In the late 1990s and the early 2000s in Japan, nationwide state-led municipal mergers (Heisei no daigappei) have been carried out, and at the same time, a drastic shift from a pattern of traditional local government constructed in the postwar era toward a new model of local governance by partnership with public and civil/nonprofit sectors has occurred. This article will examine the institutional conditions necessary for this new local governance to work effectively, focusing on the case of one rural area, Yasuzuka in Niigata, where a smaller municipality, Yasuzuka town, was merged with a larger one, Joetsu city, in 2005.

　A number of new institutions of governance have emerged since the merger and abolition of the municipality. One of these is the “Local Committee (Chiiki kyogikai, hereafter, LC)” set up in order to facilitate the residents’ decisions. “Complimentary Municipal Nonprofit Organization (jichitai-daitai-gata NPO, hereafter, CMNO)” comprised of the residents and former municipal officials responsible for public service supply, such as welfare services for the aged. The LC and the CMNO are functionally similar to the municipal congress (or council) and administrative office.

　Some may argue that both the LC and the CMNO have not had enough control over budget planning or human resource mobilization compared with the former municipal congress (council) and administrative office. However, the LC in this case has introduced a quasi-electoral system for local political decision making. And the CMNO has the capacity to steer and coordinate various local actors for public service supply.In the recent debate on governance theory, some scholars insist that effective governance requires not only the capacity for efficient public service supply, but also democratic institutions for appropriate decision making and accountability which legitimate the governance activity itself. Therefore, we will suggest that new forms of Japanese local governance can work more effectively when both LC and CMNO are formed, and when, as seen in our case study, institutional networks between LC and CMNO are created.