The major industrial sector in Japan has shifted to the tertiary industries under the progress of service-and software-oriented economy and the transformation into high information society. Japanese regions have been facing regional disparities in terms of economic growth and employment creation since the collapse of bubble economy. The rehabilitation of local economies has been a crucial issue of concern in Japanese Government. The economic situation of Chugoku region is especially sever because of the high dependence on the heavy and petrochemical industries and the backwardness in the service-oriented economy.
The input-output analysis is a useful tool to examine the economic structural problems concerning the economic growth, the industrial structure and the employment creation. This paper aims to identify the impact of service and software oriented economy on the economic growth and the employment creation in Chugoku region. The study employed regional input-output models with detailed tertiary industries for years 1975, 80, 85, 90 and 95.
The empirical study has revealed that the high dependence on the depressed manufacturing sectors has spoiled the growth performance of Chugoku region. The structural reform of industries towards the service-oriented and domestic-demand-led economy is vital to renovate the region.