Rural and Agriculture Development in Regional Science
Lily KIMIAMI (Niigata University)*
Akira KIMINAMI (The University of Tokyo)
Abstract This paper discussed the trends and the outlook of the study of rural and agriculture development inregional science, especially in Japan. First, the analytical approaches toward rural and agriculture development issues are
introduced with some comments on the roles of entrepreneurs and knowledge creation in innovation, Secondly, the pioneeringstudies in rural and agriculture development in Japan based on regional science and their development to new theories areevaluated. In addition, future tasks in rural and agriculture development studies are given as follows. First, there is an issue ofregional heterogeneity. Secondly, there is an issue of rural and agriculture development, amenity and quality of life (QOL).
Thirdly, there is an issue of creating more effective rural and agriculture development models. Fourthly, there is an issue of how
agriculture and rural areas are perceived. In other words, it is necessary to redefine agriculture from an ailing industry to a growthindustry that continually creates innovations, and to redefine rural areas from a conservative and closed society to an open 'space'to create knowledge and innovations. More specifically, it is necessary to introduce an approach of strategic marketing planningand industry cluster strategy to the traditional regional economic development approach in order to create a new approach ofstrategic development for regional agriculture.

Rural and Agriculture Development in Regional Science
Lily KIMIAMI (Niigata University)*
Akira KIMINAMI (The University of Tokyo)
1. Introduction
According to Kohno and Higano (1980 p.221), regional science is an “extremely transformative academic discipline which aims
mainly to clarify regional issues through interdisciplinary collaboration and cooperation between many areas such as modern
economics, engineering, economic geography, social science and public administration study from their own specialist
perspective.” In contrast, according to Tsubouchi (1999), area study is characterized by (1) the fusion of studies of humanities
and social science and (2) interregional comparison. On the other hand, regional economic development is, according to Stimson
et al. (2006), “the use of economic processes and available resources in the region to bring sustained development to the region
and desirable economic results, and to meet the concept of the values and expectations of the economic operators and residents
as well as visitors.” Having outlined the characteristics and mutual relationships of the three academic disciplines, regional
science, generally speaking, focuses on an understanding of the issues by theorizing and quantifying them to formulate a policy
with a view to solve regional problems. On the other hand, regional economic development study is characteristic in attempting
to capture the dynamism of regional development because regional issues and their characteristics change following thedevelopment of the region under review. In other words, it is a problem of efficiency in the optimum use of scarce resources andof equity in wealth distribution, which can be regarded as one of the very central issues in regional science (Nijkamp and Abreu
2009; Capello and Nijkamp 2011).
For the purpose of this paper, we define regional development study as the clarification of regional issues and theirmechanisms, and a quest for policies for solutions from global perspective. In addition, this study positions rural and agriculture
development study as one of the applied areas of regional development study, however, this does not mean a simple substitutionof “region” with “rural and agricultural.” This is because rural and agriculture development study is expected to solve the issue ofclarifying diversity and universality which is essentially combined in regional development study, while rural and agriculture
development issues are heavily related to natural resources in the region such as ecological systems, society and culture. Therefore,rural and agriculture development study combines two aspects of (1) the clarification of local issues by approaches that are often
taken in area study and (2) the refinement and theorization of analytical methods and the pursuit of measures to solve issues byapproaches that are often taken in regional science.
2. Regional Science and Rural and Agriculture Paradigm
2.1 Shift in Reference Framework
In proceeding with the survey of rural and agriculture development study in regional science, the following perspectives are given
importance. The first is the analytical approach toward rural and agriculture development issues. That is to draw attention in ruraland agriculture development studies in regional science to which models they are reliant on, how each model attempts to clarify
the elements and actual conditions on which the model places emphasis, and how the economic environment that surrounds
agriculture and rural communities is captured. Irwin et al. (2010) thinks that an issue of a tradeoff among scale, transport costs,
and endowments in the economic location exists at the basis of regional economic issues, and that its essence lies in (1) imperfectfactor mobility, (2) imperfect divisibility, and (3) imperfect mobility of goods and services. Therefore, theoretically speaking, theregional science approach to rural and agriculture development can be regarded as how to apply the way of thinking regarding
regional economic issues to agricultural communities. For example, regional input-output analysis is a commonly-used analyticalmethod in rural development studies in the U.S., and its contribution is significant in its application, such as in the assessment ofregional economic policy. However, there are also opinions that consider regional input-output analysis to be problematic as itdoes not sufficiently reflect the essence of the regional economic issues as above. On the other hand, Terluin (2003) categorized
recent rural development theories into three groups of (1) exogenous development, (2) endogenous development, and (3) mixed
exogenous / endogenous development, and outlined the relationships with regional economic growth theories. Namely, there are
4 types of regional economic growth theories: (1) traditional models, (2) pure agglomeration models, (3) local milieu models, and(4) territorial innovation models, and the relationships with rural development theories are shown in Table 1.

