Peripheralisation of small towns in Germany and Japan – Dealing with economic decline and population loss

Journal of Rural Studies 47 (2016) 62e75

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Peripheralisation of small towns in Germany and Japan e Dealing with economic decline and population loss Peter Wirth a, *, Volker Elis b, Bernhard Müller a, d, Kenji Yamamoto c a

Leibniz Institute of Ecological Urban and Regional Development, Weberplatz 1, 01217 Dresden, Germany University of Heidelberg, Centre for East Asian Studies, Institute of Japanese Studies, Akademiestraße 4-8, 69117 Heidelberg, Germany c Kyushu University, Faculty of Economics, Hakozaki 6-19-1, Higashi-ku, Fukuoka 812-8581, Japan d €t Dresden, Chair of Spatial Development, Mommsenstraße 9, 01069 Dresden, Germany Technische Universita b

a r t i c l e i n f o

a b s t r a c t

Article history: Received 3 July 2015 Received in revised form 18 July 2016 Accepted 19 July 2016 Available online 30 July 2016

Small towns in the rural periphery are often seen as the chronic patients of regional policy, constantly in need of care but never getting well. Even in highly developed and densely populated countries, such regions and settlements are scarred by economic decline and demographic shrinking, leading to a spatial form of inequalities that can be described as “peripheralisation”. The discourse on peripheralisation processes is relatively new. It was introduced by the German sociologist Karl-Dieter Keim (2006), who identified the socio-spatial decoupling of rural areas from the dominant processes of centralisation and the weakening of economic potential as central features of peripheralisation. In this paper Keim's approach is applied to analyse and to compare the current situation in two small towns that have experienced serious population decline from about 10,000 (1965) to about 4000 inhabitants (2015):  Johanngeorgenstadt in Germany and Oya in Japan. Although the course of regional policy in the two countries has differed to some extent, processes of peripheralisation have been similar in the two towns, including tendencies of economic downturn and a loss of original functions. Against this backdrop, the main finding of the paper is that market-oriented strategies like neoliberal austerity policy or a Keynesian approach have not yielded the expected positive results in the past and cannot be viewed as the remedy for small towns in decline as seen here. Since endogenous development approaches also did not play a major role in either case, it is concluded that strategies negating quantitative growth like Slow City and Life Beyond Growth, which focus on quality-of-life factors, well-being and deceleration, could be a viable alternative. However, more cross-country comparative research on peripheralisation processes and their connection with socio-economic decline in small towns amidst demographic change seems to be necessary. © 2016 Elsevier Ltd. All rights reserved.

Keywords: Regional policy Rural areas Demographic change Development strategies

1. Small towns in the periphery as chronic patients e an introduction Small towns are vital elements of settlement systems in all developed parts of the world. They provide services, goods and jobs, and offer access to public transport not only for the inhabitants but also for the hinterland (e.g. Lintz and Wirth, 2008). Traditionally they perform a range of functions as social, cultural, administrative, communication, shopping and business centres (Vaishar et al., 2015; Heffner and Twardzik, 2015; Visvaldis et al.,

* Corresponding author. E-mail addresses: [email protected] (P. Wirth), [email protected] (V. Elis), [email protected] (B. Müller), [email protected] (K. Yamamoto). http://dx.doi.org/10.1016/j.jrurstud.2016.07.021 0743-0167/© 2016 Elsevier Ltd. All rights reserved.

2013). The catchment areas depend heavily on the ability of these centres to fulfil multiple societal tasks, in particular acting as “networking ‘nodes’” (Courtney and Errington, 2000: 297), rural “growth poles” (Courtney et al., 2007: 1220), or “growth engines” (Giffinger and Kramar, 2012). In the past few decades, many small towns have encountered a series of opportunities as well as challenges to their economic, social and political roles. As a result we can observe two contrasting development scenarios (see also Fulton and Shigley, 2001). On the one hand there are towns which have prospered and grown, often situated near large cities or within metropolitan regions and thereby profiting from urban sprawl effects. With their close proximity to city regions, such towns can take part in the social and cultural life of urban centres while offering good living conditions.

