Strengthening Regional Economies: a Dialogue Among Governors

The following is a summary of the breakout session “Strengthening Regional Economies: A Dialogue among Governors” at the 2015 U.S.-Japan Council Annual Conference in November 2015. 

The moderator of the panel, Mr. Dennis Teranishi, Chairman, Board of Directors, U.S.-Japan Council, outlined problems that challenge prefectural and state governments, including aging populations, support for small and medium-sized businesses, and gaps in distributions of wealth. He noted that the session would examine these issues as well as how to increase ties between Japanese prefectures and U.S. states.

Mr. Teranishi first asked the Hon. Shuichi Abe, Governor, Nagano Prefecture about the impact of the aging population of Japan, what he was doing to stimulate economic growth, and the most promising areas for growth. Governor Abe first thanked the U.S.-Japan Council and then expressed the need for friendly partnerships between Japan and the United States to revitalize local industries in Nagano. The prefecture is working to build such partnerships in pursuit of mutual benefits.

Governor Abe then described Nagano Prefecture’s comprehensive strategy to address Japan’s aging society and decreasing population, including efforts at the local level to increase the fertility rate by creating an environment that supports women who want to become mothers. The measures include subsidies for having a third child and nursing care. Governor Abe stressed Nagano’s cosmopolitan qualities and noted that the prefecture supports young people who move there.

Governor Abe then turned to industry, mentioning manufacturing and Nagano’s relationship with Washington State. Both areas host the aerospace industry and Governor Abe noted that he hoped this partnership would be furthered. He also touched on tourism in Nagano, which has a rich environment for winter sports and has hosted the Olympics.

Following this, the Hon. Hidehiko Yuzaki, Governor, Hiroshima Prefecture touched upon the economic aspects of Hiroshima Prefecture, which hosts many different kinds of industries. It is also home to many international brands, including Mazda and Daiso. The prefecture faces the issues of an aging society and global competition, especially competition from developing countries in Asia. The prefecture is taking the strategy to strengthen its industries and increase productivity to deal with the labor force decrease.

Governor Yuzaki stressed that the key to tackle the prefecture’s issues is innovation, and outlined a three-pronged strategy. The first component is developing the business environment, including focusing on new growth industries such as healthcare-related enterprises. There are also efforts to create an innovation ecosystem and pursue foreign, especially Asian, markets. The third strategy component is human resource development to foster people who can work in a global environment. One aspect of this is the creation of a family-friendly environment in the prefecture and supporting mothers.

In pursuing foreign business opportunities, the prefecture has sought collaboration with Silicon Valley. Governor Yuzaki described the Japan Governors’ Meeting in Silicon Valley, which was held as part of the U.S.-Japan Council’s Governors’ Circle initiative and brought together the governors of six prefectures to meet with Silicon Valley leaders. The meeting was very fruitful for Hiroshima. Nine companies from the prefecture held business meetings, and the prefecture will also hold a business matching event. Governor Yuzaki noted that Hiroshima hopes to continue to cooperate with the U.S.-Japan Council and companies in Silicon Valley. Governor Yuzaki also mentioned a project to bring Japanese business leaders to Mexico, efforts to help Hiroshima businesses expand in ASEAN countries, and educational exchanges with Hawaii. Mr. Teranishi noted that Governor Yuzaki took paternity leave after his wife gave birth, which shows that he leads by example in creating a family-friendly environment in Hiroshima.

Following this, the Hon. David Y. Ige, Governor, State of Hawaii, spoke about the hospitality industry in Hawaii, and noted the importance of Japanese tourists. He said that Hawaii has a strong relationship with Japan, including partnerships with many Japanese tourism companies. As part of this, the State has sister-state relationships with four prefectures, which supports people-to-people relationships. Governor Ige noted that the majority of visitors to Hawaii are repeat visitors, which shows the success of the state’s hospitality industry. He also said that the hospitality industry has helped fuel the complete recovery of Hawaii’s economy.

Hawaii recently made a commitment to use 100% renewable energy. The state spends a great deal of money on fossil fuels, and this money can be better spent within the state on renewable energy projects. Governor Ige said that currently about 23% of Hawaii’s electricity is generated through renewable sources, and the state leads the country in terms of rooftop solar power. Hawaii has also partnered with Japanese companies for renewable energy, including Hitachi and JumpStart Maui. Smart grid technology and data analytics have also been implemented. The focus on renewable energy shows Hawaii’s commitment to invest in itself rather than sending money outside the state for energy.

Mr. Teranishi then introduced the Hon. Heita Kawakatsu, Governor, Shizuoka Prefecture. He asked Governor Kawakatsu about how Shizuoka is dealing with young workers who leave, and the prefecture’s ties to the United States. Governor Kawakatsu stated that Shizuoka is said to be the most advanced prefecture in Japan in terms of disaster management, enacted in response to its extensive coastline, the volcanic Mount Fuji, and the Nankai Trough Earthquake. In particular, fears about the Nankai Trough Earthquake showed that there needed to be visible signs of the prefecture’s preparation for disasters, and efforts were made to improve its infrastructure and policies.

