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The economic situations is not very promising in nonurban areas
(Dec.8, 2006)

It is reported that Japan is now experiencing its historical economic expansion. True, big companies, in particular, manufacturing and exporting businesses are enjoying a boom. However, these kinds of companies are located mainly only in the urban areas. It is quite rare that they have their headquarters in nonurban areas. This is the reason why many people are not feeling that the current economic expansion is real.

The Japanese national government is used to lift the nonurban economy out of recession by public investment; in providing nonurban areas with basic social infrastructures, the Japanese national government allocated a budget for creating jobs in the nonurban areas. This practice was common even after the bubble economy had burst. Rather, this practice was made more frequently than before the bubble economy. However, the Koizumi cabinet started reviewing public investments and decided to dramatically reduce the allocations for them. As a result, many building and road constructors in nonurban areas went bankrupt. This was a serious damage to the economy of nonurban areas.

In contrast, big companies in Tokyo and the other big cities are enjoying a striking level of prosperity. There are many favorable factors for them: they had completed drastic reconstructing, the yen keeps weakening, etc. It is undoubted that they will post record profit for four consecutive terms. This financial situations are observed not only in Tokyo, but also in Nagoya, Kyoto, Osaka, Kobe, Fukuoka, and all the other big cities. It is the nonurban areas that are left out of this historic boom.

Even in nonurban areas, there were more jobs than before. However, this is due only to the expansion of big companies' hiring, not to that of local small companies. It is surprising how the gap between big companies and nonurban small companies in their average amounts of annual bonuses given to the employee.

Bank of Japan is expected to raise the rates. However, I think that it is too early to take such a step. JOB should grasp the real situations of Japan economy. This is an extremely sensitive matter.

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