a steady rate in of national lands. The outcomes of such the 20th century, which started to decline and undertakings were construction of infrastructure age more rapidly in the 21st. This is attributed nationwide and a significant reduction of to the declining fertility rates accompanied regional income disparities. The first plan was by increase in longevity. Concentration of adopted in 1962 followed by the second (New population in three metropolitan regions - CNDP) in 1969 sharing a similar aim of guiding Greater Tokyo, Osaka, and Nagoya was observed the spatial development of Japan’s then fast- until 1980s, owing to migration from rural areas growing economy. The subsequent 3rd and for jobs, education, and better quality of life. This 4th CNDPs were adopted in 1977 and 1987, trend almost reversed but Tokyo remained to be respectively, with a horizon of a decade or more. the focal attractive region, given its significance During this period the population and economic in globalization and internationalization. growth had slowed down so the settlement pattern and economic geography were more Spatial or territorial development is critical stable. By the end of the century, the Grand to national economic transformation. It is Design for the 21st Century was approved in supported by and simultaneously impacts 1998, targeting the 2010-15 period and explicitly economic, social, demographic, institutional, addressed the consequences of globalization, and administrative reforms. Based on lessons demographic change, and the information from a wide range of international experiences, technology (IT). three key agendas arise as key to effective territorial development - a) concentration: The CNDPs, however, have always been meant create generic capital for an uncertain future to be indicative as opposed to directive. Until economy b) connectivity: connect markets 1974, the Economic Planning Agency held nationally and internationally c) convergence: jurisdiction over the Comprehensive National ensure decent living standards everywhere. Land Development Act and plans until 1974, Japan has followed a virtuous path of quite before it was restructured to National Land intense concentration, with early investment in Agency. The agency combined various projects 4 Tokyo Development Learning Center Policy Paper Series 2 for land administration rather than a general concentration during its development. coordination of development administration. However, the forces of agglomeration are The National Land Agency worked on the hard to counter. Despite continued efforts to Comprehensive National Development Plans, combat concentration, Japan’s economy has development of metropolitan regions, and continued to concentrate tightly in Tokyo and territorial development policy, including the major Pacific Belt cities. Concentration promotion of rural areas, along with land-related is in fact generally very positive for growth, measures and disaster prevention. The 3rd-5th thanks to agglomeration economies - this has CNDPs were prepared by the agency. been the case for Japan too, which enjoyed dramatic economic growth and living standard Implementation of the plans required improvement with large cities as the engines of coordinated efforts and decision making on the economy. legal regulations, budgetary provisions and local governments’ measures. All of this was governed The uniqueness of Japan’s development is, and controlled by the national government, while allowing the concentration of production which sometimes involved the government- for high growth, the geography of living affiliated corporations, such as executing standards was ‘flattened’ to create a good agencies for government-contract public work standard of living for all people in all places: projects like Japan Highway Public Corporation. people have moved to access opportunities in These corporations served as executing organs the big cities, while Japan has achieved one of of the central government and effective tools the lowest levels of regional inequality in OECD. to implement projects for balanced land Japan has followed a virtuous path of quite development. intense concentration, with early investment in strong connectivity between places, and in high Industrial location policies and infrastructure living standards and human capital investments development especially the rapid transport everywhere. network for regional development have been the cornerstone strategies in implementation At present, Japan is entering an era of of the territorial development plans. This was substantial decline and aging of the population, made possible using public investments, which which requires reexamining of all the plans in turn helped the government in gaining more and policies for reconstructing the society. tax revenue and securing abundant budgets In regional areas where these problems have through economic growth. emerged earlier than in others, one finds more and more areas uninhabited, land and Since 2000, there has been a significant shift dwellings abandoned, and fields and wooded in national land development systems and areas unmanaged. Therefore, reorganizing town policies. The CNDPs were replaced by National areas in a compact form, as well as strategically Spatial Strategy, now more focused on active managing and renewing social capital, are the involvement and planning at local level, fundamental tasks that should be taken up to integration of the national and regional plans, address the issues. Looking forward, Japan’s and planning for the needs of an evolved declining, and aging population, in fact raises society for improving the quality of life over the the importance of allowing concentration in a development-centric approach. This measure few dynamic, high-amenity, places that can be aimed at bringing in spatial, economic, social, serviced efficiently, rather than trying to spread a and functional changes altogether. dwindling population across the country. In hindsight, likewise most governments around the world, Japan has also tried to fight economic Case Study on Territorial Development in Japan 5 1. JAPAN’S POST-WAR ECONOMIC AND DEMOGRAPHIC DEVELOPMENT AND CHANGES For approximately 15 years (from the mid-1950s to the early 1970s) after post-war economic recovery from the Second World War, Japan experienced rapid economic expansion. HISTORICAL TREND OF JAPAN’S Although economic structural reform and ECONOMY economic policies, so called “Abenomics”1, have been promoted from the dawn of the 21st After the WWII, Japan experienced rapid century, Japan has not regained economic economic expansion with an annual economic power because of various factors, including growth rate of approximately 10%, called as demographic changes, such as declining and “the Japanese economic miracle”. Heavy aging population and shrinking workforce chemical industrialization was achieved population. On current projections, the through substantial capital investment and population is expected to decline by around technological innovation; a trading pattern 23% between 2010 and 2050, with the elderly of importing natural resources and exporting (65+) share of the population rising from 26% industrial products was established. Wages to almost 40% at mid-century. The working-age increased, consumer durable production population is declining by 1% every year and expanded, average life expectancy increased, this is expected to accelerate to 1.7% in the and education level `became higher with an coming decades. accompanied increase in college entrance rates. The economic miracle came to an end in 1973 POPULATION DYNAMICS OF JAPAN when the oil crisis hit Japan’s economy. Despite this, Japan maintained “stable economic In the 20th century, Japan’s total population growth” compared to other developed rose rapidly, roughly tripling between 1900 countries, with an annual economic growth rate and 2000, when it reached 126.9 million. of 3%–5% from the mid-1970s to the late 1980s, The population peaked in 2008 and started which established the country as the greatest to decline - by 2010 it reached 128 million economic presence in the world. The economic before what is projected to be sustained and growth trend of last 60 years has been shown in increasingly steep decline. At the same time Figure 1. the population is ageing rapidly, with 65+ population rising from under 5% in 1950 to In late 1980s, during the phase of the bubble around 26% in 2014, the highest in the world. economy, rapid acceleration of asset and stock This is further expected to rise to approximately prices was observed and from the 1990s to 40% by mid-century. The share of 80+ the early 2000s the annual economic growth population has risen even faster, with 0.44% rate dropped to 0%–1%, which marked the in 1950 to 7.3% in 2013, well above the world beginning of the “lost decade”. 