Considerations for Regional Clustering of Businesses and Identifying Basic Industries: Attracting the Automotive Industry and its Employment Ripple Effect on the Region

Abstract

Although regional industrial policies have focused on attracting manufacturing industries, there are cases where sufficient employment creation has not been achieved due to the globalization of the manufacturing industry and the shift to services. In order for a region to survive amid a declining population, it must create high value-added basic industries and generate income from outside the region. The "Economic Infrastructure Model" is a method for quantitatively predicting the employment effects of regional development. In this paper, we use the "economic base model" to study the case of an automobile industry, which has a large base industry and is considered to have a large employment effect. The paper discusses the employment effects and challenges of attracting the automobile industry to Southern Region Development Area of Iwate Prefecture and Western Region of Ibaraki Prefecture where new factories for finished vehicles have been established.