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In some cases we can also find this type of town in rural regions due to the special functions they perform as centres of tourism, cultural heritage or health, often in combination with good transport connections (Vaishar et al., 2015; Giffinger and Kramar, 2012; Lazzeroni et al., 2013; McGranahan et al., 2010). In contrast to this positive development trend, many small towns are undergoing a process of decline and shrinkage. They suffer from dwindling job opportunities and ever-decreasing social and cultural attractiveness. Many inhabitants are forced to commute to bigger centres far away or have to move to find work elsewhere, and education opportunities are scarce. Due to demographic shrinkage and ageing, these towns suffer from social erosion and a lack of the human capacities required to develop knowledge-based local communities. Many of them are situated in peripheral areas with poor accessibility. Latterly trends of peripheralisation have also been seen in relation to the weak network-building capacity of actors. Small towns of this type seem to be chronic patients of regional policy, constantly in need of care but never getting well. Summarising, these contrasting development perspectives represent the winners and losers in a polarisation process in the sense of Müller (2002), Erickcek and McKinney (2006) and Ehrlich et al. (2012). The focus of this article is on the situation in Germany and Japan, two highly developed countries with basically stagnating populations and widening spatial disparities. Although the two countries are situated on opposite sides of the globe and have different social traditions and forms of government (a federal system in Germany, a centralised state system in Japan), there is a close degree of convergence in many aspects of economic and demographic development and the spatial repercussions of this development. In particular we can observe that there are small towns where state policies intended to strengthen the local economy have largely failed in the past. We therefore ask what medicine could be appropriate for the chronic patients. The goal of the paper is to characterise the development options of small towns in the periphery under conditions of structural change in Germany and Japan. In this context the article is intended as a contribution to the international discussion on the spatial repercussions of structural change and regional development alternatives from a long-term perspective. On the one hand, we investigate the impact of change on small towns experiencing processes of peripheralisation, and on the other hand we discuss policy options to deal with the challenge of local development under conditions of economic and demographic decline. We would like to explore the following questions: What are the common development patterns in declining small towns? Which framework conditions matter, particularly regarding national economic regional policies in the relevant countries? What development options do small towns in the peripheral regions of highly developed countries have against this background? What is the role of the state and how is state responsibility related to selfresponsibility at the local/regional level? The study is informed by the English-language literature and numerous sources from Japan and the German-speaking countries. Section 2 presents some theoretical considerations about peripheralisation and small towns. The following section focuses on the determining political factors and past development strategies in regional policy in Germany (3.1) and Japan (3.2). At the end of Section 3.3 four strategic options are derived for rural peripheries and their small towns to deal with decline. Section 4 provides the context of the two case studies and presents the materials and methods of empirical research. Two case studies are described in  in Japan. Both Section 5: Johanngeorgenstadt in Germany and Oya of these small towns have suffered from serious economic decline and population loss since the 1960s, and today are still in a process of adaptation. In Section 6 the findings of the case studies are

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compared in order to highlight differences and similarities as well as alternative development options. Finally, Section 7 provides some conclusions on how small towns can best adapt to structural change. Furthermore, the contribution of this article to the international discussion about small towns in the periphery is highlighted. 2. Theoretical considerations 2.1. Recent considerations on peripheralisation This article draws on the theoretical framework provided by the growing body of research on peripheralisation (also: peripherisation) following the notion of the German sociologist Karl-Dieter Keim (2006: 3e4) that peripheralisation should be seen not as a static concept but as a dynamic socio-spatial process. This constitutes a new approach, as it is based on the preconception that the periphery is “made” and evolves due to processes of peripheralisation (Bernt et al., 2010), which means that being peripheral is not a structural feature of space that cannot be altered. In contrast to other theoretical frameworks, it offers a dynamic perspective that opens up a means to explain how peripheral spaces evolve and change (Naumann and Reichert-Schick, 2012: 29). It is an approach that transcends the prevalent understanding that peripheral areas are normally islands, mountains, borders, former industrial sites, rural and structurally weak areas (Ehrlich et al., 2012), an understanding that sees the periphery primarily as a spatial concept that can be quantified in terms of the distance from and accessibility of urban centres, or in terms of location in a rural or remote area. Instead it is based on an aspatial notion of periphery, focusing on the network building capacity of actors (Copus, 2001). In addition, it assumes that peripheralisation is reversible (Kühn and Weck, 2012: 21). As peripheralisation is a complex concept, opinions differ on its distinguishing features, but considerable accordance nonetheless exists. It can be characterised by a gradual weakening of economic potential with regard to production and employment (Keim, 2006: 3e4), decoupling, out-migration, dependency and negative selfperception (Bernt et al., 2010: 2), depopulation, a lack of integration in the globalisation of markets, cultures and values, continuous economic underperformance and a shortage of investment capital (Ehrlich et al., 2012: 79), or by regional socio-economic decline and demographic shrinking (Naumann and Reichert-Schick, 2012: 27). Peripheralisation is generally considered as a form of uneven spatial development, leading to fewer opportunities for people who live in peripheralised areas. It constitutes a distinct and increasingly relevant dimension of social inequality that differs from the usual €sius, 2009). class-based interpretations in sociology (Barlo The current debate on peripheralisation shows parallels with and is partially informed by the theory of regional polarisation of the 1950s, a theory that stressed that imbalances in regional development are not gradually equalised by the market mechanism but tend to intensify over time (Myrdal, 1957; Kühn and Weck, 2012: 14). This hypothesis is important for our discussion of strategies for peripheralised areas, as it offers an explanation for the failure of market-based statutory regional policy. There is evidence that the periphery is not well served by mainstream regional policy (Danson and de Souza, 2013: 5e6), insofar as it is implicitly treated as the laggard in a competition with urban areas that it can never win. As the selection of analytical tools used for the evaluation of development in the periphery is moulded by the discourse reflecting the urban-rural power divide, the parameters used tend to disregard the strengths of peripheral areas. This common bias towards stressing quantitative economic indicators has to be considered when discussing possible policy