1 Abenomics refers to the economic policies advocated by Shinzō Abe since the December 2012 general election, which elected Abe to his first term as Prime Minister of Japan. Abenomics is based upon “three arrows” of monetary easing, fiscal stimulus and structural reforms. The Economist characterized the program as a “mix of reflation, government spending and a growth strategy designed to jolt the economy out of suspended animation that has gripped it for more than two decades”. 6 Tokyo Development Learning Center Policy Paper Series 2 FIGURE 1 Change in economic growth rate in the last 60 years (%) 14 FYI1956-1973 Ave. 9.1% 12 FYI1974-1990 10 Ave. 4.2% 8 FYI1991-2014 Ave. 0.9% 6 4 2 0 Oil Shock -0.9 -2 -4 Lehman Shock -6 1982 1986 1988 1994 1996 2000 1984 1990 1992 1998 1956 1960 1962 1968 1970 1974 1976 2002 2004 2008 2010 1958 1964 1966 1972 1978 1980 2006 2012 2014 (Year) Source: Prepared based on “National Accounting” (Cabinet Office) FIGURE 2 Population dynamics of Japan in last few centuries (Ten thousand people) (2010) 128.06 million people 13,000 Peak in 2008 128.08 million people (Prompt report for 2015) Rate of aging 22.1% 127.11 million people 12,000 2030 11,000 World War II 116.62 million people End of the Rate of aging 31.6% 10,000 9,000 2050 (1 945) 97.08 million people 8,000 71.99 million Meiji Restoration people Rate of aging 38.8% Kyoho Reforms 7,000 2100 (High -end estimate) Muromachi Shogunate 6,000 64.85 million people Establishment of Establishment of Kamakura Shogunate Establishment of the Edo Shogunate 2100 (Moderate -range 5,000 (1868) estimate) (1716 to 45) 33.30 million 49.59 million people 4,000 people 31.28 million people Rate of aging 41.1% 3,000 (1603) (1338) 2100 (Low -end estimate) 12.27 million 37.95 million people 2,000 (1185) 8.18 million people 7.50 million people 1,000 people 0 (Year) 800 1000 1200 1400 1600 1650 1700 1750 1800 1850 1900 1950 2000 2050 2100 Source: Ministry of Land, Infrastructure, Transport and Tourism (MLIT) Case Study on Territorial Development in Japan 7 average. (statistics from the Ministry of Land, The Ministry of Land, Infrastructure, Transport Infrastructure, Transport and Tourism). and Tourism (MLIT) projects that more than 60% of the inhabited grid squares in the country will Both these processes- declining and ageing lose more than half their population by 2050; population – are occurring at different rates and 19% are expected to become uninhabited. By bringing about different impacts all over Japan, contrast, only 2% are projected to experience resulting in significant changes to both labor population growth. If fertility does not increase, markets and settlement patterns. The two-factor the projections point to a sharper decline, to interplay that are driving these processes are perhaps 86 million in 2060 and 43 million early fertility and longevity. in the next century. • The main factor underlying Japan’s rapid demographic decline is low fertility. The FROM CONCENTRATION IN THE THREE total fertility ration (TFR) in Japan fell LARGEST METROPOLITAN AREAS TO sharply in the early 1950’s. from a peak of CONCENTRATION IN TOKYO almost 4.5 during the post-war baby boom to 2.00 – 2.16 until 1974, after which it began The long-term trend in the drift of the population a sustained decline to 1.26 in 2005 before between rural and urban areas shows recovering somewhat to 2.43 in 2014. substantial migration from rural areas into the • The collapse in fertility has coincided with Greater Tokyo Area, Greater Osaka Area, and an extraordinary increase in longevity. Life Greater Nagoya Area during the period of the expectancy at birth rose from 51.68 years Japanese economic miracle from the late 1950s in 1947 to 83.48 years in 2013. Such a rapid to the early 1970s with setting up of the Pacific increase in life expectancy enabled Japan Belt Zone2. People migrating to this zone mainly to sustain overall population growth long comprised younger generations who moved to after the birth rates have fallen off but that these areas for work or college. The three large implies rapidly rising old-age dependency conurbations are home to almost half of Japan’s ratio. population, though they occupy only 5.2% of the national territory, on the Pacific side of the Unlike many other countries, migration is not island stretching around 500 km. a major driver of the population dynamics in Japan. Emigration from and immigration into However, in the 1970s, this flow of population Japan have been very low since 1945, with into the three metropolitan areas decreased foreign born population constituting less than exponentially, owing to the decentralization 1.7% of the total in 2010. Japan faced labor policies as depicted in Figure 3 (excess incoming shortages during high growth period in the late migration peaked around 1961). Since the 1980s, 20th century but it didn’t rely on foreign labor. migration has slowed down to these areas but Instead, it pursued automated production, continues for the Greater Tokyo Area (beginning supported with specific forms of subcontracting in the 1980s and peaking once in 1987, then and by employment systems that emphasized in 2007-2008). In the Greater Osaka Area, the multi-skilling and teamwork rather than narrow population outflow has exceeded the inflow, specialization. whereas the population inflow has slightly exceeded the outflow in the Greater Nagoya Area. 8 Tokyo Development Learning Center Policy Paper Series 2 FIGURE 3 Change in population movement in three metropolitan and regional areas 70 Total of three Metropolitan Areas Greater Tokyo Area: Tokyo, Kanagawa, Saitama, Chiba 60 Greater Osaka Area: Osaka, Kyoto, Hyogo, Nara Greater Nagoya Area: Aichi, Gifu, Mie 50 3 Areas Total Greater Tokyo Area 40 Greater 30 Osaka Area 20 Greater 10 Nagoya Area 0 -10 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: Prepared by The Ministry of Land, Infrastructure, Transport and Tourism (MLIT), based on “Basic resident resister migration report” Case Study on Territorial Development in Japan 9 2. SPATIAL DEVELOPMENT POLICIES AND COMPREHENSIVE NATIONAL DEVELOPMENT PLANS Spatial or territorial development is not a stand-alone phenomenon. It is supported by and simultaneously impacts economic, social, demographic, institutional, and administrative reforms. Distilling lessons from a wide range of In case of Japan, since the beginning of the international experiences, three key agendas 20th century, economy was concentrated, and arise as key to effective territorial development has continued to concentrate tightly in Tokyo for national economic transformation: and the major Pacific Belt cities. Tokyo boasts a population of over 40 million (which is more • Concentration: Create generic capital for than a third of the national total), and has an uncertain future economy continued to expand particularly in post WWII This translates into focusing on putting years. It also contributes to 38% of the national in place the foundational capital that will GDP. Reflecting on the findings from global be essential to productivity for any future experience - the forces of agglomeration are economy. It includes developing quality hard to counter – and is in fact generally very institutions; fluid factor markets; broad- positive for growth. Japan has been continually purpose infrastructure; human capital growing economically and improving living • Connectivity: Connect markets nationally standards with large cities serving as the and internationally engines of growing economy, and many people Connectivity is not just about linking places accessing opportunities in these cities. through roads and railways, it’s also about access to labour markets, information and Japan has followed a virtuous path of quite services, and goods. Connecting markets intense concentration, with early investment promotes specialization of production in strong connectivity between places, and across places, and production at scale, in high living standards and human capital both of which are key to productivity. For investments everywhere. This may be one economic growth, it is critical to connect reason Japan has the second lowest regional cities with each other domestically, and with income inequality in the OECD. global markets externally. • Convergence: Ensure decent living The spatial polices in Japan have mostly standards everywhere fluctuated between “promoting balanced Focusing on the concept that people development” and “harnessing concentrated everywhere deserve decent living growth” (e.g. policies aiming to decentralize standards and opportunities, while firms industrial centers versus supporting the and institutions may concentrate, reduces economic development in Greater Tokyo). regional disparities. Therefore, instead of trying to flatten the geography of As early as 1962, the Comprehensive National production, aim should be to ‘flatten’ the Development Plan (CNDP) was prepared that geography of living standards and human explicitly aimed to decentralize the industrial capital. structure developed under Pacific Zone 10 Tokyo Development Learning Center Policy Paper Series 2 Initiative, to depopulate the large cities. Similar national planning, Tokyo’s role as the key engine targets were set out in the 1969 and 1977 plans. of growth, and hub, of the national economy While the plans led to relocation of infrastructure seems to be acknowledged, and the strategy investments and activities outside the Tokyo- became about harnessing concentration in the Nagoya-Osaka urban region, the dominant Greater Tokyo Area for the benefit of all, and trend has been towards further concentration managing its negative externalities, rather than of people and economic activity. By the 4th fighting concentration. The current strategies CNDP, natural phenomenon was leading to emphasize on Japan’s more modest recent concentration in Greater Tokyo region, which economic growth rates, and the prospects of the was accepted and harnessed in this plan. The aging and declining national population. 