Study on economic ripple effects of digital Investment by local governments under uneven ICT industrial base

In recent years, the Japanese government has been encouraging the nationwide promotion of digital transformation initiatives. In Japan, however, many software-based ICT companies are concentrated in urban areas. In this study, we clarify how this fact affects the economic effects of digital investment made by local governments. Although this kind of analysis generally requires interregional input-output tables, only a few local governments have prepared and published them. In contrast, this study proposes a simple method that uses the intra-regional input-output tables published by all prefectures and the national input-output tables published by the Ministry of Internal Affairs and Communications. As a result, it was found that in the case of local governments with insufficient ICT industrial base, a considerable amount of the economic ripple effect derived from digital investment leaks out of the region. The results also indicate that the digital investment by local governments with insufficient ICT industrial base induces the leakage of employment effects, and might lead to a declining population.