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options for peripheralised areas, including the embedded small towns. The crucial point is whether decision-makers or actors on the national level are aware of the critical situation and special needs of such spaces and whether this is already reflected in policymaking on the national level. There are measures that take into account the specific strengths of peripheral municipalities. Such strengths can include the lower cost of living, proximity to nature, more living space and better social networks e factors that allow a quality of life that may compensate for lower income and wealth levels (Kühn and Weck, 2012: 17) or enable a good work-life balance and positive social capital within and between communities (Danson and de Souza, 2013: 9). Especially in countries like Germany and Japan, where demographic change has already led to population decrease and demographic ageing as well as economic decline in many municipalities in the rural periphery, there is an increasing awareness that market-oriented and growth-oriented strategies intended to revitalise local and regional economies could be illsuited to serve the purpose of guaranteeing equivalent living conditions in the affected peripheral areas and small towns. 2.2. About the functional loss of small towns in peripheral areas As there is no consistent notion of small towns in the scientific literature that can claim validity for each and every country, we define here in accordance with a definition used in the German context (Hannemann, 2015: 105e107). Accordingly, a small town is a settlement where low-order central place functions are located and population size is below 20,000. This definition is used throughout the paper. However, it should be mentioned that in documents issued by the Japanese government the implicit understanding is that a municipality of not more than 10,000 inmusho , 2009). In habitants should be considered as small (e.g. So many cases rural small towns provide supply functions to fulfil the basic needs not only of their own inhabitants but also of the people in the surroundings: public utilities, jobs, access to public transport (Visvaldis et al., 2013; Lintz and Wirth, 2008), culture (Lazzeroni et al., 2013), and education (Erickcek and McKinney, 2006). Small towns are thus an important element in the polycentric urban system (Courtney et al., 2007). Therefore, when we speak about peripheralisation in a regional context e like in the previous section e we have to note that small towns are greatly affected by such trends as they are deeply integrated in regional development processes. Consequently, discussion should consider how processes of peripheralisation influence small towns against the background of the two dominating features of regional development (see 2.1): regional socio-economic decline and demographic shrinking. The economic development of small towns is experiencing a downturn in many developed countries. In a lot of cases the loss of importance of the agricultural sector has not been compensated by a notable diversification of the economy (Courtney et al., 2007; Knox and Mayer, 2013: 140) or by the evolution of new functions such as tourism. In the post-industrial development period since the 1980s, many small towns have also not been able to counterbalance the decrease of jobs in manufacturing (Vaishar et al., 2015: 1396). Andersson and Karlsson (2004) have tried to characterise the disadvantages of Scandinavian small towns regarding their potential for economic innovation: there is often a lack of strong SME clusters and research institutions; they have problems recruiting qualified personnel; new entrepreneurial ventures e the typical creators of innovation e are rare. Under these conditions, flexible specialisation at the level of the town and recognising endogenous potentials is highly challenging (Visvaldis et al., 2013: 22). Consequently, in recent years there have been complaints in Europe

about the loss of economic functions for small towns (Courtney and Errington, 2000). In Canada, it can similarly be seen that the “traditional sources of economic […] stability” are being eroded in many small towns (Markey, 2005: 358). The main characteristics of demographic change in highly developed nations are low fertility rates and rising life expectancy (leading to an ageing population), migration from the peripheral regions to the city regions, as well as in-migration from other countries and regions (Batini et al., 2006). As in-migration from other countries is strongly directed to the big cities, peripheral areas can often not profit from this trend. Out-migration from peripheral areas is also forced by better opportunities for jobs and higher education in the bigger cities. Therefore, there are also growing demographic disparities between thriving city-regions and shrinking and/or fast-ageing peripheries in nearly all of these nations (e.g. Müller and Schiappacasse, 2009). The population loss of small towns is a process often mentioned as having various consequences for local economies (Naumann and Reichert-Schick, 2012: 31 ff; Visvaldis et al., 2013: 25 ff), e.g. on the housing stock (high number of vacancies), public infrastructure (e.g. closing of schools) and supply networks (e.g. increasing costs as a result of the decrease of consumers of water, electricity, etc.). Consequently, many small towns have lost a number of their original functions (Lintz and Wirth, 2008; Naumann and ReichertSchick, 2012) in recent decades, particularly labour-related and infrastructure functions. The loss of job opportunities in small towns forces people to commute. This penalises people who are not sufficiently mobile and young families with small children. Consequently, the loss of educational, health, cultural and other infrastructure functions reduces the attractiveness of small towns for many people. However, small towns also possess a number of advantages. The attractiveness of towns is increasingly determined by quality-of-life factors such as the residential environment, public security, and good social and natural environmental conditions (Pink and Servon, 2013; Erickcek and McKinney, 2006). Social networks ensure detailed knowledge of problems, greater flexibility in taking action, and shorter lines of communication. Thus many small towns have developed modes of decision-making that in some cases are superior to those in large urban centres, which can be less vigorous and purposeful (Lintz and Wirth, 2008). Yet the problems small towns face are all too visible and their administrative and financial capacities limited in the face of their manifold problems (Knox and Mayer, 2013: 192). Before we can suggest which concepts should be considered by policy on the national level, the course of regional policy and development in the two countries in question (Germany and Japan) is examined with a focus on small towns. 3. The changing role of small towns with special consideration of the situation in Germany and Japan 3.1. Development of small towns and peripheral regions in Germany e trends and tools In Germany the discussion around small towns and peripheral areas is closely connected to the general development conditions of regions. There are three aspects to be taken into consideration, which clearly differ from the situation in Japan. The first is the federal constitution of the state. The Federal Republic of Germany €nder) with wide-ranging political consists of 16 federal states (La competencies, exerting authority in fields like regional structural policy, spatial planning and education. Secondly, Germany is highly committed to the political, economic and spatial system of the European Union (EU). In particular, German peripheral regions

