Sustainable Regional Systems Using Limited Resources

Economics research questions how to utilize limited resources. Analysis is conducted in a variety of fields including theoretical economics, international economics, development economics, environmental economics, welfare economics, spatial economics, and urban/regional economics. This article examines the theme of regional systems mainly from the perspectives of urban and regional economics. Regional systems have economic aspects and a non-economic aspects, with the economic aspect being associated with the regional economy. For example, wages from work become a portion of income which is used to purchase goods and services. Such transactions create a series of mechanisms in which producers of goods and services receive income and profits after deducting production costs. More generally, it involves regional imports and regional exports. Of these, transactions involving outgoing shipments are said to be the source of regional economic development.

Non-economic aspects not included in these discussions also play an important role in regional systems. For example, various local activity groups are essential to improve the quality of life (QOL) of a community. However, the majority of these groups receive only necessary expenses and do not obtain sufficient compensation. Even regions where there was a natural connection--for example, everyone supporting the community and everyone being supported by the community--are now facing challenges such as a shortage of people to ensure the continued existence of the community. It is said that one reason behind this challenge is that much of our modern society is based on economic aspects, while at the same time being bound by that system. However, the problem cannot be solved simply by full-scale introduction of economic aspects into the regional system. Instead, before taking such action, the problem of financial resources must be dealt with.

Currently, in the joint research between my seminar class and Tama City, we are using the above situation as a basis for starting concrete efforts to solve the problems for the next generation. The model underlying our research is the state of regional systems that can be explained by fractions. Regions are led by members who are responsible for the management and operation of the regional activities. We place people receiving regional activities in the numerator and members supporting regional activities in the denominator. Here, it can be stated that the burden of supporting a regional grows in conjunction with a decrease in the number of leaders of regional activities. This makes the next generation reluctant to take on the role of leaders. This is similar to the principle in which a decrease in the number of insurance enrollees leads to destabilization of the insurance system. Therefore, in regional activities, we must explore what is necessary to increase the value of the denominator.

Nakamura (2023)^[1] summarizes the points that have been clarified so far as follows. First, it is necessary to create a wide entrance and prepare mechanisms that facilitate entry and exit. This can draw on the theoretical framework of microeconomics, which states that the free entry into and exit from market by corporations contributes to the efficiency of resource allocation. Second, the degree of burden must be visualized. Similar to the above, the second point can be explained by the logic that it becomes less plausible to generate unbalanced resource allocation as information increases in quality and in quantity. Third, it is necessary to demonstrate the point at which the net benefit is expected to be positive. For example, the net benefit is a relationship in which the satisfaction obtained by engaging in regional activities is greater than the cost (time and labor) associated with engaging in regional activities. These three points can be considered as the main factors.

There may be similarities in organizational management as well. For example, a person with certain attributes may incur a higher burden due to structural characteristics. Here, the level of burden increases exponentially as people acquire more sophisticated tasks. In the short term, this means maintaining an extremely high level of operational efficiency. However, in the long term, it is said that creating an environment in which employees can concentrate on what they inherently excel at will increase the benefits of the organization as a whole. Specifically, from the viewpoint of comparative advantage or trade advantage, this is a basic theory that is first learned in undergraduate education in economics and management. In the future, AI (artificial intelligence) is expected to make appropriate resource allocation based on accumulated data. However, it is essential that we work to solve the existing problems and pass on these solutions to the next generation. Our current research topic is to clarify that engaging in such problem solving will enhance internal competitiveness against the outside world.

I would now like to return my discussion to regional systems. In order to manage and operate regional systems with limited resources, many barriers must be considered compared to a situation in which there are few constraints on resources. In other words, in a situation where financial resources are declining and the scale of all aspects (local population, business activities, etc.) is shrinking, there is little chance of a scenario in which existing facilities, equipment, or services can be maintained. On the other hand, facilities and equipment are indivisible (for example, it is impossible to cut a building in half when the occupancy rate is halved). Depending on the situation, it may be necessary to close or abolish the facilities or equipment. As long as the needs in the region do not become zero, it is difficult for such a conclusion to be a solution to the problem. On example of a possible solution to this dilemma is cooperation across a wide region. This is a method in which, based on the concept that each block in the region will start all at once under the same conditions and compete for ranking (similar to a hurdle race), each block will engage in prior consultation, concentrate on a specific role, and hand off tasks to each other, thereby achieving a cooperative method.^[2]

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[1] Nakamura D., (2023), Regional Policy to Overcome the Limitations of the Economic System, Journal of Global Management, Volume 2 (scheduled to be published soon).
[2] Nakamura D., Attractiveness of regions and sustainable regional economic system: As a measure of social welfare function. Singapore: Springer, forthcoming.