Of these types, the regional economic growth theories that rely on the regional innovation model are making rapid
advancement. In terms of the theoretical aspect, theories are being developed with more attention to the roles of entrepreneurs
and knowledge creation in innovation, and in terms of the empirical aspect, analyses are being made using the substitute variableof innovation and entrepreneurship, and the models need to be adjusted based on the results (Kourtit et al. 2011). At least,
according to recent theories that innovations in a region are defined by expressions of entrepreneurship, the production function
to be assumed in the regional economy should be the aggregation of the production functions of individual entities, instead of
production functions based on aggregates. In that case, innovation is the function of entrepreneurship, in formulation as follows:Y=∑fi(I(E),LM,L,K)
Y: Income or yield, L: Labor, K: Capital, LM: Local milieu (space, human capital, technology, network, trust, culture, policy)
I: Innovation, E: Entrepreneurship, i: Individual economic entity
The second is the relationship between the current status and the changes in agriculture and agricultural communities.
According to existing notions of agriculture and rural communities, agriculture is a traditional and occupational industry that is
supported by small family-run operations, and agricultural communities refer to the areas where agriculture is carried out, and therural economy heavily relies on agriculture. Then the Japanese agriculture and agricultural communities experienced the issuesof relative stagnation during the post-war period toward the high economic growth period. However, such notions are notappropriate when referring to different eras or regions, especially in rural and agriculture development in developed countries
including the EU today. The socioeconomic reality of agriculture and rural communities has undergone significant changes, andeconomic dependency on sectors other than agriculture has increased in rural areas following the sharp decrease in the number

of farmers. In the U.S., too, changes are observed, such as the elimination of disparity in income levels between urban and rural
areas, a decrease in the farming population, the diversification of the rural economy, manufacturing industries being establishedin agricultural communities, and increased reliance on industries other than agriculture for farmers' income (Irwin et al., 2010).
Furthermore, due to the changes in the rural economy, the “New Rural Paradigm” (OECD, 2006), which forms thefoundation in rural and agriculture development policies in developed countries today, is based on the recognition that existing
rural and agricultural development policies have difficulties in driving comprehensive rural development in terms of policy
content and governance, (see Table 2). The Paradigm therefore seeks diversions from existing approaches. More specifically,rural and agriculture development today aims to improve the competitiveness of rural areas and to utilize unused resources
through the appropriate assessment of the resources in the region. It targets various sectors in the rural economy, and thegovernment and stakeholders at various levels implement measures by mainly using the development method of investment.
Based on the above, rural and agriculture development studies in regional science today are being asked whether an appropriate
analytical framework is established concerning the issues, target, methods and assessment standards according to the current
status, history and development stage of the region.

2.2 Assessment and Position of Existing Studies
2.2.1 Rural and Agriculture Issues in the Process of Economic Development
The stagnation of agriculture, outflow of rural population to urban areas and the resultant decline of agricultural communities in
the process of economic development are fundamental rural and agriculture issues in developed countries. Hayashi (1970)
analyzed the current status of the issues in mountain villages, and showed that significant differences existed between mountainvillages and therefore there was a need for different development strategies. In regard to depopulation problems, Nemoto (1972)
clarified the process of depopulation by including social capital and income level as determining factors in the demographic shift.
In regard to the demographic shift from agricultural communities to urban areas, Nobukuni (1982) clarified its relationship withthe economic cycle, and also carried out factor analysis and simulation using a utility difference model. Hagihara (1984) studied
depopulation problems from the perspective of optimal population distribution, and analyzed the effectiveness of measures toaddress depopulation such as subsidies from both theoretical and empirical aspects. Katada et al. (1987) quantitatively formulated
the mechanism of the demographic shift and commuting flows from the perspective of agricultural and mountainous
communities, and studied models to forecast the size of the demographic shift and commuting flows using the levels of the living
environment and employment environment in agricultural and mountainous communities and urban areas, respectively, and thecommuting transport conditions between the two areas as explanatory variables. In addition, the changes in the supply anddemand of food in the course of economic development, and furthermore the changes in the food trade structure have hadsignificant impact on rural and agriculture development in the respective and related countries, regardless of whether developedor developing. As a result, studies in food policy are receiving a considerable amount of interest in Europe and elsewhere. In
particular, emerging countries with enormous populations such as China and India are attracting attention. Kiminami (2009)

