Chapter2. Economy and Industrial Structure of Nagoya - the Hub City of the Greater Nagoya Area

1. Nagoya is one of the major city in Japan, accounting for about 2% of the nation's economy. Specifically, the city accounts for 1.7% of the nation's population, 2.4% of GNP, and 1.9% of citizens' income. As the hub city of the Greater Nagoya Area, Nagoya underpins the commerce and service industries of the Greater Nagoya Area, which is driven by the manufacturing industry. In terms of gross domestic product by industry, percentages of the service, wholesale, and retail industries are high.
   
   
2. In 2006, the number of citizens moving into the city exceeded the number moving out for the seventh consecutive year. In 2005, the daytime population of the city was augmented by as many as 520,000 commuters (including students) into the city. In addition, the customer attraction index (which is used to express a city's attractiveness for shoppers who live in other areas within a prefecture, as calculated by dividing per capita sales in a city by per capita sales in the prefecture) of the city recorded 1.31. In 2007, the city's benchmark land prices rose sharper than in any other area in Japan. All of these figures indicate Nagoya's importance as a hub city.
   
   
3. The per capita citizens' income has been on the decline, recording 3.24 million yen in FY 2004. In the household sector, income is falling in general, while spending is on the rise primarily for "education" and "insurance/medical care". In 2006, the average monthly cash earnings per regular employee in Aichi Prefecture were lower than those of 2001. In Aichi Prefecture, the share of labor in the manufacturing industry has significantly decreased, revealing that improving corporate performance has not translated into higher household incomes.
   
   
4. The city and the Greater Nagoya Area have benefited from the Japanese economy's continued expansion surpassing the Izanagi Boom (1965〜1970). The indexes of production, consumption, and prices have remained favorable, the number of business bankruptcies in the city has been on the decline, and the ratio of active job openings to applicants in the city has remained high. Thus, the city's economy is buoyant compared with the rest of the nation. However, the business sentiment of small and medium-sized companies (major players in the city's economy) has remained at the same level in general. With no tangible improvement in sight, the business environment shows signs of difficulty.
   
   
5. As the industrial structure shifts to the tertiary industries, the number of business establishments has fallen by more than 26,000 over the last 15 years. In particular, there has been a remarkable decrease in the number of small business establishments or other business establishments engaged in the manufacturing, wholesale, and retail industries. Today, the number of corporations closed exceeds the number of new business start-ups. Measures need to be taken to foster entrepreneurs, help them to set up venture companies to create new industries, and bring young people, women as well as baby boomers into the labor force, in response to the social changes brought about by the declining birthrate and growing elderly population, shrinking labor force, and changing age structure of the population.