Competition for private capital and central grants: the case of Japanese industrial parks |
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Authors: | Shun-ichiro Bessho Kimiko Terai |
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Institution: | (1) Graduate School of Economics, University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, 113 Tokyo, Japan |
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Abstract: | Local governments invest in public infrastructure to develop their regions. When they depend on intergovernmental grants for
local development and have opportunities to lobby upper-level governments for such grants, horizontal intergovernmental competition
in lobbying activity may emerge in addition to competition over public infrastructure. This paper empirically examines the
existence of these interactions between Japanese localities, by using data on the value of industrial parks as infrastructure
provisions and on personnel interchanges between the central and local governments as a measure of lobbying activity. Our
results suggest that a Japanese local government’s choice of the size of industrial parks and its invitation to central officers
to act as a director on loan are positive responses to the neighboring local government’s policy choices. As the value of
the industrial parks in a district is affected by the neighboring districts’ lobby activities and their industrial park values,
we can interpret these results as evidence of inter-regional competition in these two dimensions, rather than control by the
central government in this unitary state. |
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Keywords: | |
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