SPATIAL MODELING OF INDUSTRIAL LOCATION DETERMINANTS IN JAPAN: EMPIRICAL ANALYSIS USING SPATIAL ECONOMETRIC APPROACHES

Abstract

Recent empirical studies have shown that investigation is required to identify the determinants of industrial location on a spatially detailed scale for disaggregated regional units, such as cities or counties. The existing literature establishes the necessity for considering spatial dependence among proximal location units; however, few studies have employed this process for Japan. We empirically show the main determinants of new entries of production bases in 1,652 local municipalities in Japan from 2012 to 2015. We also address the existence of spatial dependence by adopting a spatial econometric approach, which has an impact on the location determination process. Some location determinants of neighboring municipalities, related to economic agglomeration, have a significant impact on the new entries of production bases belonging to the heavy industry, while no significant impact is observed in the light industry. Unobserved and spatially dependent determinants have a significantly positive impact on new production bases in both industries, particularly in disaster‐stricken areas.