1998 Grand Design for the 21st Century focused more on the overall growth in the larger global Chain of events that influenced the spatial/ context, promoting regional independence and territorial development in Japan is shown inter-regional cooperation. In contemporary below. FIGURE 4 Post-war events and legal actions influencing spatial and territorial development 1950 Comprehensive National Development 1962 1959 1960 Act 1st Comprehensive Act concerning Restriction of Ikeda Cabinet formulated the National Factories, etc. in Built-Up Areas in “Income Doubling Plan.” Development Plan the National Capital Region 1969 1964 1962 1973 New (the 2nd Act on the Promotion of the New Industrial 1st Oil Crisis Comprehensive National Development of Special City Construction Development Plan Regions for Industrial Promotion Act Development 1974 1977 1983 1987 Establishment of 3rd Comprehensive Act for Accelerating Regional 4th Comprehensive National Land National Development Based upon National Agency Development Plan High-Technology Industrial Development Plan Complexes (Technopolis Act) 1998 1998 1992 Abolition of 5th Comprehensive Act for Comprehensive 2001 Technopolis Act National Development of Regional Core Abolition of and Key Facilities’ Development Plan Cities with Relocation of New Industry Siting Act O ice-Work Function City Construction Promotion Act, 2002 2005 2005 Industrial Abolition of Act on Abolition of National National Spatial Development Restriction of Comprehensive Planning Act Special Zone Industrial Development Act Promotion Act Development Case Study on Territorial Development in Japan 11 COMPREHENSIVE NATIONAL However, the industries have typically flourished DEVELOPMENT PLANS in the Pacific Belt area. Japan initiated its national-level spatial INSTITUTIONAL FRAMEWORK: National level planning process as early as 1950 with the territorial development plans and laws in the formulation of the Comprehensive National recent history of Japan have primarily been Land Development Act. The first Comprehensive marked by the CNDPs based on the 1950 law, as National Development Plan was adopted more mentioned earlier. Subordinate to the national than 10 years later in 1962, with a horizon to plans were the Comprehensive Development 1970. It was followed by the New Comprehensive Plans pertaining to regions, prefectures and National Development Plan, which was designated areas, which were further supported developed in 1969 with a similar aim of guiding by other Regional Development Plans as part the spatial development of Japan’s then fast- of the hierarchy of national land development growing economy. This period was observing plans. Economic Planning Agency was solely rapid population growth, urbanization, and responsible for the CNDPs until 1974, which was industrialization having important spatial later reformed to National Land Agency and the consequences. law was revised to the National Land Formation Planning Law (2005). The subsequent 3rd and 4th Comprehensive National Development Plans were adopted TRANSPORTATION POLICIES AND in 1977 and 1987, respectively, with a horizon INVESTMENTS: Postwar, territorial and of a decade or more. During this period the transport plans have been prepared in population and economic growth had slowed coordination in Japan. Each of the five CNDPs down so the settlement pattern and economic aimed at spatially equitable growth of a geography were more stable. By the end of better and more stable living environment. To the century, the Grand Design for the 21st achieve these goals, transport investment has Century was approved in 1998, targeting the always been emphasized as the major policy 2010-15 period and explicitly addressed the instrument. consequences of globalization, demographic change, and the information technology (IT). REGIONAL INCOME INEQUALITIES: Japan is one of the countries with exceptionally low INDUSTRIAL LOCATION POLICIES: The have inter-regional inequalities in income by OECD been devised by the government after World standards. If balanced territorial development War II, starting from 1950’s. There have been means reduction in the two imbalances among modifications to the policy during each of the regions (i.e., differences in income levels and CNDP period aligning with the objectives of the living standard on one hand and differences in plans. Attempts have been made to concentrate the use of the national territory or population and deconcentrate the cities and areas of Japan density and frequency of economic activities on through changes in location of industries. the other) to acceptable levels, it may be said that Japan has succeeded with the former, as seen in figure below. 12 Tokyo Development Learning Center Policy Paper Series 2 FIGURE 5 Gini Coefficient of Regional Disparities in Selected OECD Countries 0.5 0.4 0.3 0.2 0.1 0.0 India Mexico Chile China Brazil Slovak Republic Turkey South Africa Estonia Hungary Korea Poland Belgium Ireland United Kingdom Canada OECD average Austria Portugal United States Italy Czech Republic Denmark Slovenia Germany Greece Spain Norway France Australia Findaland Netherlands Japan Sweden Russian Feder Source: OECD “Regions at a glance 2011” Box 1 Concept of Regional Development Regional development in Japan, driven by the industrial location policy, which entailed development of new industrial cities and the Technopolis, and other fields, such as resort areas, was generally conducted as outlined below. First, the central government zeroed down on a concept and suggested guidelines and determined conditions. Second, each local government (mainly prefectural governments) selected an area, prepared a plan, and requested the central government to designate the area and approve the plan. Once approved, the local government could receive concentrated investment in the public infrastructure, such as roads and ports, and support measures for the relevant businesses, such as tax breaks and low-interest loans from government-affiliated financial institutions. This kind of approach worked well for new policies developed nationwide, involving cooperation between the central government with its up-to-date information and the local government with its familiarity with the area. On the other hand, such an approach did not work as well as expected for some projects because more areas were selected than initially anticipated owing to overheated popularity and political pressures. Some critics also regarded the projects as a cause of pollution and destruction of nature. In addition, it was pointed out that this approach was discouraging regions to look at their individualities or local governments to act voluntarily because of the uniformity imposed by the central government. Case Study on Territorial Development in Japan 13 THE 1ST COMPREHENSIVE NATIONAL transport infrastructure. In a nutshell, the plan DEVELOPMENT PLAN intended to limit the further concentration of industry in the four largest industrial zones of Japan’s rapid economic expansion was guided Japan and narrow the gap between the various by the Income-Doubling plan established in regions’ development levels. 