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maintain about 30 partnerships with neighbouring regions through the system of Euroregions (Perkmann, 2003). A third specific feature is the German reunification process, launched in 1990. This deepened the spatial disparities in Germany in general as eastern Germany was considerably lagging behind economic development in the west of the country at the time. Since the earliest days of industrialisation, population development in Germany has been characterised predominantly by migration from rural areas to agglomerations. Due to the country's polycentric urban system, many cities have benefited from migration. Initially rural areas could compensate for the loss of these migrants by high birth rates. However, by the 1970s the birth rate had fallen below the mortality rate. While western Germany's population continued to grow because of immigration from abroad, peripheral areas underwent rapid depopulation, a trend that politicians are still trying to counter. The aim of the Spatial Development Programme of the Federal Republic of Germany (Bundesraumordnungsprogramm) was to guarantee equivalent living conditions in all parts of the country (BROP, 1975). Furthermore, the programme identified ten regions with alarming levels of out-migration, eight of which were rural areas close to national borders. The response to these problems was a series of initiatives and model projects to strengthen rural areas, particularly through the adaptation of infrastructure according to their special needs (Burberg and Wieneke, 1989). Furthermore, spatial planning tried to contribute to this goal by defining small towns as “lower order centres” in the central place hierarchy. Turning to the eastern part of Germany, under the central planning system of the German Democratic Republic (GDR) the hierarchy of settlements was crucial for the allocation of state investment budgets, e.g. for infrastructure development. In consequence, small towns were disadvantaged in the socialist economy, unless they were the political centre of a district or were of particular interest for the central economy, for instance as an important location for agriculture and industry. As a result, only a few small towns could profit from state support, while the mass of towns received less political attention and underwent a loss of importance and life quality (among others Sch€ afer et al., 1992; Hannemann, 2015). German regional structural policy (Regionale Strukturpolitik) is a crucial tool to reduce spatial disparities. In its classical form it helps to develop infrastructure in order to boost economic activity (e.g. by designating commercial and industrial zones) as well as encouraging private investment. In western Germany, the policy has been implemented since 1969 within the framework of a “Joint Agreement for the Improvement of Regional Economic Structures” (Gemeinschaftsaufgabe zur Verbesserung der regionalen Wirtschaftsstruktur), an initiative by the Federal Republic and the individual states to strengthen economically weak regions. However, the main goal of the regional policy, namely the reduction of regional disparities, has not been achieved, and the programmes were hardly tailored to the needs of small towns. As a result, in the 1980s the top-down character of the regional structural policy was refined by the addition of bottom-up elements such as regional development concepts and regional management agencies, involving other sectoral policies, and focusing on regional hotspots and key projects (Danielzyk, 1995). This was accompanied by a new strategy for rural areas called endogenous or self-contained regional development (Mose, 1993), which aimed to boost jobs in rural areas by exploiting regional resources and talents as well as the potentials of small and medium-sized enterprises. After reunification (1990) eastern Germany saw a system transition from a centrally planned economy to a market economy. This was a sharp break, accompanied by a wide range of issues requiring attention such as the privatisation of farms, the maintenance and

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funding of basic infrastructures and the improvement of general living conditions in peripheral areas. An initial reaction was simply to copy the rural development concepts of the “western” federal states like investment support for roadworks and sewage treatment plants, and to transfer these to the eastern part of the country €nder were further challenged by the (Beetz, 2006). The “new” La above mentioned endogenous development trends with local and regional development concepts, regional development agencies and cross-border cooperation. In the past few years these trends have also been supported by EU initiatives like the Territorial Agenda 2020, aiming “to unleash the territorial potential through development strategies based on local and regional knowledge of needs, and building on the specific assets and factors which contribute to the competitiveness of places”. Among other things, the Agenda addresses the potentials of small towns (TA-EU, 2011: paragraphs 11, 26 and 29). In Germany the fate of small towns and peripheral areas is also related to the issue of inter-municipal cooperation and municipal mergers. This debate centres on the question of scale dynamics and how local administrations can best fulfil their public duties. Both close cooperations and mergers of municipalities have been attempted since the 1970s, resulting in a diverse range of municipal sizes and forms. Though all such mergers were undertaken with the aim of improving efficiency and effectiveness, convincing evidence for this effect is lacking (Bogumil and Kuhlmann, 2010). Finally we must not neglect to mention the Municipal Fiscal Equalisation Scheme (Kommunaler Finanzausgleich), which is a crucial tool to help all of Germany's municipal administrations suffering from low fiscal capacity. As the name indicates, the main aim of this scheme is to equalise municipal revenues across the country (Lenk and Rudolph, 2003). While this has become an important tool to stabilise local budgets, it is not specifically tailored for small towns or for peripheries under pressure. To summarise the development of rural and especially peripheral areas in Germany, the national government has shown a clear commitment to maintaining the functions of small towns and to supporting such areas in general, and has consistently pursued national development strategies to this end. This goal is also supported by EU policy on rural areas. However, some new political priorities have arisen since the turn of the millennium. Shrinking and ageing populations in eastern Germany's small towns and peripheral areas are now seen as demographic developments that could come to afflict the whole country over the next few decades (Müller, 2002). This has sparked a political discussion on equivalent living conditions in all parts of the country. Many planners and also researchers have adopted scenarios which assume that demographic shrinkage and ageing will continue to be distinctive features of German development (Küpper, 2010). Peripheralisation even seems to be progressing, forcing out-migration and dependence on state support (Kühn and Weck, 2012). And some argue that the German small town is undergoing a socio-economic €del, 2015). decline in general (Schro 3.2. Development of small towns and peripheral regions in Japan e trends and tools Today many of Japan's small towns are afflicted by fast ageing and dwindling populations as well as ongoing structural problems in their local economies. These problems have their roots in the rural exodus that occurred in the so-called Period of High Economic do seicho -ki) from the mid-1950s to the early 1970s, Growth (ko when the country underwent a range of major demographic, social and economic changes. During this period the economic base of rural areas was weakened not only by the large-scale migration of workers to the booming metropolitan areas, but also by structural

