Abstract

Research opinion on informatization is divided between two opposite poles—that it promotes or inhibits the spillover of regional economies. These conflicting viewpoints are called “the paradoxical geographies of the digital economy”. Information-based investment and diffusion of informatization contribute to breaking the economic space constraints caused by distance, leading to interregional spillover effects, according to the results of the Durbin model of spatial lag applied to Japanese regional data. Clearly, the local direct effects and the perimeter region’s indirect effects of informatization are both positive. This proves the existence of network externality, which causes increasing returns to scale. Extensive diffusion of information technology plays a significant role in the process, in addition to rapid accumulation and infiltration of information resources, which strengthens the information-based investment spillover effect. In this empirical analysis, evidence seems to support the view that informatization promotes economic development in Japan. View Full-Text