1960 as an economic plan. This was aimed to be realized by establishing the Pacific Belt THE INDUSTRIAL LOCATION POLICY: In Zone (Fig 6). On establishment of this initiative, response to the 1st Comprehensive National underdeveloped areas expressed strong Development Plan, 15 new industrial cities criticism; which led to the preparation of the 1st mainly outside the Pacific Belt Zone and six Comprehensive National Development Plan, for special areas for industrial consolidation in the an overall and balanced development. Pacific Belt Zone were specified (Fig 7). As part of concrete measures of the growth pole strategy, The Plan was established in 1962 with the the Law to Promote the Construction of New “growth pole strategy,” aiming at controlling Industrial Cities was enacted in 1962 (repealed overpopulation in large cities and correcting in 2001) and the Law on the Promotion of the regional disparities. Meaning the plans were Development of Special Areas for Industrial formed in accordance with a new concept called Consolidation was enacted in 1964 (also polarized development, which implied the repealed in 2001). According to these laws, creation of growth poles which could potentially heavy and chemical industrial sites were to be influence on the hinterland development; constructed along the coastal areas nationwide. industry in mid-sized cities, and the creation of Figure 6 Pacific Belt Zone as part of Income- Figure 7 New industrial cities and special areas Doubling Plan for industrial consolidation as part of 1st CNDP Douou area New industrial city Special areas for industrial consolidation Hachinohe area Akita Bay area Pacific Belt Zone Niigata area Sendal Bay area Toyama/ Iwaki-kooriyama area Takaoka area Kashima area Harima area Matsumoto Suwa area Chukai area Bingo area Higashi-suruga area Higashi-mikawa area Shunan area Minami area, Okayama Pref. Tokushiama area Oita area Toyo area Hyga/Nobeoka area Shiramui/Ariake/Omuta area 14 Tokyo Development Learning Center Policy Paper Series 2 INSTITUTIONAL FRAMEWORK: Until 1974, and income disparities between rural and the Economic Planning Agency, responsible for urban areas. This was addressed through developing Territorial Development Plans held spatial policies covered under the 1st CNDP of jurisdiction over the Comprehensive National promoting balanced development nationwide Land Development Act, Comprehensive National and local industrial promotion. Development Plan, regional development plans for Tohoku, etc. The National Capital NEW (THE 2ND) COMPREHENSIVE Region Development Committee, Kinki Region NATIONAL DEVELOPMENT PLAN Development Headquarters, and Chubu Region Development Headquarters under the Prime During the continuing economic growth, Minister’s Office were responsible for plans and problems related to national development, development in the three largest metropolitan including urban problems and regional areas – Tokyo, Osaka, and Nagoya respectively. disparities, were becoming more serious; the The Ministry of Home Affairs took care of the need for correction was vociferously advanced. promotion of underpopulated regions. The New Comprehensive National Development TRANSPORT INVESTMENTS: The 1960s saw Plan (1969) proposed a large-scale development great improvement in the economy, including project, which comprised construction of a the railways. In 1965, when the economic nationwide transportation network of rapid miracle set in, the Tōkaidō Shinkansen, the first national railways/ bullet rail (“Shinkansen”) and modern high-speed rail line connecting Tokyo expressway network and industrial complexes, and Osaka opened up. An expressway between farming, and sightseeing sites along this Nagoya and Osaka was also completed, infrastructure. Measures were also taken to enhancing the connectivity. relocate industries from over-concentrated areas (“removal areas”) to less developed areas Figure 8 Development of high-speed (“promotion areas”). The network of express transportation networks during 1st CNDP traffic services (Fig 9) was developed in response to strong demands of local governments and produced great effects, including improved convenience for citizens and businesses, promotion of industrial relocation to rural areas, fostering high-value added agriculture, and promotion of tourism. The development of the network systems enabled local economic development and de-concentration of the metropolitan areas. The highway network as of 1965 (Tokaido After formulating the Plan, realization of various Shinkansen and Meishin Expressway) other projects was also considered, but some of those were forced to be postponed or reviewed because of unfavorable circumstances, such as REGIONAL INCOME INEQUALITIES: Period issues of increasing environmental pollution, between 1960s to 1970s observed rapid and starting of oil crisis from 1973. economic growth and an increase in economic Case Study on Territorial Development in Japan 15 Figure 9 Projects of the New Comprehensive Development Plan Tenpoku Konsen Tomakuma Akita Mutsu-Ogawara Akita Bay Nakauma Kitakami- Irrigation district Toyama Kikaiwate Niigata Suo Sendal Hiroshima Nada Chubu mountain area Abukuma-Yamizo Asokuj New Tokyo High-speed trunk rallway Shibushi Bay International Airport Trunk expressway International airport Distribution base port Livestock base Industrial base Tourism recreation base THE INDUSTRIAL LOCATION POLICY: In Land Development Act; which was strongly 1972, after the New Comprehensive National opposed by the opposition party because Development Plan was implemented, the these bills were likely to increase the land Industrial Relocation Promotion Law was speculation and impact the environment and enacted to support relocation of existing plants nature that were already being social problems. in the metropolitan areas to rural areas through Consequently, the National Land Agency was tax incentives and subsidies and to support formed in June 1974 to combine various projects construction of hub industrial parks by the for land administration rather than a general Japan Regional Development Corporation. coordination of development administration. INSTITUTIONAL FRAMEWORK: The 2nd TRANSPORT INVESTMENTS: The bullet train CNDP was also prepared by the Economic lines were expanded to Northern Kyushu, Planning Agency before it was restructured Tohoku, areas along the Sea of Japan, Southern in 1974. With inauguration of Prime Minister Kyushu, and Hokkaido. Expressways were first Tanaka’s new Cabinet in 1972, a bill was constructed along a backbone, then branches passed a year later for restructuring the from this were constructed, which were further above administrative organizations and linked with local cities. For remote areas and establishing the “Comprehensive National Land islands, which were not included in the plan D-evelopment Agency” to promote various of bullet train lines, airports which could measures for the territorial development. This accommodate jet aircrafts were constructed. bill was submitted to the Diet along with an (Fig 9) amendment to the Comprehensive National 16 Tokyo Development Learning Center Policy Paper Series 2 Figure 10 Income Disparity Ratio over the CNDP Period 0.14 0.134 0.13 0.12 0.11 0.10 0.09 0.079 0.08 0.07 1st Plan 2nd Plan 0.070 3rd Plan 4th Plan 5th Plan 0.06 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 Year Source: Regional economic accounting (Cabinet Office), National Census Report and Annual Population Report (Ministry of Internal Affairs and Communication) DECLINE IN REGIONAL INCOME INEQUALITY: public investment in rural areas, which perhaps Per capita income inequality amongst Japanese retained the workforce in the underproductive prefectures began to narrow down since the rural areas. This phase also marked the end of first half of the 1970s and generally remained the peak rural-to-urban migration by post-war at a low level, except some fluctuations (Fig baby boomers (1947-49), that were migrating for 10). During the period of 2nd CNDP, efficient college or work. transport network was developed and this enabled the development of regions and THE 3RD COMPREHENSIVE NATIONAL areas outside Pacific Belt Zone too. The gap DEVELOPMENT PLAN was subsequently reduced by uplifting rural income through the following measures - a) As Japan’s economy was shifting from the improving productivity with development of rapid growth to the stable growth phase, manufacturing sector, where underproductive the concentration of the population in the agriculture had previously been the most three metropolitan areas slowed down. The important industry, and b) substantial increase population census conducted in 1980 showed in public investments. The reduction in regional population growth in each of the 46 prefectures income inequality also led to the slowing other than Tokyo. The 3rd Comprehensive down of the population migration from rural National Development Plan (1977) was intended to urban areas. This was owing to sluggish to harmonize nature, life, and production income growth and employment absorption with human habitation. This Plan shifted rate in the largest metropolitan areas because its focus to living environments rather than of the decreased economic growth rate, industrial infrastructure, placing importance resulting in lower population inflow. Slower on the development of settlement areas and a economic growth could also be attributed to the balanced placement of educational, cultural, decentralization of the industries and increased and medical facilities. Case Study on Territorial Development in Japan 17 To promote the 3rd Comprehensive National looking for targeted investments in the lagging Development Plan, a model settlement area was regions. This led to the surge of “localism” constructed for each prefecture, and various against a backdrop of improved socio-economic projects were implemented for the development conditions. During this period, governors and of the residential environment, specifically mayors of local governments along with the featuring preservation and use of traditional citizens initiated voluntary regional activities culture and historic properties within the region. for growth and development, based on their local advantageous characteristics. An example With discontent over the Pacific Belt Zone of one such program was the “One Village One initiative, sub-national