clarified the changes in food consumption behavior in the course of economic growth in China, and discussed the need forharmony between food policy and other policies.
2.2.2 Production Structure and Production Factors in Agriculture
The restructuring of the agriculture production structure has not advanced as rapidly in Japan as in Europe and the U.S. Structuralreform is especially important in land-extensive farming. One significant feature in comparing agriculture with other industries isthat land plays a crucially important role as a production factor. It does not simply refer to the size of land usage area per production
value, but the significant role that is played by the quality of land (form, compartment, abundance and so on). Kiminami andKiminami (2005) viewed land improvement as changes in capital stock on the basis of quality of land, and measured its economic
effect on agricultural management. By contrast, Furuzawa and Kiminami (2006) clarified from a farmer-level analysis that thedirection of land improvement projects is determined by farmers' business objectives and the assessment of land resources.
2.2.3 Diversification of Agriculture and the Rural Economy and Collaboration with other Industries
The phrase, “the rural economy is not the same as the agricultural economy” has several meanings in developed countries. It may
refer to the fact that the continued existence of farmers and rural communities depends on employment opportunities in nonagricultural sectors in rural areas, or it may refer to the fact that new economic activities (community business, collaboration
between agriculture, commerce and industry, and so on) are intensifying as a result of the diversification of the rural economy.
The relationship of mutual dependence between agriculture and related industries is not limited to the simple trading of assets andservices, but also includes business collaboration in various formats. Yoshimoto et al. (2009) looked at the relationship between
agriculture and tourism in Okinawa, and measured the economic ripple effect of agriculture on other sectors and the employment
creation effect by analyzing inter-industry relationship tables. In regard to unused organic resources, Yasunaga (2006) estimatedthe cyclic use flow of agricultural biomass in the region and quantified the effect of utilizing agricultural biomass on the regional
economy including the chain effect. The effects of rural industrialization on the regional economy and rural and agriculture
development by industrial cluster strategy are recently attracting attention in developing countries as well. Kiminami (2010)
explored solutions for rural and agriculture development issues in China (improvement in agricultural productivity, increase infarm household income, poverty reduction, environmental conservation and so on) from the perspective of industrial clusters. In
addition, studies concerning the agro-industry are making advances based on the reality that agriculture today is deepening its
economic ties with other related industries, and rural areas are heavily dependent on non-agricultural industries. As a study,
especially in relation to the food industry, there is Kiminami et al. (2010), which looked at business collaboration.
2.2.4 Urbanization, Agriculture and Rural Areas
The relationship between rural and urban areas, and the relationship between agricultural and non-agricultural industries haveoften been treated as a simple binary relationship, but the clarification of the mutual interdependent relationship between rural andurban areas and cooperation between agriculture and non-agriculture industries have become important research themes in recent
years.
The importance of agriculture in the rural economy has decreased in developed countries, but agriculture still plays a significant
role in terms of land management. Furuzawa and Kiminami (2007) clarified the structure of the issues concerning agriculturalland use and urban land use in Niigata's city planning based on an analysis of residents' awareness, and explored consensus
formation for plan formulation. The effect of economic activities in urban areas on the rural economy is also an important pointof argument. For example, Kakimoto (1991) used the Harris-Todaro model that incorporates the relationship where agricultural
products become raw materials for the urban sector, and showed that employment subsidies in the urban sector have no effect on
improving employment in rural areas due to factor substitution. In developing countries, too, interest in food safety andenvironmental issues is growing, following rapid industrialization and urbanization, and as a result, the concept of urban

