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Embedded Localities: Employment Decline, Inner City Population Growth, and Declining Place Stratification among Japan's Mid‐Size and Large Cities

The 1990s were a decade of economic decline in Japan. During this period, similar to the United States in the 1970s and 1980s, Japan's largest cities suffered contractions in total and manufacturing employment, and income inequality widened, nationwide. In contrast, after 1995, inner city districts in eight of its 11 largest cities and in central Tokyo experienced population and housing growth. Residential growth, coupled with contracting incomes in affluent cities and rising incomes in provincial large and mid‐sized cities, then fostered a decline in place stratification by per capita and household income among cities with more than 200,000, between 1990 and 2000. This article argues that the primary factors provoking this combination of positive and negative outcomes were the same policies implemented by the Japanese Developmental State in order to protect its firms from the destructive forces of the world capitalist market system. In other words, failed market interventions unintentionally led to industrial disinvestment and plunging urban land prices. These conditions, supported by national and subnational urban redevelopment policies, then spurred residential growth in large cities. In sum, Japan's interventionist policy logic and its unique development trends suggest that its cities remain as embedded localities, tightly nested within their own political‐economic development context. Its situation also suggests that it might be time to create a more integrated metatheory of urban development, one which fully incorporates the reflexive nature of the interplay among the global, the national, and the local political‐economic contexts in order to explain its impacts on spatial patterns.