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Part 2. Changing Asia-Pacific world cities

The Japanese urban system and the growing centrality of Tokyo in the global economy
Seoul: A global city in a nation of rapid growth
Globalization and the urban system in Taiwan
Globalization and the urban system in China
Global influences on recent urbanization trends in the Philippines
The changing urban system in a fast-growing city and economy: The case of Bangkok and Thailand
Emerging urban trends and the globalizing economy in Malaysia
Jabotabek and globalization

The Japanese urban system and the growing centrality of Tokyo in the global economy

Japanese urbanization in perspective: An overview, 1955-1991
Functional and structural changes
New growth upon new accumulation: The Capital Tokyo Metropolitan Area
New agglomeration and "Tokyo problems"
Future prospects and policy implications

Junjiro Takahashi and Noriyuki Sugiura


Whereas the Japanese economy has often been under scrutiny in various ways, with both theoretical and practical concerns, its direct consequences, i.e. the Japanese regional and urban system, have been surprisingly little analysed in a comprehensive manner (Glickman 1979; Nakamura and White, 1988).

The regional and urban system of a country is both the condition and the result of its techno-economic development. The rapid techno-economic expansion during the post-war period (1955-1970) in Japan drastically transformed the previous regional and urban system into a more complex and dynamic one. Several research reports on that period estimate that more than 30 million people moved, one way or another, during that transition. It is, however, of great importance to recognize that the more rapid and far-reaching changes in the techno-economic environment in the 1970s and 1980s, internationally as well as domestically, literally forced the recently established Japanese urban system to reorganize itself, and thus bring Japanese society into a new, uncharted phase of development (Sassen, 1991). The Japanese regional and urban system in the early 1990s had to face some fundamental changes and the problems associated with these changes.

One of the prevailing forces that triggered the change was undoubtedly the widespread adoption of varying and powerful forms of Information Technology (IT), not only in industrial and business activities but also in society at large, at the very critical moment when the international role of the Japanese economy was growing and changing (Castells, 1989; Kodama, 1991; Sassen, 1991).

This chapter will explore the fundamental nature of these changes, as manifested in the forms of spatial systems and organizations, in the following interlinked aspects: How has the Japanese regional and urban system evolved? What are the structural and functional characteristics of this system? What are the critical problems as epitomized by the Tokyo Metropolitan Area? And what are the prospects for the future and the policy implications from the viewpoint of regional and urban planning?

Japanese urbanization in perspective: An overview, 1955-1991

Rapid economic expansion and growth, which commenced as early as 1950, inevitably transformed the fundamental structure of the Japanese regional and urban system. Prior to that transformation, the Japanese spatial system was characterized by its duality: the urban and industrial areas on the one hand, and the rural and agricultural areas on the other. Despite the radical transition in the process of industrialization and its accompanying urbanization process since the mid-nineteenth century, the urban and the rural still remained two distinctive entities.

When the post-war techno-economic growth began to speed up, every economic resource was mobilized and handed over to the market mechanism. Of the various economic resources, human resources (i.e. the labour force) were the most visible. As is often the case with theories of economic development, the uneven distribution of employment opportunities and clear differences in wages should trigger massive internal rural-urban migration, which indeed happened to the Japanese regional and urban system. During the period 1955-1970, the net in-migration to three major metropolitan areas (namely Tokyo, Osaka, and Nagoya) reached approximately 9 million people. With natural increase, the population of these three metropolitan areas alone increased more than 10 million in less than two decades.

The consequence of these changes was twofold. The out-migration areas had to face devastating depopulation, while the metropolitan areas were forced to cope with the problems of overpopulation and congestion, which urgently needed to be rectified, necessitating comprehensive readjustment and decentralization policy efforts.

