【Fifth Round】What will travel look like five years from now? We ask Professor Kentaro Nakajima, a spatial economist.

The New Buds of Tourism, Exploring the Shape and Future of Tourism Five Years Ahead

This column aims to pinpoint new buds of tourism (the latest trends and changes in traveling) that are to come. However, the column isn’t limited to just the travel industry, but feature people an interview format from a variety of industries. Today we’re talking with Kentaro Nakajima graduated in 2003 from Tokyo University’s Faculty of Economics. In 2008, he completed his doctoral course at the university’s graduate school of economic research (Faculty of Economics). He has experience as an Associate Professor, Endowed Chair in Regional Economics and Finance (77), Graduate School of Economics and Management, Tohoku University and as an Associate Professor, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University, and as an Associate Professor, Graduate School of Economics and Management, Tohoku University. From 2023, he’s acted as a professor for Hitotsubashi University’s Institute of Innovation Research, Professor for the School of Business Administration and Faculty of Commerce and Management. His empirical research for spatial economics consists of a wide variety of data from historical records, GPS data, smartphone data, and satellite imagery.

Mr. Kentaro Nakajima

The study of urban economics and spatial economics consists of research of urban centers that are created by the movement of people.

　
Interviewer: Mr. Nakajima, what kind of research have you been carrying out as a specialist in the fields of urban economics and spatial economics?
　
Mr. Matsumura: Economic activity tends to gather in a single area and not in others. It possesses an uneven spatial quality to it. Why does it have this uneven spatial quality to it? Why does this happen? That’s what I’m researching. I have a few projects on going right now, but if I look at the tourism-related ones, you can see the flow of people using this GPS data (*No.1). I’m researching how many people decreased and where they decreased during COVID-19 and how will the decrease of movement change the cities in the future.
　
*No.1 GPS Data: Anonymous location information from smartphone user’s applications have been provided as data to understand the flow and movement of people.
　
Interviewer: Can you tell us what is the difference between the study of urban economics and spatial economics?
　
Mr. Matsumura: The scale of the space is what differs between urban economics and spatial economics. Urban economic study focuses on one city, while spatial economics thinks about things in a larger scale. For example, people in Tokyo work in the offices in Otemachi but will live outside of that area in the suburbs to commute to the city. Why does that difference emerge? That’s the study of urban economics. On the other hand, spatial economics will look at why people come from all over Japan to live in Tokyo.
　
Interviewer: We saw the movement of people decrease during COVID-19 but what were the reasons behind that? In addition, has COVID-19 change the structure of cities?
　
Mr. Matsumura: One reason why people stopped movement was because they could no longer go to their workplaces during COVID-19. GPS data will show us this trend in a clear manner. The second reason is movement not related to work also decreased by a large margin during this time. If we analyze the main factor of why people decreased movement in the city, we can see that people aren’t going into the city to go shopping or have meals – the opportunities for these have decreased. But that only doesn’t explain for the decrease movement. People set their destinations everyday. For example, they go to the convenience store from their homes, they go to work, go to lunch, go back to work, stop on by a pub on the way home, and then stop by a supermarket. It’s a chain of continual trips and movement for someone. These trips have decreased because people have stopped commuting to work. The movement of people has decreased significantly which would explain this phenomenon. We can think about how this will affect the structure of cities going forward too. In 2023, the movement and flow of people has basically returned back to pre-COVID-19 levels but it is not exactly the same. Remote work has become more commonplace, and there aren’t many people who like to commute. People move because there’s something that’s waiting for them that they can attain. COVID-19 gave people the option to work from home and not commute. I’m very interested in to see the long-term effects on the structure of cities because of this.

What are the main factors that would cause a change in the movement of people and the structure of cities?

