This paper analyzes the tendencies in the specialization and decentralization of Japanese manufacturing using the time-series data of Japanese Census of Manufactures by prefectures and by 2-digit SIC codes. Comparing the time-series values of the coefficients of variation and the basic employment to total employment ratios, it is shown that whereas Japan tends to specialize in the export industries at the national level, it has been homogenizing and decentralizing at the regional level. This implies that the localization economies and the urbanization economies are becoming less important in Japanese manufacturing industries.
Next, the regional output shares in the 6-digit computer industries are plotted for Tokyo and Kanagawa prefectures. It is demonstrated that the application of the product cycle theory is inadequate particularly in explaining the decentralization phenomenon.
Finally, so as to explain this, tested and confirmed is the validity of the theory of interregional spatial division of labor in the multilocational manufacturing firms. Three kinds of analyses are conducted. Revealed are: (i) increasing tendency in the number of branch firms whose headquarters locate in Tokyo prefecture; (ii) less regional variation than the industry variation in the growth rate of employment; and (iii) decreasing trend in the regional variation in the growth rate of employment., It is thus inferred that although the agglomeration economies in a classical sense have been reducing, the agglomeration economies at the interregional network level have been increasing in recent years presumably due to the interregional integration by the multilocational corporations.