During the period of rapid economic growth and massive social migration in 1955-1970, a fundamental change in the structure of the Japanese regional and urban system had taken place. This was the shift from the dualistic system, where the urban-rural dichotomy was prominent and meaningful, to the monolithic system, where this dichotomy became blurred and unrealistic. By about 1970, nearly three-quarters of the total population were defined as urbanites, and, perhaps more importantly, even a small town in a remote area was functionally integrated into one nationwide urban and regional "umbrella" system.

Within this newly emerged nationwide urban network, two distinctive subsystems were interlocked. One was the metropolitan areas and the other was the micropolitan areas, which were made up of groups of small and medium-sized cities and towns. The metropolitan areas were further subdivided into two groups: three major metropolitan areas, namely Capital Tokyo, Osaka, and Nagoya; and four regional core metropolitan areas, namely Sapporo, Sendai, Hiroshima, and Fukuoka (see the maps in the Appendix).

  -Three major metropolitan areas -Osaka
Metropolitan areas   -Nagoya
  -Four regional core metropolitan areas -Sendai
Micropolitan areas (groups of small and medium-sized cities and towns)

The monolithic urban system emerged around 1970. The formation and development of this system were far from smooth and even. During the first half of the period of rapid economic growth (19551965), the main stream of rural-urban migration was from the rural areas (later defined as micropolitan areas) to the three major metropolitan areas. This trend changed when the three major metropolitan areas became overpopulated and began to suffer from severe congestion. During the second half of the 1960s, the main trend forked in two different directions. One flow changed direction towards the regional core city of each region, thus accelerating the growth of four regional core metropolitan areas. The other became the overflow movement within the three major metropolitan areas, which led to the dynamic and extreme expansion outwards to the suburbs. During the 1960s, it was not exceptional to observe a 30-50 per cent annual population increase in the suburban fringes of these three metropolitan areas. Among them, Tokyo Metropolitan Area experienced the most dynamic and far-reaching transformation. In the late 1960s, its suburban fringe already stretched as far as 40 km from the city centre.

The outward expansion movement was literally explosive in its speed and magnitude, but this suburban development could not offer a solution to the new build-up of metropolitan problems, but rather worsened the overall situation. Building huge dormitory towns in the suburbs created an enormous number of commuters whose workplaces were still concentrated within a 5 km radius of the central business district (CBD) areas.

In response to these drastic changes, the government took various policy initiatives, the most important of which was the decentralization of growth poles. In line with national economic planning based upon a series of Keynesian macroeconomic policies, the government encouraged and financially supported industries to relocate their plants and production sites out of the three major metropolitan areas. Along with this policy, the government increased public spending in the micropolitan areas for their industrial infrastructure as well as for more direct support for the depopulated, industrially declining areas. In that period, government aid and grants for agriculture changed their content and significance, while still lingering as a politically sensitive issue. In 1962, 60 per cent of total public investment went into the metropolitan areas, but by the end of 1975 the micropolitan areas received nearly half of total public investment.

As a result of these policy interventions, a considerable proportion of manufacturing industries (such as steel, petrochemical, ship-building, and heavy machinery industries) moved out and built their new plants in the micropolitan areas, in order to generate incomes regionally.

It was, however, a historical irony that, when the income-generating industries moved out to these micropolitan areas, the technological innovation and the international environment of the Japanese economy swiftly changed and began to dismantle the previous structure that had brought about the fastest-growing economy among nations. In this restructuring process, the leading industries were replaced by newly emerging high-tech industries such as micro-electronics. Then came the first oil crisis in 1973, which accelerated this replacement process on a larger scale. Through the agonizing process of redirection and adjustment to the new economic environment, the rapidly growing sectors began to take a lead in the economy, in which innovations of information technology and their adoption played crucial roles. Among the various manufacturing industries, microelectronics (semi-conductors, computers, and communication equipment) and other related manufacturing industries, such as automobile and consumer durable goods, became the major sources of employment, technological innovation, and the macroeconomic multiplier affecting the overall economy.