governments were Product” movement. It began in Ōita Prefecture in 1979 when the then-governor advocated Figure 11 Model Settlement Areas based on the the program. Communities selectively began 3rd Comprehensive National Development Plan to produce goods with high added value. One village produced one competitive and staple product as a business to gain sales revenue to improve the standard of living for the residents of that village, such as shiitake, kabosu, greenhouse mikan, beef, aji, and barley shōchū. Over 300 such products were selected. INDUSTRIAL LOCATION POLICY: A short time after the 3rd Plan, the Ministry of International Trade and Industry proposed the idea of Technopolis, aiming at promotion of local industries with the development and transfer of technologies as the driving force, focusing 1 on cutting-edge technologies and regional development with linkages between industry, universities, and living environments for the 26 areas specified under the Technopolis Law (1983). Figure 12 Changing trend of industrial products and number of employees in the three metropolitans versus other areas Shipment of Industrial Products Number of Employees 1955 60.1 39.9 1955 55.0 45.0 1965 63.9 36.1 1965 58.0 42.0 1975 57.6 42.4 1975 52.5 47.5 1980 55.2 44.8 1980 49.3 50.7 1985 55.8 44.2 1985 51.1 48.9 1990 55.2 44.8 1990 47.9 52.1 1995 52.4 47.6 1995 48.4 51.6 2000 51.1 48.9 2000 47.0 53.0 2005 49.7 50.3 2005 46.3 53.7 2010 48.5 51.5 2010 45.7 54.3 3 Metropolitan Areas Other Areas 3 Metropolitan Areas Other Areas 18 Tokyo Development Learning Center Policy Paper Series 2 INSTITUTIONAL FRAMEWORK: The National the 1968 City Planning Law revisions c) the city Land Agency instituted in 1974, worked on offered a better living environment, free from the Comprehensive National Development pollution of industrial zones, especially after the Plans, development of metropolitan regions, citizens’ movement for livable environment as and territorial development policy, including articulated and dealt by 3rd CNDP. Ultimately, promotion of rural areas, along with land- higher concentration in the region stemmed up related measures and disaster prevention. issues of soaring land values, monetary easing, The 3rd–5th CNDPs were prepared by the and others. This necessitated the formulation of Agency. The Agency worked with the Ministry the 4th CNDP in 1987. of Construction; Ministry of Transport; Ministry of Agriculture, Forestry and Fisheries; Ministry The 4th Comprehensive National Development of Industry and Trade; and Ministry of Home Plan (1987) aimed to address the issue of Affairs for planning and promoting measures, overconcentration in the Greater Tokyo Area. as a general coordinator, because its work was Targeting the year 2000, it approached the closely related with social infrastructures and de-concentration of big cities by creating other related measures. Personnel exchanges the multiple satellite cities with different were also adopted. characteristics, known as “multipolar patterned national land”. The satellite cities shall be TRANSPORT INVESTMENTS AND POLICIES: connected via interactive network systems. In 1980 Japanese National Railways (JNR), This meant to build an information and a state-owned public corporation was communication system and “a transportation reorganized under the JNR Reconstruction Act, network enabling one-day trips,” the which mandated low-profit railway lines to be development of an expressway network across abandoned. Portliner, Japan’s first automated the country, which could enable people to guideway transit (AGT) was opened in Kobe in go to and return from major cities in a single 1981. One of the world’s first driverless urban day. It described the distribution strategy of transit systems, this urban AGT system is the population and economical activities operated by Kobe New Transit. A huge turning by transferring the Public administrative point was the privatization of JNR to Japan institutions to the sub-centers. Railways Group in 1987. The Fourth Plan differs from earlier plans with REGIONAL INCOME INEQUALITY: Trends in its emphasis on the National Capital Region the early 1980s point towards increasing trend (NCR) and its positive role that it plays in the in the income inequalities in the regions, with development of Japan. The NCR was divided changes in financial reforms directing increased into two zones - the Tokyo Metropolitan Area investments in Tokyo metropolitan area. The and the ‘Outer Areas’. This strategy envisaged gap widened further in the 4th CNDP phase. the development of the NCR as a national and international center of political, economic and THE 4TH COMPREHENSIVE NATIONAL cultural activities. The NCR’s interrelation with its DEVELOPMENT PLAN suburbs (Outer Areas) as well as other regional urban centers was seen within a supportive In the 1980s, concentration of higher levels of multicore framework, where natural and man- urban functions and re-concentration of the made environments also received prominence. population in the Greater Tokyo Area were One of the characteristics of this policy was prominently visible. This was a result of many that it positioned Tokyo as the pivotal city, factors – a) land prices in Tokyo declined due supported by the other smaller cities and sub- to higher supply than demand b) Building centers, and put it on the world map in the era of Standards Law 1970 was revised incorporating globalization and information-driven economy. higher permissible FARs of the buildings as per Such policies reflect a turning point where Tokyo Case Study on Territorial Development in Japan 19 Figure 13 Increase and Distribution of “Daily Exchange Population” (1970) (1985) (Future) Ratio of the daily interchangeable population to the total population of Japan 30 % 15 30 % 7 15 % 0 7% 1. Daily interchangeable population is the total number of people living within a range that can be reached within about 3 hours on one way starting from a certain point. 2. Consider each capital of the prefecture as a main point of the prefecture, calculation is carried out based on the shortest time distance between these main point. 3. For the future transportation system, it is assumed with the case the development of the high-speed transportation system was made during the planning period in the description of the text. Note: “Daily exchange population” refers to the sum of the people residing in all areas within 3-hours of travel from a given point. The legend indicates the percentage of this “daily exchange population” against the national population. Hence, the higher this percentage, the more people one can exchange/ interact in a day travel (no stayover days). was accepted as a hub of the economy, and the treatment in financial services and tax breaks, strategy became about managing concentration and deregulation. in the Greater Tokyo Area (rather than fighting concentration). INSTITUTIONAL FRAMEWORK: In 1986, the National Land Agency of Japan published THE INDUSTRIAL LOCATION POLICY: After the the Development Plan for the National establishment of 4th Comprehensive National Capital Region and the outline of the 4th Development Plan, the development of research Comprehensive National Development Plan. parks for software and design industries based on the Key Facilities Siting Law (1988) and TRANSPORT INVESTMENTS: In 1988 the development of business parks based on the Act zairaisen (3’6” gauge) networks of Hokkaido and Concerning the Promotion of the Development Shikoku were connected to Honshu following of Regional Core Urban Areas and the Relocation the opening of the Seikan Tunnel (the longest of Facilities for Industrial Business (1992) railway tunnel in the world until 2016) and the was promoted in rural areas. These policies Great Seto Bridge, with the Shinkansen network led to considerable progress in industrial extended to Hakodate following the dual- decentralization and aimed at attracting gauging of the Seikan Tunnel in 2016. businesses to rural areas, in line with the local characteristics, to overcome barriers in business Focusing on harnessing concentration in activities and to promote balanced territorial Tokyo, the subway system of the city was development and regional vitalization through further strengthened with opening of “Tokyo the development of an industrial infrastructure Metro Namboku Line”. As of 2015, Tokyo’s (both hard and soft), subsidization, preferential subway network comprises 278 stations and 13 lines covering a total system length of 304.1 kilometers (189.0 mi). 