agriculture is getting re-examined. Kiminami et al. (2006) discussed that urban agriculture in Shanghai, China, attachedimportance to securing food for urban residents until the reform and opening-up of China, but the focus shifted after that toeconomic efficiency, i.e., increase in farmers' income. The paper also pointed out that environmental conservation and the safetyof agricultural products are also given importance in recent years in response to the needs of residents.
2.2.5 Globalization, Regional Integration and Agriculture/Agricultural Communities
Studies on regional integration are roughly grouped into studies concerning regionalization of the economy and studies
concerning regional trade agreements. In the studies concerning regionalization, studies on the aspects of economics and trading
are advanced, and these are divided into those concerning the production network and spatial economics such as industry
accumulation. Empirical studies are abundant, such as studies on the economic effect of economic partnerships in East Asia, asrepresented by WTO-JETRO (2011), and studies concerning location and agglomeration, such as Jin and Tokunaga (2008) andLu and Tokunaga (2008), but studies on mutual dependence through the trading of agricultural products and food are scarce.
Kiminami and Kiminami (1998, 1999) analyzed the trend in economic integration in East Asia by clarifying intra-industry trademechanism through the typification of trade patterns and in terms of the relationship with direct investment, and clarified theinternational division of labor in the food industry. In contrast, in regard to the liberalization of agricultural trade, Sakuyama (2010)
empirically clarified the determination factors in the custom duty reliance in agricultural protection in developed countries, andKiminami and Kiminami (2007b) clarified domestic and bilateral consensus formation in Japan and China for achieving FTA
including agriculture.
3. Future Prospects
As pointed out by OECD (OECD, 2014) that focusing on the two pillars critical to revitalizing rural areas – innovation andmodernization – is one way to identify factors that can trigger or facilitate improved economic performance and identify thosethat tend to weaken it.
First, there is an issue of regional heterogeneity. This issue is especially important in the discussion of the effectiveness of ruraland agricultural policies. Many developed countries are introducing people-based policies (to develop regions through humanresource development) and region-based policies (to set a regional range and develop the region) as a result of problems inindustry-based policies (which is to develop regions through industry promotion). However, there are also claims that pan-region
people-based policies do not function effectively due to regional heterogeneity (Kilkenny 2010). Regarding region-based policies,
policies that consider regional characteristic (place-tailored policies) rather than blanket policies are thought to be more effective,
but these are problematic in terms of high policy cost. Therefore, discussion on effective policies continues. This is why it isimportant to consider the way of accurately capturing regional heterogeneity and reflecting it on policy formation and governance
Secondly, there is an issue of rural and agriculture development, amenity and quality of life (QOL). In Japan, there are manystudies on multi-functions of agriculture and farming land, but rural and agriculture development studies are limited, for example
Kiminami and Kiminami (2006, 2007a) which assessed the impact of urban agriculture on urban QOL and analyzed thesustainability of agriculture. Furthermore, studies on the relationship between the inter-regional demographic shifts, especiallyvarious formats such as “UJI turn,” and amenities are in severe shortage.
Thirdly, there is an issue of creating more effective rural and agriculture development models. Recent changes in theenvironment that surrounds agriculture and rural areas have certainly introduced more factors that need considering indevelopment models and thus complicated the matter. But on the other hand, the potential to create new development models has
also increased. For example, McGranahan and Wojan (2007) and McGranahan et al. (2011) proposed a new growth model by
combining Florida's (2002) regional development model based on creative class with the shift of creative class to rural areas as aresult of amenity factors in rural areas, and conducted empirical analysis. However, studies on innovation by individual economic
entities, knowledge creation activities and their results need to be accumulated. To this end, large scale surveys at an individual

management level and the construction of databases for management results are needed.
Fourthly, there is an issue of how agriculture and rural areas are perceived. In other words, it is necessary to redefine agriculture
from an ailing industry to a growth industry that continually creates innovations, and to redefine rural areas from a conservativeand closed society to an open 'space' to create knowledge and innovations. Studies on innovations and knowledge creation inrural and agriculture development have only just started. Related studies include Souma and Kiminami (2012) which dealt withknowledge management in agricultural management succession and Kiminami and Furuzawa (2013) which examined theknowledge creation mechanism in international cooperation in rural and agriculture development. However, studies oninnovation by individual economic entities, knowledge creation activities and their results need to be accumulated. To this end,large scale surveys at an individual management level and the construction of databases for management results are needed.
More specifically, it is necessary to introduce an approach of strategic marketing planning and industry cluster strategy to the
traditional regional economic development approach in order to create a new approach of strategic development for regional
agriculture (see Figure 1). The “Strategic regional agriculture development” approach is thought to be formed bycomprehensively combining existing town development plans (Higasa and Hibata 1993), community development (Nitagai etal. 2008), strategic marketing and planning (Kotler, et al, 1993) and the industry cluster strategy approach (see Figure 1), whichis considered to form a regional agriculture innovation system looking at new knowledge and learning processes andunderstanding the interaction between producers and end users, local government and research institutes.

Industrial
cluster(Innovation)

Community
develpment(QOL)

Strategic
regional
agriculturaldevelopment(Sustainability)

Strategic
marketingplanning(Attractiveness)

Urban planning(Improvement ofphysicalinfrastructure)

Fig.1 Concept of Strategic Regional Agricultural Development
Note: This paper is a revision from “Rural and Agriculture Development” (Kiminami, L. Kiminami, A. and Furuzawa, S.) The progress and perspectivesof regional science in Japan: The golden 50th Anniversary, eds, Japan Section of Regional Science Association International, 2012 (in Japanese)