In the tertiary sector, finance (banking, securities, and insurance), distribution (wholesale and retail), and services (especially producer services) began to equip themselves with and fully utilize the new information technology. They grew fast to lead the ongoing restructuring process.

All these new growing sectors were highly concentrated within the major metropolitan areas, especially within the Capital Tokyo Metropolitan Area. In addition to the industrial reorganization, the rise of the Japanese yen in international business transactions had a devastating effect upon small and medium-sized industries as well as large-scale heavy industries in the micropolitan areas, which lost their international competitive edge.

These multiple transitions over a short period had a considerable influence on the Japanese regional and urban system. The most significant impact was the productivity gap between the metropolitan areas and the micropolitan areas, which widened again. In the early 1980s, these trends became pronounced and irreversible. As in the case of the period of rapid techno-economic growth and expansion in previous decades, the drastic shift of economic resources and social components among industrial sectors, as well as among regions, inevitably came into play. These new trends towards new growth may be summarized as follows.

Population - A new migration trend

Figure 4.1 shows the long-term trend and the magnitude of incoming population to the three major metropolitan areas. There was massive net in-migration in the 1960s, which was followed by a decade of adjustment in the 1970s. In the 1980s, however, the net in-migration to these areas began to increase again at the level of 100,000 people per year. This was considerably lower than the net in-migration at the peak of the rapid economic expansion in the 1960s, but this time there was a significant difference in the source of migration.

Fig. 4.1 Net migration to Japan's three major metropolitan areas, 1955-1990 (Source: 1990 Census)

Tokyo Saitama, Chiba, Tokyo, KanagawaKen Osaka Kyoto, Osaka, Hyougo, NaraKen Nagoya PNGu, Aichi, Mie-Ken

From 1955 to 1970, the three major metropolitan areas had somewhat similar patterns, but after 1970 Osaka and Nagoya metropolitan areas turned out to be out-migration areas, with only the Capital Tokyo Metropolitan Area gaining in net in-migration. The Tokyo Metropolitan Area had never lost its population, and it became virtually the only area to increase its population through migration. Needless to say, the Tokyo Metropolitan Area exhibits the biggest natural increase in population owing to the massive in-migration of people of reproductive age in previous decades. The combination of these trends in the 1980s led the population of the Tokyo Metropolitan Area to grow at a far greater rate than any other area in the nation. Perhaps more importantly, Osaka and Nagoya metropolitan areas became the out-migrating areas to the Tokyo Metropolitan Area. In this way, the fundamental structure of the three major metropolitan systems began to disintegrate and crumble.

The globalization of the Japanese economy

One of the most significant changes in the Japanese economy is that it has come to play a key role in the internationally interlinked world economy. As Japan became the largest creditor nation in the world in the early 1980s and continuously demonstrated its industrial strength in international competition with a major trade surplus, it was inevitable that Tokyo should become one of the key international financial centres. Besides its economic power, its geographical location contributed to its new status. In an age of international economic interdependency and international telecommunications networks, international financial transactions require a global, 24-hour transaction system. Tokyo was naturally chosen as the third key centre for that system, in addition to New York and London.

The fact that Tokyo became the third international financial centre had a significant impact not only upon Tokyo itself, but also upon the Japanese urban system as a whole. Tokyo was expected to provide all sorts of new international business establishments with various facilities and services, which might not be directly related to domestic economic and financial transactions and the everyday life of its citizens. In fact, the notorious land price increase in the second half of the 1980s was often attributed to the sudden increase in the demand for office space in the city centre.

After the Plaza Accord in 1985, the rise of the Japanese yen put the economy into a short slump, but industries reorganized themselves promptly and effectively to develop new strategies for growth. One was the expansion of the offshore production system, and the other was to reduce overall production costs by implementing computerized manufacturing systems, often referred to as Factory Automation (FA) and Computer Integrated Manufacturing (CIM). The first strategy established the new international division of labour, and the flexible manufacturing system, with its high precision and high values, brought about even greater roles for research and development functions and marketing and sales functions. Numerous corporations rushed to establish their headquarters offices in Tokyo for their overseas operations and globally integrated management. In this way, the globalization of the Japanese economy accelerated the concentration of various business functions in Tokyo and its metropolitan area.

