Governmental Plans for Post-Disaster Reconstruction and Economy

The reconstruction plan after the Great Hanshin Earthquake was regulated based on the principle and policy of the governmental economy plan. It was seen as "it should comply with the governmental economy plan which is under way of being drawn up and should be approvable for the national government (the Committee for Reconstruction of the Hanshin-Awaji Area)."

The keynote of the governmental economy policy was the market principle as seen in the "Six Reforms" by the Hashimoto administration, and intensification of global competitiveness by deregulation. In the background, there were trade conflicts between Japan and other nations since the late 1980's.

Japan created a fundamental project for pubic investment in the final report for the 1990 Japan-US Structural Impediments Initiative talks and promised the United States to propel public works worth 430 trillion yen for the ten years between 1991 and 2002 (revised afterwards to 630 trillion yen) and to expand domestic demand. Governmental fixed capital formation in Japan, which is higher than those of other nations, has been increasingly utilized as an economic measure since the Japan-US Structural Impediments Initiative talks, especially after the burst of the bubble economy in 1991. The number of public works was on a rapid increase in the 1980's and the 1990's in Japan, while it was decreasing in other nations.

Above-mentioned public works have been carried out by a large amount of national and municipal debts. The national and municipal outstanding balance of long-term debts increased by 2.1 times from about 265 trillion yen in 1990 to about 553 trillion yen in 1998 (Table 1). The debt in red has reached 110% of the GDP. As a result of public works by a large sum of debt, the proportion of outstanding balance of long-term debt of the GDP skyrocketed, compared with the other nations, from 63.8% in 1985 to 112.3% in 2000 (Table 2).



Based on the above-stated national economic policy, the post-disaster reconstruction strategy by the national government was to direct the disaster-hit municipalities to create reconstruction plans along with the economic course of the national government. And there was a system for administration and finance with the centralized power to force the practice responsibility and the burden onto the municipalities within the traditional, vertical governmental structure, with subsidy, bond issues and grant-in-aid tax as levers. At the same time, it functioned to make the responsibility of the national government for the disaster ambiguous, as well as to emphasize the need of reconstruction by self-aid for individual victims in the name of the market principle.

Post-Disaster Reconstruction Policy in Kobe

The post-disaster reconstruction policy of the City of Kobe, one of the quake-hit municipalities which were supposed to protect the life and living of the quake-affected people, also ended up as a developed version of the traditional development-oriented one.

The reconstruction-related budget of 2.3683 trillion yen in Kobe city consisted of 189.8 billion yen (8%) for support for living, 834.5 billion yen (35%) for restoration projects, and 1.344 trillion yen (57%) for reconstructive development. With those related to the enterprises account section such as the restoration of ports excluded, general account consisted of 8% for support for living, 26% for restoration projects, and 66% for reconstructive development.

As it shows clearly that the high proportion of the budget was devoted to large-scale, development-oriented reconstruction projects and not to living support, the post-disaster projects put importance on the reconstruction rather than restoration, slighting the support for the living rehabilitation of quake-influenced citizens.

(IKEDA Kiyoshi)