Japanese economy is experiencing the increasing presence of transnational capital. The object of this paper is to make clear the process of structural change of economic space in Japan by the evolution of globalization of Japanese companies and to point out the problems involved in it.
Two interrelated processes, the development of transportation technology and communication technology, underlie the transnationalization of capital. These two external conditions integrated world economies into a single sphere of economic interaction and urged to shift the labor-intensive production function from Japan to low-wage developing countries especially in Asia. In other words, transnationalization of capital fostered the emergence of hierarchical spatial division of labor on a world space.
Transnational capital is the only organization that can utilize efficiently the geographical differences concerning the locational factors such as labor cost, language, manners and customs, climate, natural resources, distance from the mother factory in developed country, infrastructure, tax system on the world wide plane. Spatial projection of hierarchical structure of organization on the earth shapes the hierarchical structure of world space, hierarchical network of world cities.
As transnationalization of capital has developed, Japanese and foreign transnational capital management functions have been concentrating and agglomerating in the center district of Tokyo.
This process has affected fundamental structural change of the location of industry, laboratory and the spatial disparity of wage and income.
Over the decade or so, the pre-existing regional structure, based on the concentrated production on the pacific belt area, has changed and recently production and research functions have shifted to the outskirts of Tokyo metropolitan area, which is closely linked to Tokyo by highways.
It is considered that the continuous extention of transnationalization of capital should magnify the geographical unequality and the urban problems which is occurring in the world city Tokyo.