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changes in the energy sector, in agriculture and in forestry, all of which directly impacted rural economies (Fujita, 1981: 245e247). As a consequence of their shifting population structures, rural areas were affected by demographic change much earlier than urban areas. Furthermore, small towns and villages also had difficulty in adjusting to the dramatic structural changes to the economy. While benefitting to some extent from the shift to manufacturing from the mid-1960s to the mid-1970s (Okahashi, 1997: 29), they failed to adjust to Japan's subsequent transformation into a high-tech, services- and knowledge-based economic powerhouse. The efforts of small towns in the rural periphery to meet the challenges of demographic and economic structural change have to be considered in the light of the conditions set by Japan's regional policy framework. At least for the period from the 1960s to the end of the 1980s Japanese regional policy was orientated towards the goal of mitigating regional disparities between metropolitan and rural areas. Weaker local governments were (and to a lesser extent still are) eligible for funds from the local allocation tax system  ko fuzei seido), which is by far the most powerful tool for fiscal (chiho redistribution. This large-scale intergovernmental programme is run by the central government and is meant to enable financially weaker local governments with a low tax income to provide an adequate level of public services. The complex formula that determines the amounts to be allocated is clearly designed to benefit rural municipalities. Furthermore, rural municipalities and areas are eligible for subsidies from a wide range of other measures intended to help disadvantaged districts such as underpopulated areas (kaso chiiki), mountain villages or areas situated on peninsulas and islands. While such central government funding has enabled the local governments of small towns to provide a similar level of public services to those found in conurbations, it has led to a high degree of economic dependency. Similar to the situation in Germany, the largely disappointing results of statutory regional policy measures have, since the 1970s, led to a focus on pragmatic bottom-up, endogenous and participatory approaches to regional development. The shift from a topdown regional development policy (chiiki kaihatsu) to the bottom-up approach of regional development co-creation (chiiki zukuri) (Ditzer, 1998: 49e54) has fundamentally changed the understanding of regional planning. Two examples of bottom-up approaches are the One Village, One Product movement (isson ippin ) and Village Revitalisation (mura okoshi). The One Village, One undo Product movement was started at the beginning of the 1980s in the  Oita prefecture. The aim is that every town or village should produce something typical for the municipality that its citizens can take pride in and that can be marketed all over Japan. The items produced ranged from agricultural products to manufactured goods to touristic services. Since there were a considerable number of cases in which this strategy of local specialisation succeeded, the programme was even copied and transferred to other countries (Hiramatsu, 1990: 95e113). At the same time another programme for endogenous regional development in Japan was Village Revitalisation. It was initiated by the Small and Medium Enterprise  sho  kigyo  cho ) and aimed to strengthen product Agency (Chu ko kai) in rural areas development by the local chambers (sho (Nishino, 2008: 101). There are considerable doubts about whether these measures can really be considered bottom-up or not. However, concepts for endogenous regional development continue to have a certain impact on the development of regional policy in Japan, including the notion of endogenous skills and resources that could be valorised to revitalise small towns and villages experiencing population decline, i.e. through an intensified exchange with people from urban areas (Miyaguchi, 1998). Because the costs of the intergovernmental system for fiscal redistribution d including the local allocation tax system