20 Tokyo Development Learning Center Policy Paper Series 2 Box 2 Central Management Functions and Capital Functions All administrative functions, which are political, executive, and judicial, and more than 50% of the head offices of major businesses are concentrated in Tokyo (>60% for the Greater Tokyo Area). In the 1970s, it was recognized that main factors in the concentration of population were related to these management functions and higher levels of cultural, financial, and information services, but not to industrial manufacturing. Unlike London and other large cities, there was never a regulation for the establishment of business offices in Tokyo. The 4th Comprehensive National Development Plan indicated that the cost burden for business offices established in the center of Tokyo needs to be discussed, but it was not possible to defend an argument that the promotion of international roles should not be interrupted. However, the need and importance of relocating capital functions was strongly felt based on three factors - (a) overall government reform, (b) solutions towards negative externalities due to concentration of activities in Tokyo, and (3) strengthened disaster preparedness capabilities. In 1990, the House of Representatives and the House of Councilors passed a resolution for the relocation of the Diet (= Parliament), which stated that “the government should relocate the Diet and other organizations from Tokyo.” In 1992, the Diet passed the Act for the Relocation of the Diet and Other Organizations. Ever since, the relocation of the capital functions has been subjected to investigations and deliberations from many perspectives. It is an important subject that concerns many individuals. The Council’s report is expected to encourage discussions in broader aspects, from wider angles, by an even greater number of people. According to the polls conducted to date, the number of people approving of the relocation is generally higher than the number disapproving of it in most areas throughout the country, except for the residents of Tokyo, where the number of residents disapproving of it is quite high. Figure 14 Tokyo Subway Map Case Study on Territorial Development in Japan 21 REGIONAL INCOME INEQUALITY: In the The 5th Comprehensive National Development late 1980s and until 1990’s regional income Plan targeted to promote regional independence inequality widened (Fig 10) and the population and create a beautiful national land with inter- inflow increased in the Greater Tokyo area regional cooperation as a national policy for the during this boom period. Financial institutions 21st century. The plan aimed to strategize based increased their loan for investment in stocks and on the following policy agendas, which seemed real estate, especially in the Tokyo metropolitan to be the need of 21st century. area, as it became one of the major international financial and information centers in the world, 1. Significant changes in national following the deregulation and liberalization consciousness: this period observed of the financial sector in Japan. As a result, changes in people’s values towards – a) the prices of stocks and real estate increased placing more importance on quality than conspicuously, and their respective capital gain on quantity, on comfortable living than brought huge wealth to on higher income b) giving significance to the investors creating wealth inequalities, which freedom to choose and on self-responsibility was later dealt with land price control policy. c) realizing that nature is a precious part of However, this bubble economy collapsed in life and importance of natural environment the early 1990s with a drastic fall in the prices d) believing in equal opportunity and equal of stocks and real estate, and the Japanese responsibility for men and women in society. economy entered a period of long recession and subsequently reversal of trends. 2. Global age: increasing threat to the   environment from global warming and THE 5TH COMPREHENSIVE NATIONAL other factors may lead to restricted supplies DEVELOPMENT PLAN - GRAND DESIGN of food, resources and energy on a global FOR THE 21ST CENTURY scale. In response to such concerns, international systems were planned to With approaching of 21st Century, it was clear be strengthened to preserve the global that the new century will undoubtedly bring environment and to promote the circulatory with it an increased consciousness of nature use of resources. In these circumstances, the and the limited resources on the globe, and efforts to conserve the natural environment raise people’s hopes of leading comfortable as a common asset of the future generations and dignified lives in which they can enjoy both and the global community are being economic wealth and intellectual satisfaction. undertaken. Also, it was realized that As a prerequisite to providing this kind of life, regional competition will intensify beyond a national land plan is necessary to lead the national boundaries. To survive the country toward the following goals: maintaining competition, each region needs to have its socioeconomic vitality as the sources of own many-sided attractions, including a affluence; conserving and recovering the natural high quality of life environment, richness environment in order to soothe and heal the in nature and culture, substantiality of the human spirit by its blessings; creating the intellectual resources, efficiency of industrial basis for a culture that brings fulfillment and infrastructure, a high-quality transportation significance to human activities; and providing infrastructure, and especially accessibility to its citizens with the capability to choose their the global network. For regions to develop in own lifestyles from various possibilities. This led the right way, drastic reforms must be made to the proposal and development of the “Grand to the socioeconomic system to change the Design for the 21st Century” in 1998. existing high-cost structure. 22 Tokyo Development Learning Center Policy Paper Series 2 3. Decreasing population and aging interregional cooperation and interactions society: Japan’s population growth has of cities over the wide range. been slowing rapidly mainly because of • Second, comfortable living conditions must the declining birthrate. Concurrently, the be supported by more efficient production, number of elderly will increase further. distribution and consumption. Each region In the aging society of the 21st century, should be developed to provide wide- the economic growth rate will fall off and ranging functions including protecting and availability of investment will decrease. To restoring the natural environment and counteract this trend, Japan is promoting creating new cultures and lifestyles. economic efficiency and technical • Third, each region should have the facilities innovation, and pursuing well-focused to conduct international exchange and be and more efficient investment in the able to provide the most advanced urban infrastructure. With a stagnant population functions, not only according to their role growth, the necessity to transform into within the regional structure of Japan, but urban land use style to support an also as a member of the Asian Pacific region increasing population, will diminish at a and of the global society. country level. Instead, the possibility to develop land from a long-term viewpoint Looking forward, Japan’s declining, and aging needs to be explored. population, in fact raises the importance of allowing concentration in a few dynamic, high- 4. Highly informatized society: From the amenity, places that can be serviced efficiently, beginning of the 21st century, restrictions rather than trying to spread a dwindling caused by time and distance will be population across the country. With a declining overcome on both national and global population increasingly concentrated in the scales, and two-way communications Pacific Belt/Tokyo (see Figure 15), maintaining almost “face-to-face,” will be possible. As a the connective infrastructure built may impose result, information and communications will a difficult fiscal burden, which is a forward- take on dramatically greater roles, in various looking challenge of Japan’s largely successful socioeconomic aspects. New industries investments in quality connective infrastructure. will appear in the field of information and The other map on the right displays the communications. Regional communities, areas which the government deems will be which has suffered from disadvantages abandoned by 2050 - it is estimated that 20% of that include limited accumulation, and current inhabited area will become abandoned, the distance from the large cities, will and the total inhabited area nationwide will have greater opportunities to develop decrease from 50% of the territory to 40%. themselves. To lead regional development, the efforts to utilize global information INDUSTRIAL LOCATION POLICY: Most of the networks will be one of the significant industrial location policies achieved their goals factors. by this period and were repealed in around 2000 when the economy was globalizing. As Addressing these agendas and issues, this plan a substitute for these policies, new regional developed the new land structure, focusing on industrial policies, such as the Industrial Cluster the following concept. Policy, were promoted, but these policies • First, the hierarchical inter-city structure covered the largest metropolitan areas and had with Tokyo at the top has created a “hub different characteristics from previous industrial and dependent satellites” relationship. location policies, which aimed