Abstract
Purpose: Mechanisms of budgetary resource allocations from the Japanese central government to local governments are analyzed in this paper. Method: The paper utilizes statistical methods and a Self Organizing Map (SOM). Results: All budgetary transfers to local governments are said to be redistributed on an equitable basis. As a result of the budgetary transfers to local governments which have been carried out for a long time (since the World War II) on an equitable basis, we expect inefficient investment in public goods being carried out. We also suspect political influences. This paper tries to analyze the budgetary resource allocations from three points of view - equity, efficiency and political influences. Using a cross- sectional analysis of fiscal year 1991 and a panel data analysis of 18 years from 1977 through 1995, the following results were obtained. With the cross- sectional analysis of fiscal year 1991, we found that our results were as expected- namely, the budgetary resource allocations are made on an equitable basis, but inefficient public goods investment has taken place, and there is political influence. Based on the cross sectional results, we performed the similar analysis using panel data. The results obtained utilizing SOM and the statistical method generally support our cross sectional findings. New or Breakthrough aspect of work: However, when data from 46 prefectures are clustered using SOM, and the two largest clusters are analyzed further statistically, the results differ between national data and two cluster data and also within two clusters. Furthermore, findings from an analysis of panel data by SOM provide evidence to support our assumptions. Conclusions: The result shows that SOM adds new dimension to economic analysis and that SOM is useful as a visual data mining method.
