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New growth upon new accumulation: The Capital Tokyo Metropolitan Area

It is now clear that Tokyo has been the centre for the new growth since the 1980s, and various urban functions compete and cooperate to orchestrate and control the hyper-production system of the nation as well as the global economic network. It has often been overlooked, however, that the Capital Tokyo Metropolitan Area is not only the hub of the hyper-production system but also, perhaps, the largest consumer market in the world today. More than 30 million people within the commuting area are consuming daily. Population as a mass is one thing, but more importantly the average disposable income per household in the area is estimated to be around US$30,000 per year. A huge population with high spending power, combined with highly diversified tastes and lifestyles, inevitably make the area the most attractive market in the nation.

In the following, the hyper-agglomeration of urban functions in and around the Capital Tokyo Metropolitan Area will be briefly examined.

As figure 4.4. shows, the Capital Tokyo Metropolitan Area does not dominate every aspect of urban function. Rather, its expansion has concentrated in certain sectors, namely financing, wholesaling, information-related industries, and specialized service industries. As figure 4.5 indicates, the growth in secondary industry is faster in the micropolitan areas in terms of employment, while the metropolitan areas in general are strong in the expansion of tertiary industry, especially in the sector of specialized services, such as the computer software business. It is this specialized service sector that would be the key to understanding the recent transition and agglomeration of urban functions in the Capital Tokyo Metropolitan Area. The clarification of the nature of new agglomeration needs to examine not only the magnitude of concentration, but also the quality of its content. For that, the crucial aspects are as follows:

(1) governmental functions
(2) business and financial/administration functions
(3) distribution and transportation functions
(4) manufacturing and R&D functions
(5) service functions
(6) education and research functions
(7) media functions

First, as the nation's capital, Tokyo hosts the key governmental functions -legislative, administrative, and judicial - as well as foreign diplomatic representatives, both embassies and legations. The executive offices are concentrated in one specific area, Kasumigaseki, which is adjacent to the national Diet (parliament). In addition to these central and national administrative and legislative authorities, there are also numerous Tokyo offices of local governments. These facts in themselves do not necessarily make Tokyo special compared with the counterparts in other nations, but the structure of administration and bureaucracy really makes a substantial difference.

Fig. 4.4 The concentration of economic functions in Tokyo Metropolitan Area, 1985 (Sources: Census, 1985, 1990, Mm, Census of Manufacturing, 1988; MITI, Census of Commerce, 1988; Report by Bank of Japan, 1989; Economic Planning Agency, White Paper, 1989; Ministry of Education, White Paper, 1990; Ministry of Construction, White Paper, 1990)

More than two-thirds of all public levies are collected by the national government, and a considerable proportion is redistributed throughout the nation by way of fiscal expenditure. As a result, all local governments combined spend two-thirds of all taxes, including their own local taxes. This fiscal structure in intergovernmental relations unavoidably attracts various administrative functions to the capital Tokyo.

Fig. 4.5 Employment increase by industry and area, 1985 - A

Fig. 4.5 Employment increase by industry and area, 1985 - B

Furthermore, the government holds the power of authorization and permission, which necessarily encourages numerous office functions, of both the public and private sector, to concentrate in the capital. For instance, numerous kinds of authorization and permission by the Ministry of Transport alone amount to more than 10,000 a year!

Second, the power of authorization and permission could be crucial to certain industries, and naturally proximity to the government, both geographical and otherwise, becomes important in running their businesses. It should, however, be noted that there is more to the reasons why the headquarters functions of industry and business are concentrated in the capital, especially in such areas as Marunouchi and Otemahci, than just easy access to governmental power. As decision-making points and command posts, headquarters functions come to congregate in certain locations so as to establish the best access to business information, both domestic and international. In the age of telecommunications and computerization, nothing is more precious than business lead-time.

Financing its business is, perhaps, by far the most important function of all business administration. Tokyo has been the largest financial centre of the nation for a long time, but since the 1980s Tokyo has become one of the key international financial centres and the Tokyo Stock Exchange exceeds the New York Stock Exchange with respect to stock volumes and stock values. Financial business is also the forerunner to implementing information technology. The recent development of a highly sophisticated computer system for banking costs approximately US$1 billion of capital investment per bank. In the age of international business and telecommunications, these investments are unavoidable. Thus they create more demand for IT-based producer service industries in the area.