at balanced This hierarchy needs to be flattened to territorial development. create one based on independence and mutual support, to pursue merits through INSTITUTIONAL FRAMEWORK: While the 5th Case Study on Territorial Development in Japan 23 Figure 15 Current Distribution of Population Figure 16 Prospective Abandoned Areas by 2050 Population density 0 1-99 100-299 300-999 1,000-2,999 3,000-4,999 Over 5,000 Prospective areas to be abandoned by 2050 Source: Intermediate results from “Long-term Prospects of Territorial Development” (2011) Source: National Census 2010 CNDP was prepared under the jurisdiction of the Agency, except disaster prevention. The 1st and National Land Agency, administrative reforms 2nd National Spatial Strategies were developed for territorial and other sector developments by MLIT. were initiated during this period. Prime Minister Hashimoto’s Cabinet, which took office in TRANSPORT INVESTMENTS: This plan 1996, raised the idea of administrative reform focused on improving the transportation and as an important issue. The Administrative communications systems while considering Reform Council which was formed immediately harmony with nature, safety and the under the Prime Minister mainly discussed the environment, based on suitable role-sharing reform of the central government ministries between the public and private sectors and the enhancement of the Prime Minister’s as well as between the national and local Office functions. Consequently, the central governments. Under this plan, projects were government was reformed from one Cabinet and designed to provide equal access to diversified 22 ministries to one Cabinet and 12 ministries. functions that will help each region to become As part of the reform, the Ministry of Land, broadly independent, including employment Infrastructure, Transport and Tourism (MLIT) opportunities and advanced urban services, was established, integrating the Ministry of establish transportation and communications Construction, Ministry of Transport, National systems that are convenient and easy to use Land Agency, and Hokkaido Development even for the elderly at reasonable prices. Agency, responsible for the comprehensive and systematic development and use of the national DECLINE IN REGIONAL INCOME INEQUALITY: land, and resulted in consistent development of Despite increasing concentration of activity and infrastructure. MLIT was established in January population, Japan in 2010 recorded the second 2001 and took over the role of the National Land lowest inter-regional Gini co-efficient for GDP per 24 Tokyo Development Learning Center Policy Paper Series 2 capita in the OECD and the lowest disparities in a commendably lower difference of average the OECD between predominantly urban and per-capita income between the top five and rural regions, reflecting, among other things, the bottom five prefectures, which has reduced a long-standing commitment to well-defined significantly from 1960, as shown in figure 17. levels of infrastructure and service provision across the country. In 2000’s, Japan exhibited CHANGE IN THE OUTLOOK TOWARDS Figure 17 Ratio difference in the average per-capita income between the top five and the bottom five prefectures 2.40 2.32 2.30 2.20 2.10 2.00 1.98 1.90 1.80 1.70 1.60 1.50 1.57 1.58 1.40 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Source: Prepared based on the Cabinet Office, “Prefectural Accounts” and the Ministry of Internal Affairs and Communications, “Population Census Report” and “Annual Report on Current Population Estimates” Note: The prefectural incomes between FY1955 and FY1989 are based on 68 SNA (System of National Accounting); those from FY1990 are based on 93SNA. Case Study on Territorial Development in Japan 25 Table 1 Summary of Comprehensive National Development Plans (CNDPs) 1st CNDP 2nd (New) CNDP 3rd CNDP 4th CNDP 5th CNDP Cabinet March 31, Oct 5, 1962 May 30, 1969 Nov 4, 1977 June 30, 1987 Decision 1998 For about 10 Target Years 1970 1985 years from Around 2000 2010-15 1977 Effective 1969 1977 1987 1998 2005 Years Basic Balanced Creation of an Improvement Establishment of Establish- Objective development enriched (people) of the com- multipolar decen- ment of the between re- environment prehensive tralized national foundation gions environment land for creating for human a multi-axial inhabitation national land structure Develop- Polarized de- Large-scale devel- Settlement Exchange network Participation ment velopment opment project plan plan and cooper- method, etc. · Transition plan · Stable · Concentration of ation to high · High economic economic population and · Global era economic growth growth functions in the (global en- growth · Correct uneven · Create a Tokyo Metropoli- vironmen- · Controlling distribution in comprehen- tan area tal issues, overpopula- the use of na- sive envi- · Growing concern mega com- tion in large tional land and ronment for over employ- petition, cities · Dissolve con- human in- ment issues due exchanges · Correcting gestion, depop- habitation to rapid changes with Asian regional ulation, and · Promotion of industrial countries) disparities regional dispar- of balanced structures in · Era of · Promote ities through land use regional areas population dispersion improvements across the · Progress to- decline and of industry of networks, nation by wards full Inter- aging to achieve such as the suppressing nationalization · Era of balanced Shinkansen (bul- the concen- advanced devel- let train) line and tration of information opment highways, and the popu- between · Promotion of lation and regions large-scale proj- industry in by setting ects large cities growth · Progress of in- while ad- poles (hubs formatization, dressing the / clusters) internationaliza- problem of and or- tion and techni- congestion ganically cal innovation and depop- connecting ulation by them using promoting transport regional de- facilities velopment · Income- · doubling plan (Pacific Ocean belt initiative) Source: Modified by authors based on reference from Ministry of Land, Infrastructure, Transport and Tourism 26 Tokyo Development Learning Center Policy Paper Series 2 THE TERRITORIAL DEVELOPMENT suburbs, and the land use lacked harmony POLICY with its surroundings in rural areas. Land and water contamination and dumping of illegal Five Comprehensive National Development wastes became threatening social problems. Plans were formulated from the 1960s to the With effectiveness of Omnibus Decentralization 1990s to give direction to territorial development Act in 2000, roles played by the national and based on the philosophy of “balanced territorial local governments largely changed with local development.” They had successfully uplifted authorities becoming more autonomous the Japanese cities and people, ensured than hierarchical, which also meant more balanced regional income disparities, improved opportunities for decentralized development public facilities and infrastructure, added under the aegis and guidance of the central element of nature and beauty in Japanese government and that could not be supported settlements and people’s attitude, and overall with the CNDP framework. All the above led to improved the quality of life. the need for restructuring planning systems aligned with spatial, economic, social, political, However, it was realized later that the unipolar and governance requirements of the 21st structure concentrated in Tokyo and the Pacific century. Belt Region was not yet entirely redressed. There were still many provincial areas troubled With approaching of the new century, urban by outmigration to central urban districts and renaissance became an important theme it was becoming a serious problem in local in the national policy under Prime Minister cities. In metropolitan areas, issues such as Koizumi. The policy aimed at the promotion of over congestion of urban districts were issues economic revitalization and increase in Tokyo’s in terms of disaster prevention and living global competitiveness, and the philosophy of environment. Furthermore, the landscape “balanced territorial development” diminished. also quite disordered due to the sprawl in Case Study on Territorial Development in Japan 27 3. ECONOMIC AND ADMINISTRATIVE POLICIES AND CONCEPTS IMPACTING SPATIAL DEVELOPMENTS INVESTMENT IN SOCIAL OVERHEAD For a balanced spatial development and to CAPITAL achieve objectives of the territorial development plan, it is imperative to develop and invest in In the 1960’s Japan was poorer than other social overhead capital. At the beginning of advanced countries in public housing, the economic miracle, such infrastructures in transportation, waste disposal facilities, public Japan were underdeveloped, and therefore, parks, health and medical services, social five-year plans were established for each welfare facilities, educational, cultural facilities, type of infrastructure to promote systematic environment, and so on. These goods and development with a medium- and long-term services are what are now called public goods, perspective. In 2003, various plans under the and are