10. Examination of Regional Production Activity Using City System and Regional Connection Indexes

The agglomeration economy is changing with the progress of the globalized economy. In addition to the place-based economy, the connection economy has exerted its influence on firms’ activities. This paper divides the connection economy into the city system economy and the regional connection economy and devises two indexes to indirectly measure their influence. Using these two indexes, the paper classifies 47 prefectures in Japan into four categories and considers the impact of connection economies on regional production activities. This study clarifies the following two points. The 47 prefectures in Japan are arranged with regularity according to the strength of the connection economy. Prefectures that largely enjoy the connection economies have large economic activities and factory scales in their territories becomes smaller. On the other hand, prefectures with low connection economies have larger factory scales in order to enjoy more place-based economies. It can be said as follows. The agglomeration economy continues to have a significant impact on the composition of firms’ activity in each region.