Third, banking and insurance are not the only businesses to have been highly computerized. Rather, the thoroughgoing development of technological innovation has come into play in industries such as distribution industry and high-tech-based manufacturing industry. The distribution system in Japan used to be one of the most complex systems. Each industry and its subgroup had its own distributional network, and these differed by region. By the development of high-speed transportation networks throughout the nation, these old systems were replaced by more cost-efficient, large-scale distribution systems, which have access to both production sites and markets.

Transportational accessibility becomes crucial, and numerous distribution centres have been constructed and operated on the outer fringes of the Capital Tokyo Metropolitan Area. These distributional reorganizations interconnected the market and various production sites outside the previous metropolitan area, and thus created a functionally integrated, expanded Capital Tokyo Metropolitan Area in the 1980s.

Fourth, the Capital Tokyo Metropolitan Area accumulated the largest manufacturing agglomeration in the nation throughout the period of rapid techno-economic growth and after, but the nature of manufacturing industry and its locational characteristics have changed drastically during the past two decades. Through industrial reorganization, heavy industry, which was once the leading sector of the entire economy, was replaced by high-tech-based, light and knowledge-intensive industries. A direct consequence of this was the shift in industrial location from the coastal industrial zone, which was most suitable for heavy industry, to the inland/interior industrial zone, which usually has access to clean air and water, high-speed transportation such as highways and airports, and the markets (fig. 4.6).

In this way, manufacturing industry has been decentralized on three different geographical scales: (1) within the metropolitan area, from the coast to inland, (2) to the micropolitan areas, and (3) to offshore operations.

The production process itself was highly integrated by computer systems, and factory automation has been further developed; together, these have had two significant consequences. One was that the importance of marketing and building efficient distributional channels was increased. The other was that the functions of R&D became crucial to the competitive edge across all manufacturing industries. As was pointed out earlier, in 1985 total R&D investments came to exceed capital investments in Japan. This crucial fact implies that rapid economic growth and the expansion of employment are expected in places where R&D investments are located. Table 4.3 and figure 4.7 clearly show the staggering concentration of R&D investments in the Capital Tokyo Metropolitan Area.

Fifth, the implementation of information technology in industries such as banking, wholesaling, and retailing, and in manufacturing itself, has spurred economic expansion and boom in the nation. Also, it has created the fastest-growing sector among all industries, namely the specialized producer service for business and industrial establishments, as well as for affluent consumers. Here again, the spatial discrepancies are prominent and the major metropolitan areas, in particular the Capital Tokyo Metropolitan Area, have grown the most and the fastest in terms of both employment and economic value.

Fig. 4.6 Industrial decentralization from Tokyo, 1975-1984 (Source: Kiyoji Murata, ea., Industrial Capital Tokyo,Tokyo: Toyo Keizai, 1988)

Sixth, the government has been taking the policy initiative to decentralize universities and colleges, since the unbalanced development patterns would be reproduced and magnified by the concentration of institutions for higher education. During the past two decades, numerous universities and colleges in Tokyo have been relocated or newly built outside the city, although they remain within a distance of 45-50 km from the city centre, and they have also tried to re-establish links with the fastest-growing and most dynamic city. However, they have found it hard to counteract the high concentration in Tokyo, since such departments as science and engineering usually worked closely with the R&D laboratories in the region, and other departments were also related to various metropolitan activities.

Table 4.3 R&D establishments in Tokyo Metropolitan Area

Source: National Land Agency, Annual Report on Regional Economy, 1988.

Fig. 4.7 Locations of R&D by region, 1985-1987 (Source: National Land Agency, Annual Report on Regional Economy, 1988)

Lastly, media functions are mostly concentrated in Tokyo, where information flows in from all over Japan and from abroad. All the major daily newspapers are affiliated with major television networks, and almost all key programmes are produced in Tokyo. Without exception, the major media conglomerates, including NHK, a very influential public television company, have their headquarters in the middle of the city. The irony is that these media often criticize the high concentration in the uni-centred urban system but they are the last to move out.

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