Industrial reorganization based on information technology

The fastest-growing sector in the Japanese economy in the 1980s was the service sector, in terms of its value-added and its employment. This does not necessarily mean that the service sector grew by itself, but, on the contrary, it has been revealed that other sectors of the economy increasingly demanded various highly specialized services in order to maintain their competitive edge. Among the fastest-growing service industries were those related to computer business, both hardware and software. These service industries were naturally concentrated in Tokyo Metropolitan Area.

Another important trend in relation to the impact of information technology is based on the fact that severe international competition and the demand for continuous growth had given rise to the recognition of the crucially important role of R&D functions. During fiscal year 1985, the total amount of R&D investment in Japan exceeded capital investment for the first time in its history, and the ratio of R&D to capital investment has become increasingly larger (Kodama, 1991). The spatial implication of this trend is enormous, because production sites and facilities are relatively dispersed all over the nation, whereas R&D facilities and institutions are rather concentrated in one critical area - the Capital Tokyo Metropolitan Area.

Labour shortages

The average unemployment rate in the 1980s stabilized around 2.5 per cent. This implies that full employment has been accomplished, and that wage rises exert a steady pressure on the economy. In fact, average wages in the 18-25 age group rose considerably in the past decade. As the economy grew rapidly again, and certain sectors expanded faster than others, the adjustment process became more difficult to ascertain; the new job opportunities required more sophisticated skills and were highly specialized. Against this backdrop, the service sector became polarized into two different segments in the metropolitan areas. One comprises jobs that require specialized skills, such as computer software services, and the other comprises semi- or unskilled "manual" jobs such as delivery services and sales assistance in highly mechanized retailing services. The problem is that the advancement of information technology in virtually every aspect of business and urban daily life requires a more technologically sophisticated workforce, hence the stronger pressure on higher wages. Large corporations have been coping with this techno-shortage by providing various training and retraining programmes, both on and off the job, to upgrade the quality of their workforce and human resources. In 1990, in-house training programmes throughout the nation became a US$8 billion business.

Another important consequence of this trend is the shortage of manual labour, especially in the metropolitan areas, such as construction workers and workers in dirty, dangerous, and rough jobs. The gap has been filled with foreign labour from the third world and illegal immigrants, who become conspicuous in the metropolitan landscape and often create their own ethnic ghettoes.

Governmental policy efforts

In 1987, the Fourth National Comprehensive Development Plan was announced by the government's National Land Agency. The fundamental issues in that plan, targeting the year 2010, were radically different from previous ones. The new plan replaced the previous scheme of ecologically sound, stable growth and development with a scheme for a multi-centred regional and urban system to be achieved through the maximum use of advanced information technology. The reason behind this drastic change lay in the "hyper" concentration problems in the Capital Tokyo Metropolitan Area. According to the latest Census in 1990, nearly 30 million people lived and worked in Tokyo and three other surrounding prefectures. Needless to say, metropolitan issues, especially Tokyo's problems, came to be the top priority on various political agendas.

With the increase in in-migration to the metropolitan areas and the aggravation of urban problems, the government gradually changed its spending policy, whereby the metropolitan areas received more public investment than in the previous decade. Thus the gap between the metropolitan and the micropolitan areas in terms of government support began to be reversed again. Furthermore, the government announced that US$4 trillion would be spent in the 1990s to build a new infrastructure for the age of information technology and to improve the quality of life. The details of this "mega" spending and investment are not yet available.

All these trends since the 1980s undoubtedly indicate that the Japanese regional and urban system is undergoing a process of transition. The rest of this chapter will delineate this transition and examine its essence.

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