This study utilizes prefectural panel data for the 2014-19 period to examine whether inbound demand contributes to the productivity growth of local economies. Before the COVID-19 pandemic, the destinations of inbound visitors gradually diffused to non-metropolitan regions, and a certain number of foreign visitors to Japan would visit many non-metropolitan destinations. With an increase in the number of foreign visitors to each region, IT-related factors, represented by cashless payments and reservation services through travel websites, have advanced throughout Japan. How did the agglomeration of tourism and the use of IT because of the dispersion of visitors to non-metropolitan areas of Japan affect local economies?
In this study, the number of visitors to Japan is measured in terms of prospective tourism market (TMP), which is “the duration of metropolitan and non-metropolitan (tourism) demand for foreign visitors to Japan”, and is used for ‘agglomeration’. . effect. The TMP does not measure the gross effect in terms of an undeniable scale of the number of visitors to Japan, but rather the net effect, which includes accessibility from origin to destination. We then analyze how regional LMPs and IT-related points signal productivity and wages in the prefectures. The estimation effects imply that TMP and IT-related aspects have a positive effect on productivity and wages in the visited prefectures.