Shizuoka has also established employment assistance and internship programs to attract young workers. This has encouraged young people to take a fresh look at the prefecture. Governor Kawakatsu made note of the numerous SMEs in the prefecture, as well as global businesses in the western part of Shizuoka. He said that Shizuoka’s new frontier is in photonics, and that he wants to create “Photon Valley” in the prefecture. He noted that revenue from pharmaceuticals and medical devices is over 1 trillion yen, the top figure in Japan for healthcare. He also mentioned agriculture in Shizuoka, and the prefecture’s work in food science in its “Farmer Valley.” Governor Kawakatsu closed his remarks by mentioning Shizuoka’s close relationship with the United States, especially in the form of business partnerships and as symbolized by Shimoda, where the relationship between the United States and Japan began.

Mr. Teranishi then invited questions from the audience. An audience member asked about how SMEs can compete internationally with limited resources. Governor Kawakatsu said there are efforts to get different parties together for study groups to create innovation. He noted the importance of the finance industry to help worthy SMEs. Governor Abe agreed on the importance of the finance industry, and also mentioned support for businesses in Nagano. He said that the prefecture has top companies in industry clusters, and that they can work together for their overseas operations.

Governor Yuzaki mentioned activities such as arranging business meetings, which the U.S.-Japan Council is also involved in. He stressed human resources, noting that many companies lack the people to drive businesses overseas. Hiroshima provides subsidies for training workers and incentives to attract talent from Tokyo. Governor Ige described grants to small businesses to upgrade their manufacturing capabilities, geared towards those that have great potential for developing export products. He also noted that Hawaii works with the national government to find markets abroad.

A member of the audience said he was inspired by the Japanese governors and asked about concrete resources to recruit people who could support them. Governor Yuzaki said that Hiroshima is encouraging Asian students to study in the prefecture. When the students graduate, there are efforts to match them with local companies. He emphasized that many companies in the prefecture, including small and medium-sized companies, are looking to globalize. Governor Ige said that it is important to have an ecosystem that supports entrepreneurship, and that Hawaii is working to create such an environment, including in the field of energy.

Governor Abe noted that globalization of human resources has not yet happened in local regions. To address this issue, Nagano plans to develop a new prefectural university by 2018. He noted that the prefecture wants to double its tourists, and that there is a great need for employees who can speak English and help foreign visitors.

Governor Kawakatsu followed by outlining some of the features of Shizuoka, including its large nuclear power plant that is committed to safety and clean energy, its plentiful ryokan, a new American-style hotel near Mount Fuji, and its new airport. He also noted that some of the events of the 2019 Rugby World Cup would be held in Shizuoka, and suggested the prefecture as an excellent place for investment.

An audience member mentioned Silicon Valley and asked about translating innovation into policies. Governor Yuzaki said that there are two directions for innovation in Hiroshima. Clusters are created for various industries, and include consultation with academia. He said a fund has been created with several hundred billion yen to support growth industries and startups. He said creating ties with Silicon Valley will broaden business perspectives and stimulate motivation to achieve further growth.

An audience member described a tourism investment, spearheaded by the Prime Minister, which makes it easier for foreign visitors to come to Japan. He asked what the governors were doing in this area. Governor Abe said that Nagano is strong in its winter activities but needs to work on its summer activities. The prefecture is also working on its WiFi availability and safety measures in its mountains. He said he hoped the central government would lighten some very restrictive regulations governing tourism in high altitude areas in the prefecture.

Governor Kawakatsu said that 120 million visitors, most of whom are Japanese, come to Shizuoka each year. He has made a suggestion about Cultural Olympiad events, much like the ones held in the U.K. He also noted that it is a problem that many foreign tourists do not know about Mt. Fuji Shizuoka Airport.

Governor Yuzaki said that when he became Governor, there was not much substance to Hiroshima’s tourism efforts. Hiroshima is home to Miyajima, but there was underinvestment in the tourism industry. Under his leadership, this has increased threefold. There have also been out-of-the-box ideas, and the number of inbound tourists continues to break the record. He mentioned destination marketing organizations (DMO), and said that seven prefectures will jointly establish a DMO in April 2016. The DMO will have a civilian CEO and will be announced soon. Governor Yuzaki also noted the need for development around the Seto Inland Sea.

A participant asked about strategies to attract talented women to the prefectures. Governor Yuzaki said he is known as someone who took paternity leave, and noted that working conditions for both men and women need to be change. He said that managers need to support parents, and that there need to be substantial policies to help people raise their families. Governor Abe said that Nagano has two measures related to this. He noted that there needs to be a change away from the men-centered society in Japan, and that he has used his authority to choose women to be deputy governor, the leader of the Board of Education, and the head of law enforcement. He has also increased the percentage of women in advisory councils. He said that Nagano is targeting single-parent families from other prefectures and encourages them to move to local communities with special support.

Governor Kawakatsu stated that childrearing is the key to developing talented human resources, and noted that a nursery was created within the prefectural government. He said that we need to have a shift in the way we think about women and children, and properly support them. Governor Ige said that Hawaii promotes equal participation of men and women in the state’s administration, which requires active efforts to seek women candidates for key positions.

Mr. Teranishi then closed the session by noting the dynamic changes that have been championed by each of the governors.