mentioned above d previously consumed around a fifth of the national budget (DeWit and Yamazaki, 2004), the entire system was targeted for reform by the neoliberal Koizumi administration of 2001e2006. Under the package of regional policy reforms known as the Trinity Reforms (sanmi ittai kaikaku), rural municipalities must now attempt to deal with the repercussions of demographic change with greatly reduced budgets (Lützeler and Elis, 2007: 717; Elis, 2008: 869e870). The wave of municipal mergers (Heisei no dai gappei) which saw the number of municipalities drastically cut from 3200 in 1999 to only 1700 by 2010 (a drop of 47 per cent) also had a strong impact on the role and functions of small towns in Japan's rural areas. Small towns and villages were encouraged to participate in the mergers by incentives set by the Trinity Reforms. The budgetary constraints faced by small municipalities in non-metropolitan areas due to the gradual reduction of fiscal transfers from central government raised the prospect of bankruptcy and forced administration by central government. Thus many small towns decided to merge with large cities or to form larger municipal units, sometimes even creating a new city (shi), together with other small ) and villages (mura). Following such mergers, the heads towns (cho of the new or enlarged municipal units generally strove to exploit synergistic effects by making infrastructural cutbacks, reducing local government staffing and discontinuing or privatising municipal projects and ventures. The strategies employed by the local governments of small towns struggling with the impact of structural and demographic change are quite diverse. They include the promotion of migration to the countryside, pro-natalist measures, conventional policies to stimulate industrial development, the promotion of tourism and policies for endogenous development, and the devolution of tasks to volunteers on the sub-municipal level (Elis, 2011a: 447e451). Other proposals include the development of new specialised rural industries (Yoshida, 2005: 136e137; Matsutani, 2006: 171e172), a more consistent application of market-oriented regional reforms (Matsubara, 2006) and a reassessment of municipal policies to ensure the more active participation of local residents (Taira, 2005). At the basic level of settlements, anti-depopulation measures can be classified as either proactive or defensive. While proactive measures normally focus on attracting people from outside to locate in the countryside, defensive measures try to sustain traditional economic activities, mainly in agriculture, to prevent the structural weakening of local communities and eventual abandonment of settlements in the course of demographic change (Sakuno, 2006: 47e54). Passive strategies that attempt to maintain the status quo are often considered irresponsible or counterproductive, as they tend to be based on the unrealistic assumption that the population will stay constant or rise in the future (Taira, 2005: 60e64). The rather ambiguous concept of “revitalisation” (kasseika) is prominent in discussions around potential strategies. However, the whole concept seems to be based on the erroneous assumption that not only can the repercussions of demographic change be mitigated e in itself a rather ambitious goal for the reasons explained above e but that some regions may even be able to successfully reverse negative development through new impulses. 3.3. Strategic options for the development of small towns in peripheral areas National governments have a range of options to deal with the challenges of ailing peripheral regions and towns. We can distinguish between several options with different notions of growth. Firstly, the state may pursue a policy of regional austerity (MacLeod, 2000). This follows the assumption that the best way to handle the

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development problems of declining regions and towns is to employ market forces rather than state intervention. In this view, regions must rely on their own capacities. Competition will foster innovation and development, uncovering inherent strengths faster than policy interventions, which only cover up regional weaknesses temporarily without treating the underlying problems. An example for such an approach, as mentioned in the previous two sections, are the regional policy reforms carried out under the Koizumi administration in Japan, which reduced the transfer of funds to rural municipalities and forced mergers leading to a higher potential for cost reduction and retrenchment. It has been shown how these two interconnected reforms contribute to further peripheralisation in the countryside in the dimensions out-migration, decoupling, dependency and negative self-perception (Elis, 2011b). This confirms the widespread notion that neoliberal regional policy generates peripheralisation. While measures in Germany like the implementation of municipal mergers and intermunicipal cooperation share the objective of increased cost efficiency, their connection to neoliberal objectives is less obvious compared to the regional policy reforms in Japan. However, it is important to stress that the public debate in Germany e in contrast to the Japanese debate e is influenced by concrete discussion of the option of stopping subsidises for afflicted areas and completely abandoning towns and villages suffering from peripheralisation € lsche, 2006). (Bo Secondly, the state may support regional development by a strong policy of innovation-oriented intervention (Camagni, 2002; Malecki, 2004). This follows Keynes's precept that the state should increase spending and run budget deficits at times of recession in order to raise the demand for goods. Such a strategy of regional intervention assumes that declining towns and areas possess hidden assets that can be strengthened, and that the state must provide the necessary means to do this. Such high-impact state intervention is believed to promote innovation and development. It can be interpreted as a means to counteract peripheralisation. Most of the conventional statutory policies that shaped regional policy in Germany and Japan can be termed Keynesian. In Germany, policies to strengthen infrastructure provision and “regional structural policy” relied on intervention by the state to foster private sector investment and generate employment. In Japan, measures which aim at fiscal redistribution and support for disadvantaged municipalities are characterised by Keynesian features as well, insofar as they do not leave everything to the market mechanism and rely on state intervention. Thirdly, since the 1990s there has been a new trend in regional economic development theory that has a strong focus on endogenous factors (Stough et al., 2011: 3). This relatively new approach attributes a much more significant role to endogenous forces as a corrective to external factors like global markets and national government expenditure and investment (Danson and de Souza, 2013). Endogenous development approaches originally emerged in reaction to increasing regional disparities in many countries and the insight that a lot of regions hardly benefit from mainstream regional policy. In contrast to the growth-oriented theories and approaches (neoliberalism, Keynesianism) that build mainly on quantitative factors such as wealth and income levels, job creation and employment rates, endogenous concepts integrate qualitative aspects such as creative capital, social and financial equity, sustainability and quality of life (see Stough et al., 2011: 4). Such approaches seem to fit well with the strengths and potentials of peripheralised small towns, which include good environmental conditions, social networks and public security. In the structural policy of Germany and Japan we can also find trends towards endogenous approaches, like the German regional development concepts that emerged in the 1980s and the One Village, One

