The regional circular flow of information services and "mono-polarization in Tokyo": A case study of the Tohoku region

Abstract

The excessive spatial concentration of high-order economic and administrative functions and population in Tokyo has been recognized as a serious problem. This paper attempts to clarify the actual parameters of this phenomenon. As a case study, it examines concentration in the information service industry, which achieved rapid growth in the 1980s. The analysis especially emphasizes the regional circular flow of information services. The data are arranged in a regional input-output table; this statistical manipulation, clarifies the regional structure of the information service industry in Japan. Also this will point out the validity and limitations of "exogenous development" for the growth of regional economies. It became clear that information services are concentrated in Tokyo. The Tokyo Metropolitan Area contains about half of the total number of business establishments in this industry. The information service demands emerging from the various regions of the concentrate on the Kanto region, and especially aim toward Tokyo. In the stock sense, the industry has formed a large agglomeration in Tokyo and maintains a large node there in the flow sense as well. In the Tohoku region, which is used as a case study region in this paper, the information service demands emerging from this area are little concerned with local economic activity. The demands from the Tohoku region depend on such "public" sectors as public administration, public utility companies, public sector service and public works constructors, whose activities are based on the regional transfer of public financial funds. In short, the demands are not endogenous. In the supply phase, regional exports from the Tohoku region are almost nothing, and the self-sufficiency rate of information services is also relatively low compared with other regions. Thus, the relationship between regional flow of information services and regional economic activity is extremely thin. Various factors have brought about this pattern of concentration on Tokyo. Demand come through both market channels and the intra-corporate trade channels. In the former case, as a result! of the regional disparities in the level of technology and different sizes of enterprises, the demands concentrate in the Tokyo metropolitan area, in which large corporations with high-level technology are monopolistically located. And "unbundling," separating the cost for software from the price of hardware, has been underdeveloped in Japan: it results in the concentration of the demands received by computer makers whose headquarters are almost all located in the Tokyo metropolitan area. This movement is, of course, reflected in the spatial dimension - namely, physical concentration in Tokyo. In the latter case, through intra-corporate trade channels, the demands have been directed toward the headquarters. In the information service industry, what is transferred from branch offices to head-quarters, are added value and demands. The headquarters of large private corporations are so concentrated that the demands and added value are drawn out from various regions and flow into Tokyo. The factors mentioned above are also cross-related and cumulatively contribute to the process of "mono-polarization in Tokyo". In this regard, "mono-polarization in Tokyo" can be recognized as an inherent problem deriving from the Japanese politico-economic structure.