essential for maintaining normal Ministry of Land, Infrastructure, Transport modern living, and investments in them is and Tourism (formerly the Ministry of Land, regarded as public or social overhead capital. Infrastructure and Transport) were integrated into a focused plan for improvement of the social infrastructure to harmonize with the National Spatial Plan. Figure 18 Social overhead capital investment (general government gross fixed capital formation vs. GDP ratio) among countries Germany Italy UK USA France Japan Korea Sweden 8 7 6 5 4 3 2 1 0 1995 1961 1964 1965 1968 1971 1972 1973 1975 1978 1979 1980 1983 1987 1990 1991 1994 1996 1998 2001 2002 2003 2006 2010 2013 2014 2015 1960 1962 1963 1966 1967 1969 1970 1974 1976 1977 1981 1982 1984 1985 1986 1988 1989 1992 1993 1997 1999 2000 2004 2005 2007 2008 2009 2011 2012 Source: Honkawa Data Tribune 28 Tokyo Development Learning Center Policy Paper Series 2 Figure 19 Ratio of Administrative Capital Investment per Capita Tottori Aomori Tokyo Aichi Osaka 200 180 160 140 120 100 80 60 1960 1965 1970 1975 1980 1985 1990 1995 2000 2000 2010 Source: Cabinet Office (Tottori, Aomori, Tokyo, Aichi and Osaka Prefectures – top to bottom) As can be seen in figure above, from the 1970s proposals from local governments and obtain to the 2000s, Japan continued to invest more in feedback from citizens, and iii) a double-layered social overhead capital compared to many other system to unite the National and Regional Plans countries, before it plummeted suddenly in the for regional independence into a partnership beginning of 21st century and then stabilized. between national and regional governments. The decline in investments was because of severe financial constraints and an increase in Under the new system, the 1st National Spatial social security payments. Strategy (NSS) was established in 2008 with the Region Plans for Tohoku, Kyushu, and other With respect to regional allocation of social regions launching the following year and the 2nd capital overhead investment, the investment NSS was established in 2015 and subsequent amount per capita was higher in the largest Regional Plans in 2016. metropolitan cities than in rural prefectures in the 1960s; however, the trend reversed after PROMOTION OF UNDERDEVELOPED that period, except during the economic bubble AREAS years. Parliament members implemented laws for REFORM OF THE PLANNING SYSTEM remote islands, mountain villages, and heavy- snow areas far from the metropolitan cities, The Comprehensive National Land Development which were under severe natural conditions, Act was amended in 2005 and was renamed as and faced issues of depopulation and declining the National Spatial Planning Act. The revision vitality. Under these laws, various support points included i) a change from development- measures were undertaken, including securing centric approaches to planning for a mature public works budgets, increasing government society for quality of life, ii) a system to forward subsidies, and implementing human-related Case Study on Territorial Development in Japan 29 measures (e.g., promotion of tourism, reducing the inter-regional inequality. industrial development, and maintenance of 4. It is believed that the leading driver of transportation services). increased inequality in the developed world is the accumulation of wealth by those DECLINE IN REGIONAL INCOME who are already wealthy, driven by a rate of INEQUALITY return on capital that consistently exceeds the rate of GDP growth. Japan has a high As noted earlier, inter-regional inequalities income-tax rate for the rich (45%), and the in income in Japan have been much lower inheritance tax rate recently was raised to than many other developed countries, 55%, which makes it difficult to accumulate perhaps comparable to Nordic countries. High capital over generations – a trend that concentrations of population and economic is considered as a significant driver of activity with low territorial disparities has been a inequality. prominent characteristic in Japan since 1980’s. There are many reasons which are attributed, In Japan, geography of production has been and sometimes speculated for Japan’s low controlled through strategies and policies for regional income inequality. an equitable growth. However, the concept of 1. Japan has traditionally been a highly providing good standard of living to the people, centralized country with a strong wherever they are, was never given any less commitment to territorial cohesion. It priority. This has been achieved through strong is possible that the extremely high rate public services and progressive tax and transfer of urbanization lowers the rural-urban policies applied everywhere, that capture the inequalities because of the lower relative benefits of a strong economy and reinvest weight of the rural population lowers the them to ensure equitable living standards for cost of policies aimed at improving service all. Japan has been successful in achieving provision outside the cities and raising the ‘flattened’ standard of living, while allowing the standard of living of rural dwellers. concentration of production for high growth. 2. Data suggests that there is a labour market equilibrium in Japan that serves to limit Looking forward, Japan’s declining, and aging wage disparities across areas. population, raises the importance of allowing 3. Indicators such as health, safety, and jobs concentration in a few dynamic, high-amenity rank very high for Japan compared to places that can be serviced efficiently, rather other OECD countries explained by higher than trying to spread a dwindling population investments in these sectors, further across the country. 30 Tokyo Development Learning Center Policy Paper Series 2 4. KEY MESSAGE ON TERRITORIAL PLANNING Territorial development or planning is typically 2. Connectivity: connect markets associated with the spatial integration or nationally and internationally geographical scale of development. It could This refers to addressing “soft” connectivity mean development of specific areas or constraints with the same effort as physical territories, which could be urban, metropolitan, transport infrastructure, such as roads regional or rural jurisdiction. However, in a more and railways. This means access to labor technical sense, territorial development is an markets, information and services, and integrated multi-sector development, guided goods. Connecting markets promotes by a spatial vision of the desirable future and specialization of production across places, supported by strategic investments in physical and production at scale, both of which are infrastructure and environmental management. key to productivity. For economic growth, it Learning from the good practices of territorial is critical to connect cities with each other planning world-wide, three key points come domestically, and with global markets forward that must be considered while making externally. Investments in connectivity the plans. deserve a central place in industrial and social policy. 1. Concentration: create generic capital for an uncertain future economy 3. Convergence: decent living standards The concept promotes putting in place the everywhere foundational capital that will be essential This emphasizes the concept that to productivity for any future economy. people everywhere deserve decent living This focuses on building on existing standards and opportunities, while firms agglomerations and facilitating comparative and institutions may concentrate, and that advantage, which is achieved by promoting reduces regional disparities. Therefore, cities with strong institutions and broad- instead of trying to flatten the geography purpose infrastructure. It includes of production, aim should be to ‘flatten’ developing quality institutions; fluid factor the geography of living standards and markets; broad-purpose infrastructure; and human capital. This could be achieved by human capital. Dense and highly-educated taking advantage of high urbanization and work forces provide the support pillar. local connectivity, to deliver strong public services for all, and address human capital deficiencies. Case Study on Territorial Development in Japan 31 This work is product of the staff of the World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. Nothing herein shall constitute or be considered to be a limitation upon or waive of the privileges and immunities of the World Bank Group, all of which are specifically reserved. The Tokyo Development Learning Center (TDLC) program is a partnership of Japan and the World Bank Group. TDLC supports and facilitates strategic World Bank Group and client country collaboration with select Japanese cities, agencies and partners for joint research, knowledge exchange, capacity building and other activities that develop opportunities to link Japanese and global expertise with specific project-level engagements in developing countries to maximize development impact. World Bank Group Social, Urban, Rural and Resilience Global Practice Tokyo Development Learning Center (TDLC) Program