# ICT and the Future of Regions

## Section 1 ICT and Regional Enterprises

In this section, we analyze what roles ICT can play in stimulating regional economies. Specifically, working from the assumptions of the examinations used throughout this chapter, we provide a general overview of the current state regional economies are in and sort out realistic potentials that ICT can have in stimulating regional economies.

### 1. Current state of regional economies and the potential of ICT

## (1) Outflow of populations from rural areas and concentration in Metro Tokyo

The flow of people from rural areas to the Tokyo metropolitan area has accelerated, and the movement of younger people is particularly notable. Metro Tokyo's population now accounts for about 30 percent of the entire nation's population, which is an extremely high concentration compared to other nations. It has been pointed out that the flow of younger people from rural areas to Metro Tokyo, where the birth rate is lower, is not only draining the vitality of regional areas; it is helping to fuel Japan's overall declining birth rate and population decline.

## (2) Background to the population outflow

The population outflow from rural areas to Metro Tokyo is inseparable from fluctuations in the number of employed people in rural areas. This implies that a major contributing factor to the population outflow is regional economies and employment circumstances in particular. In other words, there are not enough attractive employment opportunities for younger people in rural areas, and this is believed to be drawing younger people from rural areas to Metro Tokyo. In fact, in an MIC survey given to local governments across the country, about 90 percent of the organizations said that they think a lack of quality employment opportunities is a cause of population outflows.

Looking at the situation from employers—i.e., regional enterprises, on the other hand, finds that many enterprises, regardless of the region or industry, feel there is a labor shortage and that the labor shortage has been worsening rapidly in recent years.

The phenomenon behind this apparent contradiction of a job shortage from the younger people’s perspective and a labor shortage from the enterprises’ perspective is thought to be a problem with employment quality in rural areas. In other words, there is a lack of quality employment—in terms of wages, stability, and job satisfaction—in rural areas, creating a situation where younger people move to Metro Tokyo seeking relatively higher quality employment.

### 2. State of ICT use and application by regional enterprises

## (1) State of ICT use and application by enterprise type

When considering connections with regional economic stimulation, the problem of interest in this chapter, or with revitalizing local economies, two groups sustain regional economies over the mid and long term: the group of enterprises that provide services to the residents in regional areas (i.e., medical care and social security businesses, retailers, service businesses, and transportation businesses) and the group of enterprises that utilize regional resources to develop businesses (i.e., farming, fishing, and forestry businesses and tourism businesses). These groups (local regional enterprises) are, by their nature, unlikely to relocate their operational bases to other regions or overseas. Consequently, they are expected to be ongoing employment providers in their regions over the mid to long term. To revitalize local economies that will stem the population outflow from rural areas, encouraging enterprises with operations concentrated in Tokyo to decentralize their operations to other regions and calling back manufacturing bases that have shifted overseas to rural areas are indeed important. But at the same time, local regional enterprises have to work to measurably improve employment quality. The application of ICT is seen as key to accomplishing improvements in quality of employment.

It is not easy to draw a distinction between local regional enterprises and other enterprises, but for the purposes of this section, we divided enterprises along two perspectives: the locality of their business region and their dependence on regional resources. Specifically, of the 14 industry types on the survey, we classified 10 types (medical care and social security industry, real estate and rental and leasing industry, retail industry, mining industry, electricity, gas, heating, and water provision industry, construction industry, financial and insurance industry, transportation industry, service industry).