THE ＧＬＯＢＡＬＩＺＡＴＩＯＮ ＆ ＧＯVＥＲＮＡＮＣＥ ＰＲＯＪＥCＴ， ＨＯＫＫＡＩＤＯ ＵＮＩＶＥＲＳＩＴＹＷＯＲＫＩＮＧ ＰＡＰＥＲ ＳＥＲＩＥＳStructural Reform in Hokkaido
in the Context of Globalization
Ⅳ−０５Kazunori Narita, Hokkaido Government＊Paper for the Workshop Local Governance in a Global Era –In Search ofConcrete Visions for a Multi-Level Governance, 7-8 December 2001＊

None of these papers should be cited without the author’s permission.

Structural Reform in Hokkaido in the Context of Globalization
Kazunori Narita
Division of Structural Reform, Policy Unit, Hokkaido Government

Background to the Reform in Hokkaido
In this paper, I would like to describe the present circumstance ofHokkaido and the policy for structural reform by the Hokkaido Government,in the context of globalization.
Information on Hokkaido
1) Area of Hokkaido: 80000km2 (22%of the total area of Japan)-Approximately the same size as Austria2) Population of Hokkaido: 5.7 million (4.5% of the total population ofJapan)-Equivalent to the population in Denmark3) GDP of Hokkaido: $154 billion (US) (4.0% of the total FDP of Japan)-Little less that of Denmark4) Income per capita: $23,000 (US) (90% of the average of Japan)-Approximately the same as Sweden
5) The composition of industries in Hokkaido
Hokkaido
3.7%
11.0%
12.5%
75.2%

Agriculture, Forestry, and Fisheries
Manufacturing
Construction
TertiaryJapan
1.7%
23.5%
9.3%
69.5%

Note: Hokkaido depends greatly on public investment, therefore the rate ofconstruction industry is relatively large. On the other hand, themanufacturing industry is relatively low, because Hokkaido must buy muchof their consumer goods and capital goods from outside Hokkaido. Thus, the1deficit totals about 12-13% of the GDP, in annual balance of budget.
deficit is compensated by national finance.

This6) Budget of the Hokkaido Prefectural Government: $30 billion (US)Hokkaido Government had launched the initiative for structuralreform in January 1998. Governor Tatsuya Hori proclaimed reform
towards “autonomous Hokkaido,” where Hokkaido would break away fromtheir dependence on the central government. Behind this policy, thebankruptcy of Hokkaido Takushoku Bank in November 1997, enhanced oursense of crisis.
We should look at the current crisis of Hokkaido from a historicalcontext. Hokkaido’s place changed in the following way. Japanese
government started to develop Hokkaido in the 1870s, just after the Meiji
Restoration, to supply raw materials for mainland Japan. Hokkaido
possessed a comparative advantage on coal, timber, agricultural and fisheryproducts in the domestic market. However, it has been losing its
competitiveness rapidly, as Japanese economy is becoming globalized.
Hokkaido had another comparative advantage—its vast land.
Hokkaido did not have any accumulation of manufacturing industries,
which was thought to be its weakest point. In order to overcome thisproblem, the Hokkaido government continued to invite factories, byemphasizing its cheap land prices. Japan, especially the area of Tokyo,
was notorious for expensive land prices. However, globalization has
deprived Hokkaido of this advantage as well. It is no longer easy tocompete with Asian countries with respect to location of manufacturing
plants.
In addition, long-lasting recession and the accompanying fiscal
crisis have tremendous impact on Hokkaido. It has become evident thatthe structure of over-dependence on public investment is no longer
sustainable.
Structural reform by the Hokkaido government is an initiative forcreating new frameworks of economy and society, in the coming age. We
should implement the reform by facing the reality and re-evaluating values
and the possibilities in Hokkaido.
Contents of Reform
The reform consists of five dimensions, which include: economic
structure, regional community, system of administration and finance,2

