A Spatial and Economic Analysis of Agglomeration, Multinational Firms’ Location, and New Industrial Clusters

In this chapter, we first present the background and questions of this study, followed by the objectives, structure, and a summary of this book. The objectives of this book were threefold. The first objective was to determine whether and to what extent industrial agglomeration existed in the Japanese manufacturing industry during the 1980s and 1990s, and if so, what the economic effects of this agglomeration were on production in Japan’s manufacturing industries from 1985 to 2000, when the globalization of Japanese multinational firms (MNFs) was in progress in East Asia. From the early 1990s through the 2010s, the number of Japanese MNFs relocating overseas in East Asia increased rapidly. The second objective was to empirically elucidate the factors that led Japanese MNFs to relocate overseas in East Asia during this period. Then, targeting East Asia, we conduct an empirical analysis of the determinants of Japanese MNFs’ overseas location choices in East Asia for 1985–2009 using a conditional logit model based on new economic geography (NEG), particularly focusing on the effects of agglomeration, market access, and supplier access. Since about 2010, Japan has seen its overall population decrease, caused by a declining birth rate and population aging. The third objective was to construct new industrial clusters with digital technologies to elucidate their economic effects for overcoming the negative economic impact of declining population and the COVID-19 pandemic using a dynamic four-region computable general equilibrium model.