Revitalizing local economies

A pair of bills aimed at revitalizing Japan’s local economies — enacted at the last minute before Prime Minister Shinzo Abe dissolved the Lower House on Friday — merely sets the procedures for the national and local governments to work out strategies to reverse the accelerating concentration of resources and population in big metropolitan areas. To introduce meaningful steps to address this long-running problem, the government needs to make sure not to repeat the same mistakes of its past efforts.

Abe has put regional revitalization high on his agenda amid criticism that his economic policies have mainly benefited major firms in big urban areas. A think tank report released in May added to the alarm that something urgently needs to be done. It warned that if rural depopulation continues at the current pace, half of the nation’s roughly 1,800 municipalities will be put at risk of disappearing within a few decades — with local public services such as social security, public transportation and school education rendered unsustainable.

The demographic data underlines the continuing population flight from rural areas. The three largest metropolitan areas around Tokyo, Nagoya and Osaka combined had a record high population of 64.39 million as of January, accounting for 50.9 percent of the whole nation, while Japan’s total population fell by 240,000 for the fifth straight year of decline. The population of Tokyo alone increased by 67,500 while 39 of Japan’s 47 prefectures lost population compared to the previous year.

But the problem did not emerge out of the blue. Lawmakers have for decades advocated revitalizing regional economies, and taxpayer money has been spent to this end, but such efforts have had seemingly little impact on stemming the population flight.

A draft of the national government’s strategy includes a review of past government policies. It says that regional revitalization efforts so far have been hampered by bureaucratic divisions between ministries and agencies, which introduced separate programs without much cross-turf coordination. Many of the programs resembled sheer pork-barrel spending and their effects were never reviewed, and uniform projects were introduced across the country that ignored diverse regional needs. In short, taxpayer money has been spent the wrong way.

The Abe administration set aside a special quota of up to ¥4 trillion in the budgetary requests for fiscal 2015 on measures to address regional revitalization and population problems. Whether the administration can overcome bureaucrats’ ingrained efforts to secure funds for their ministries — and can adopt programs that serve the needs of each of the regions and municipalities — will test its commitment to introducing meaningful steps to address the issue. Regional revitalization must never be used by bureaucrats and lawmakers as a pretext for securing government projects and money for their own needs.

One of the laws enacted by the Diet requires the national government to devise a comprehensive strategy to deal with regional depopulation over five years beginning in fiscal 2015. To put a brake on the shift of population, resources and money to greater Tokyo, it calls for the creation of jobs and a better environment for young people so they stay, work and raise families in their home regions. The law urges the prefectural and municipal governments to create their own strategies by March 2016. The other law calls for the creation of an integrated channel for prefectures and municipalities to apply for national government support for efforts such as attracting business investments.

There will be areas in which the national government should take the initiative and provide leadership. The introduction of a tax system that provides incentives for businesses and people to move from Tokyo to other parts of the country is one idea. Relocating and dispersing the nation’s capital functions away from Tokyo — which has long been advocated to little avail — may be another.

Equally important will be the national government’s readiness to accept initiatives from local governments — which should be in the best position to understand their own diverse regional needs — and extend maximum support for locally driven efforts. Decentralization of the national government’s administrative powers should also be pushed forward so that regional revitalization will ultimately be put in the hands of local governments.