　
Interviewer: We believe the structure of cities can change due to other factors aside from COVID-19, could you tell us what other factors might do that?
　
Mr. Matsumura: There are multiple factors. For example, regulations regarding the height of buildings and floor space indexes. One reason why companies want to have an office in the city is because it is easy for people to commute there from the various places they reside. Terminal stations have convenient transportations so that’s attractive for them, right? Another reason is productivity will increase when things go smoothly such as the exchange of information and meetings – this happens when many people live in a single area. Urban economics calls this “economics of agglomeration” when referring to the positives that companies get when they focus on a specific area. Companies will concentrate in the cities because there’s value they’ll receive from the economics of agglomeration. However, too many regulations can decrease that value and the direct value of the city itself. There are high possibilities of regulations changing the value and structure of the city itself.
　
Another factor is the transportation infrastructure. The value of public transportation is often researched, and depending on the income of such structures, the value may change. Without public transportation, people have to rely on cars, which can be difficult. If someone’s workplace is far away from their home, they may have a hard time finding a place to work that’s good for them. By having robust public transportation, the creation of cities is important when viewing it from where people live and work.

　

　

What sort of structures will the cities in the future for the long term?

　
Interviewer: Thinking about it from an urban economics and spatial economics viewpoint, how will the large cities in Japan and countryside change in five years?
　
Mr. Matsumura: For the big cities, I believe working from home will become a normal part of life so I’m interested in what will happen to office spaces. If you work only once a week at home, then that means you’ll only need 4/5th of the office space. On days you do come into the office, communication will be very important and being able to sit anywhere in the office will become a part of the new office style. Office space rent will decrease in large cities, and the spaces which only the largest companies could afford – smaller, newer and upcoming companies will be able to occupy them. They might be able to have spaces in the city centers. When or if this happens, a different type of economies of agglomeration will take place and the shape and structure of urban centers will grow in a different way.
　
Regional cities will have more people working from home and that means the value of office space in those city centers will possibly decrease. On the other hand, regional cities do not have as many people as places such as Tokyo, so it’s harder to theorize what will happen and how those cities will change in the future. I previously talked about regulations as a factor in changing cities, but we need to look at them in urban economics in the long term and not the short term, which only thinks about temporary chaos in both large urban centers and regional cities.
　
Interviewer: The way cities change depends on the time, whether that’s short or long term. In terms of urban economics and spatial economics, how long is both short and long term?
　
Mr. Matsumura: Short and long term can be defined as this: if people or companies don’t influence or change a place then we call that “short term” and if they change it, then we call it “long term.” Let’s look at Niseko as an example. Inbound tourist going to Niseko will be called “short term” but people living there and offering services to those visitors will be called “long term.”
　
Interviewer: When thinking about things in the long term, will over tourism change the structure of cities? The tourism industry is trying to break up the flow of people into different areas. Could controlling people and their movement be one of the functions of a city?
　
Mr. Matsumura: It has been debated on how to avoid overcrowding in the cities, and I believe one solution lies in the regulations of development. Over tourism is an issue we’ve discussed and how to control the crowds is an important point of our discussions. When there’s too many tourists, there’s a lot of services set up for those tourists. Services that cater to people who live there will be driven away and people will leave the city because they can’t live there anymore. I believe over tourism has a high possibility of changing the structure of cities and it is a big problem. We always focus on the short-term overcrowding, but if cities are a focus for inbound visitors, locals won’t go there anymore and their workplaces and residences will also change, which changes the city in the long term. Basically, when people move, the cities change. That’s the viewpoint of urban economics and I believe it is a very interesting focus of study.

The “Bud” We Found in this Exploration

The “bud” we found in this exploration was that the flow of people will change depending on factors such as regulations and how the movement of people changes the structures of cities. In the tourism industry, we can guess the reasons why they visited certain charming regional spots from the large movement of people and the order of their trips. With this, we can connect the dots with enticing visitors and creating proper promotions. On the other hand, we must extend time and expand spaces to truly think about the cities of the future. This interview made us think that we must consider the long term value of cities and the structure of those cities.