infrastructure, and motivation for reform.
The first dimension is the reform of economic structure. We areconstructing a system for collaboration between companies and publicresearch institutes, in order to promote technology development, which liesat the base of competitiveness. We realize the importance of the networkof various actors that are pursuing this project. We also feel that the roleof coordinator in building such a network is extremely important. We canexpect that such network will expand globally through the use of theinternet.
With respect to information technology, enterprises with excellent
technology are concentrated in the Sapporo area. In this context, theHokkaido government started a unique subsidy to invite call centers in
December 1999. Since then, more than ten call centers located in
Hokkaido have been established, and over a thousand people are employed
there. These companies chose Hokkaido not because land prices are low,
but because universities in Hokkaido provide more than 2300 people withthe capability in information technology and high motivation, and because
they can enjoy good urban environment in the city of Sapporo. President ofAmazon.com said he chose Sapporo because he was able to enjoy skiing.
Although IT depression is shrinking the world economy, expansion of
information technology is still quite important for improving life standard ofpeople, by enabling remote medical treatment, as well as enhancing
productivity of various kinds of industries like agriculture and tourism.
It is in my own opinion that there is a limit to what the government
can do about economic problems. All it can do is support technology
development through subsidy or by building infrastructure of information
technology. It cannot predict what kind of goods and service will sell. We
should leave business to businessmen. When they recognize its limit,
thereafter, we can establish new economic and industrial policy for
Hokkaido. In pursuing this project, I think a global point of view isessential. For instance, Denmark has developed a very strong dairy andlivestock industry in the matured structure of division of labor in Europe.
We can foresee similar division of labor in East Asia, although it will taketime for China and Korea to fully develop this kind of division of labor. We
need to envision Hokkaido’s role within such structure. In such process,various specialists need to participate and exchange ideas.
The second dimension of structural reform is regional community, inwhich collaboration between citizen and the government must take place.
In economy, competition and effectiveness is the key. Hokkaido shouldmake every industry more effective to survive competition in the market.
3However, in Hokkaido where there are many small to medium size
enterprises and only few large ones, collaboration and network is very
important, as I mentioned previously, since the capability of each company
is limited. In fact, new experiments are underway, as we speak.
In local communities, new projects are also starting up. In Japan,
rapid aging is bringing about serious problems of care for old people. As
more women participate in social and economic activities, childcare isbecoming a problem as well. Non Profit Organizations are growing inmany districts, and have come to cope with various problems in thecommunity. Especially, in rural area with small population, we cannot
expect the private sector to supply these kinds of services because theycannot get profit from them, and at the same time, we cannot expect thegovernment to provide these kinds of services because of the fiscalconstraint. NPO are playing a very significant role in these areas. We
can find other projects of mutual support in communities around Hokkaido,
such as local currency, adopt system in which residents take care of streets
and parks as their own assets, and public theater managed by spontaneousorganization composed of residents.
It is urgent and necessary for citizens and government to build a
new system of collaboration, featuring respective points based upon mutual
understanding. Moreover, the number of entrepreneurs who are interested
in community business are increasing because they consider the solution forcommunity problem as a business opportunity. These new kinds ofprojects and programs that are based on principles of cooperation, not oncompetition, are important because not only do they produce new
employment opportunities, but also more importantly, present a new form ofsociety that we should aim for in the future.
The third dimension is the reform of the administrative andfinancial system. The local government of Hokkaido, in the mist of themove towards decentralization, has been working hard to establish new
institutions that will pursue high quality policy, based on information
disclosure and participation. The following are some of the things wewould like to promote, and would like to pursue at a relatively advanced
level within Japan: information disclosure of administrative information,
the procedure for public comment on important plans and ordinances, thereflection of the outcome of policy assessment in the budget.
These and other various kinds of programs and projects are being
pursued as we speak, and at the same time, we are also working towards
establishing a set of basic regulations that will become the general guideline
for Hokkaido’s administration. The objective of this new regulations is to4

establish basic rules and principles that our work will be based on, toestablish transparency and accountability to the people of Hokkaido andlastly, to promote participation of people of Hokkaido.
The fourth dimension is the infrastructure, more specifically themaintenance of social capital. In this day and age, the national and local
finance and administration are facing difficult times; therefore, a particularregion must choose for itself what would be the necessary social capital forthe future of that region. In Hokkaido, the Hokkaido Development Agency
and all the municipals are cooperating to accomplish such a system.
The presupposition is that the information concerning themaintenance of social capital in a region is open to the people, and that thepeople’s opinions are taken into account in the decision-making process.
We are currently planning and establishing a guideline for information
sharing concerning the social capital of Hokkaido, and at the same time,working hard to involve people’s opinion in the decision-making process.
The fifth and last dimension is the recognition and the motivation
for reform. The may be the most difficult problem of all. We haveestablished a slogan “Hokkaido Standard.”“Hokkaido Standard”--astandard different from a “Tokyo standard” or a “global standard.” What I
mean by this is creating a culture, industry, and personal life that are
unique to Hokkaido, based on our personal values. In the last Hokkaido
Assembly, from this point of view, we have established three new ordinances
which include: the promotion of outdoor activities an sports, the promotionof tourism by emphasizing the natural environment of Hokkaido, and theconservation and creation of the natural environment.
Furthermore, we are trying to register our Hokkaido heritage, suchas historical buildings, regional festivals, and the Ishikari River. All of theabove are unique and proud heritage of Hokkaido, and these will become
symbols that will revitalize the region.
Conclusion
Hokkaido’s history is relatively short, compared to other regions inJapan; however, Hokkaido possesses unique tradition and culture that wecan be proud of. I believe Hokkaido is the place where one can create
his/her own unique lifestyle, and a place where one can live their life to thefullest. I also believe that Hokkaido is the optimal place where one canexperiment, in terms of economy and regional society, without being
hindered by traditional frameworks.
As one of the models fordecentralization, if we were to accomplish the Hokkaido provincial system,
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Hokkaido will become an independent island, therefore, the kind of merge ofprefectures seen in Kyushu Island or Tohoku region, will not be necessary in
Hokkaido. Also, Hokkaido has the potential for being unique and distinct,
when compared to other regions in Japan. We have entered an era where
we must think about our responsibilities on how to build Hokkaido, while
complying with and taking into account, the limits and policy by thenational government.
In Hokkaido, we are planning to design a Hokkaido provincial
system model by next year, and are examining the potentials and thepossibilities at this time.
(Incidentally, if I may add at the end, I am the chief of the section
responsible for this design.)

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