Institute of Economic Research, Kyoto University
For Advanced Economic Analysis
Applications of complexity science in economics advanced during the 1990s, with major successes in the use of non-linear dynamics and spatial economics to analyze economic change and development. KIER assembled a team of researchers who had been leaders in the global effort to apply those fields to the study of complex systems. Government grants-in-aid were received from 1997 to 2003 for the formation of a center of complexity economics (in 1997 - 2001 for the basic research in formation of a center of excellence, and in 2002 - 2003 for specially promoted research at a center of excellence), and through the holding of several international conferences and the completion of joint projects with many foreign researchers, KIER has built up a significant record as a base for international research in this field. After the center-of-excellence grants ended, KIER established this Center to provide a permanent base for research in complex economic systems.
Research at the Center for the Research of Complex Economic Systems is focused primarily on complexity economics, and also on spatial economics and economic dynamics. Complexity economics seeks to unify explications of human perception and behavior, strategic interdependent relationships, and macroeconomic fluctuation phenomena. Interdependency and self-organization principles are applied to deepen the analysis of multi-agent cyclical phenomena. The conventional postulates of economic agent behavior are challenged, such as by anticipating high-dimensional chaos effects associated with multisector economies and multiple equilibria.
Spatial economics takes account of industry and population locations, pattern formation, industrial clusters, city formation, transport/traffic hubs and artery formation, as well as innovation, theories of linkage to growth, and methods of empirical analysis. Systems are being developed for spatial economics simulations in object-oriented and parallel programming environments.
Economic dynamics research is aimed at refining mathematical techniques for nonlinear dynamic analysis in ordinary time and space. It is being used to develop a common mathematical groundwork for all of the Center's research areas.
The Center for Advanced Policy Studies consists of five professors and assistant professors with two-year terms who are drawn from five Japanese government agencies (the Cabinet Office; Financial Services Agency; Ministry of Economy, Trade and Industry; Ministry of Land, Infrastructure and Transport; and Environment Ministry), and one full-time faculty member who oversees the research (and is the Center director). As the theories and techniques of advanced analysis that are the main research focus at KIER are verified, findings from cutting-edge research can be immediately and precisely linked to policy analysis and thus reflected in actual economic policy. The goals of the Center are to remove barriers between the public, private and academic sectors and between government agencies, facilitate two-way personnel exchanges between government and academia, and promote policy studies based on both theory and verification.
The background to the establishment of the Center was the recognition that refining the negotiating and persuasion skills of policymakers and crafting policies worthy of high international esteem are pressing needs for the government of Japan. To take Japanese policy analysis to the necessary next level, it is essential to end the compartmentalization that customarily affects policy setting and analysis, and to promote two-way personnel exchanges between government and academia. The presence of public servants in the academic setting, and the ongoing availability of a venue for free and frank exchanges, are significant aspects of the Center's importance.
The incorporation into Japanese economic policy of findings from KIER research, which is chiefly theoretical, is an important opportunity to demonstrate the effectiveness of theoretical economics. Meanwhile, inducing researchers to take account of actual policy needs in the real world is indispensable if economic theory is to retain its practical footing. Joint research continues among faculty of this Center and full-time KIER faculty, aimed at theoretical and empirical findings that may serve policy needs.