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Product movement in Japan. Fourthly, in recent years some theoretical concepts were established that neglected or qualified the definite need for economic growth. They focus on issues concerning “quality of life and environment, with an emphasis […] on local produce, maintaining local uniqueness, and sustainable urban economies” (Pink and Servon, 2013: 454), or “the environmental, sociocultural and economic dimension of liveability and social well-being” (Knox and Mayer, 2013: 193). Approaches like this are intensively driven by practical developments like the Slow City movement (Cittaslow), created by a network of Italian small towns in 1999. This development approach has six fields of action: “(1) environmental policies, (2) infrastructure policies, (3) technologies and facilities for urban quality, (4) safeguarding autochthonous production, (5) awareness and (6) hospitality” (Radstrom, 2011: 96). They are embedded in a philosophy of deceleration “to sustain the city's own unique characteristics while also improving the city so that it is a better environment in which its residents are able to enjoy living” (ibidem). Such an approach can be created, preferably in a bottomup fashion, and can be tailored to the needs of small towns, using their resources and capacities, as comprehensively justified by Knox and Mayer (2013). Similar to the Slow City movement is the Life Beyond Growth philosophy. It replaces the idea of “unending economic growth” by an “economy of well-being” (Atkisson, 2012: 5) and tries to combine an (environmentally compatible) “green economy” with factors of “national happiness”, which refer to criteria related to quality of life (ibidem: 66). The Life Beyond Growth concept draws on older growth-critical literature (Meadows et al., 1972) as well as on older concepts of “small is beautiful” (Schumacher, 1973). Though it is mainly a non-spatial approach, it can be related to small town development (Atkisson, 2012: 31). In Germany and Japan these sort of concepts are still not very widespread in regional policy. The aim of this study is to investigate the conditions of regions and small towns facing economic decline and negative demographic trends e put bluntly, the “losers” of long-term development e and to determine which of the four strategic options outlined above cope with their situation. 4. Materials and methods In order to compare the causes and processes of decline in small towns in peripheral areas of Germany and Japan, two extreme but not unusual cases were selected. We followed the extreme-case method, where the examples selected correspond to cases that could be considered “prototypical or paradigmatic of some phenomena of interest” in reference to a general question and there is no intention to confirm or disconfirm a hypothesis (Gerring, 2007: 101). The reason for this decision was the expectation that extreme cases would be particularly helpful in pinpointing underlying mechanisms, as the impact of population decrease and economic decline appears here in its clearest form. Towns with an economy characterised by low sectoral diversity are generally among the municipalities in which the impact of rural shrinkage comes to light earlier than in other places, therefore case studies on Johanngeor genstadt and Oya came to mind as suitable choices. The intention was to look for common patterns to find valuable hints for the development of small towns in declining peripheries, since similar problems are likely to appear in other municipalities and regions in countries undergoing demographic change in the near future, and not only in small towns in the rural periphery. Our study thus enables the reader to clearly see the challenges that many localities will have to cope with and the options that will have to be considered if demographic change continues as expected, not only in the two countries in question.

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The two research projects underpinning this article were carried out independently of one another in Germany and Japan. Some early research on the town of Johanngeorgenstadt was undertaken from the late 1990s (Müller et al., 2002). Then from 2002 to 2006 the Leibniz Institute of Ecological Urban and Regional Development (IOER) in Dresden coordinated a comprehensive R&D project on the redevelopment of urban structures in the town of Johanngeorgenstadt under conditions of shrinkage (Wirth and Bose, 2007), financed by the German Federal Government and the Free State of Saxony. Research included statistical data analysis about the abovementioned topics, document analysis (all relevant municipal, regional and state development programmes and plans), process moderation and participatory observation (steering group and relevant working groups). Interviews were held with the mayor of the town, members of the local council, administrative officers, entrepreneurs and leaders of citizen associations. Furthermore, based on a survey of 590 inhabitants and 61 visitors to the town, the internal and external image of Johanngeorgenstadt was examined (Steinführer and Kabisch, 2004). To  compare the Johanngeorgenstadt data with that from Oya, in 2012/ 2013 the basic quantitative data were once again updated and qualitative information on the continued development process added after a further talk with the town mayor and a newspaper review. In 2006 the research project “Demographic Change and its Regional Implications for Municipalities in Rural and Urban Areas” was launched by the German Institute of Japanese Studies (DIJ) in Tokyo as one of several projects contributing to the interdisciplinary research programme on “Challenges of Demographic Change”. Empirical research was conducted in three small towns in different regions of Japan in order to gain new insights into pro was visited in 2009 (complemented cesses of rural shrinkage. Oya be) and again in 2013. In by talks at the prefectural authorities in Ko contrast to Johanngeorgenstadt, hardly any academic literature in

