Japan's Urban Economy and Land Policy

In the 1980s, with advancing information technology and business globalization, Tokyo emerged as a major business and financial center in the world economy. Especially after 1985 Tokyo and then other large cities experienced a strong boom and a rapid increase in land values. It should be pointed out that, instead of high land prices restricting domestic demand, the appreciation of land along with other assets has helped boost the economy through the wealth effect and has made Japan the “richest†nation in the world in terms of the value of assets. There are, however, some serious problems associated with land in Tokyo and other large cities. Among them are inefficient land use, inadequate public infrastructure, and an increasing disparity between the haves and the have-nots due to land-price escalation. To solve these problems, it is essential that excessive regulations over land use and transactions be removed and the present land-tax system be reformed. Japan's land problem must be dealt with by encouraging the supply of land and the efficient use of land.