Determinants of new firm formation in Japan: A comparison of the manufacturing and service sectors

This paper analyzes the determinants of regional variations in new firm formation by industry, using the data of 47 prefectures in Japan. The results of this paper reveal the following evidences: (1) market access is the factor that promotes new firm formation in all industries, though the impact on new firm formation is greater in the service sectors than in the manufacturing sectors (2) the industrial agglomeration contributes to stimulating new firm formation in the manufacturing sectors and (3) while average wage is an important factor in the manufacturing sectors, it is not significant in the service sectors.