Activating precursors of agglomeration: how large is impact of Japanese agglomeration inducing policies on manufacturing employment?
Abstract: This study assesses effect of Japanese policies that can realize agglomeration against change of employment of Japanese manufacturing. It firstly identifies three precursors of agglomeration from literature review: network of similar companies, organizations with world-class technology and organizations with big demand. It then theorizes agglomeration factors induced by the precursors as well as factors for exploiting the agglomeration factors. Based on the finding, this study conducts cross sectional analysis of Japanese prefectures in order to evaluate influence of three policies that potentially induce the precursors of agglomeration to retention of regional manufacturing employment. The results indicate positive influence of the Japanese Industrial cluster initiatives, which aims at reinforcing network among companies, universities and government, on change of regional manufacturing employment from 2001 to 2006. The results also suggest negative impact of highly subsidized policies to invite companies on change of the employment of small businesses. Further look into the policies indicates that business creation is important for exploiting agglomeration factors of the organizations with world-class technology and that the other policies than the Industrial cluster initiatives likely failed in exploiting agglomeration factors of the precursors. Consideration of the factors for exploiting the agglomeration factors is suggested for policymakers.
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