relevant fields could be drawn upon. A survey was conducted yielding 12 unstructured qualitative interviews with representatives of the municipal and prefectural authorities, managers of industrial plants in the town, and other local actors. The data gained by the survey were recorded in the form of audio recordings or field notes that were summarised and matched with information from   shi henshu  iinkai, 2001e2010), internal the town history (Oya cho materials from the local administration and statistical data in a further step. The German and Japanese research teams came together for the first time in 2008 at an international scientific workshop in Tokyo on “Rural Areas without Hope”. When it became clear that similar developmental problems were afflicting small towns and rural regions in both countries, the idea was born to collaborate more intensively in this field. While it was not possible to realise this venture immediately, the joint efforts gained momentum after 2011. By harmonising the research design, updating data and consolidating information regarding the areas under investigation, the two case studies presented here evolved to follow approximately the same design. 5. Case studies 5.1. German case study: Johanngeorgenstadt 5.1.1. Geographical location and characteristics Johanngeorgenstadt is located in the German Ore Mountains/ Erzgebirge region (Federal State of Saxony) directly at the border to the Czech Republic (see Fig. 1). With a population of 4200 (StLA Sachsen, 2014), it is a typical small German town. The urban centre of the region is the city of Chemnitz lying about 70 km away (roughly an hour's drive) with a population of about 250,000. A border crossing for pedestrians, trains and vehicles connects Johanngeorgenstadt with the Czech Republic.

Fig. 1. Location of Johanngeorgenstadt and the cooperation area “Central Ore Mountains”.

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5.1.2. Population and economic development From the end of the Second World War until 1960 the area enjoyed an economic boom due to the mining of uranium for the Soviet Union. During this period the population of Johanngeorgenstadt grew from 6600 to 10,600 (municipal data). But by the early 1960s the boom had already ceased. From this time to 1989 the town underwent a socialist programme of “industrial renewal”. Coordinated by the central planning authority of the German Democratic Republic (GDR), three large state companies were set up in Johanngeorgenstadt for the production of furniture, textiles and machinery. Furthermore, the town established itself as a mountainous summer and winter resort with several holiday homes and youth camps, typically owned by socialist companies from several parts of the GDR. This development ensured not only a considerable number of jobs, but also a relatively stable population (Fig. 2). Yet today Johanngeorgenstadt is a town that is both shrinking and ageing. Economic activity has greatly declined in the period since German reunification. As a consequence of a process of deindustrialisation, from 1991 to 2014 the number of inhabitants fell by half. And the trend continues: if forecasts are accurate, Johanngeorgenstadt's population will drop to 3100 by the year 2025 (see Fig. 2). In 2014 the average age of residents was 51.3 years (StLA Sachsen, 2015), a figure which is expected to rise to 56.9 by the year 2025 (Bertelsmann Foundation, 2006). 5.1.3. Structural change and current economic structure The recent economic, social and demographic pressures on Johanngeorgenstadt can be attributed to the general economic decline in the east that followed German reunification in 1990. The German “Treuhandanstalt” e a state agency founded to privatise the state-owned companies in eastern Germany e had to manage one of the largest public sales of assets seen in the last century (Cassell, 2003). Johanngeorgenstadt could not benefit from this. All of the state-owned flagship companies in the small town could not be sold or were forced to close within a few years due to their relative inefficiency and inability to compete in the new marketplace. Also most of the holiday homes and youth camps in the town and neighbouring villages were either privatised or closed. Thus Johanngeorgenstadt lost both its industrial base and a large part of the tourist sector. Whilst other towns and regions in the former GDR have been able to maintain and modernise traditional branches or foster new industries, Johanngeorgenstadt has seen no major new investment since 1990. This lack of business creation can be attributed in part to the town's poor accessibility and to the legacy of environmental damage from mining activities (Müller et al., 2002: 89), but also to the fact that German structural policy (see 3.1) was hardly able to compensate for an economic decline of the dramatic dimensions seen in eastern Germany. As the local economy with its small and smallest private businesses provides only 742 jobs, another 697 residents are forced to travel elsewhere for work (StLA Sachsen, 2011). In this situation it is no wonder that the inhabitants stress the weak economic situation as the main cause of the poor opportunities for young people and out-migration (Steinführer and Kabisch, 2004). 5.1.4. Local government finance The financial situation of Johanngeorgenstadt is typical of eastern Germany's small municipalities, most of which have relied since reunification on transfers under the national programme of fiscal equalisation. Yet Johanngeorgenstadt faces particular pressures as a community with a declining and ageing population (and thus lower fiscal revenues) as well as a relatively high level of expenditure due to cost inertia, largely in the oversized infrastructure (Ewringmann et al., 2004: 7ff). With tax income of only

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 Fig. 2. Population development and prognosis for Johanngeorgenstadt and Oya 1965e2025.

V298 per capita (as opposed to the Saxon average of V576), the town is highly dependent on financial transfers. Communal debts in the town were V1890 per capita in 2010 (compared to an average of V876; StLA Sachsen, 2010). In addition to these general problems, Johanngeorgenstadt received an additional blow in 2006 when the communal housing association became insolvent. A large share of public housing (34 per cent in 2001) lies vacant as a result of the shrinking population (Killisch et al., 2003: 53). 5.1.5. Basic public services Given these problems, it is unsurprising that the local authority has struggled to maintain and adapt services to a shrinking and ageing population, and to avoid a massive loss of functions (compare 2.2). Here the top priority over the past decade has been to preserve basic education services. When it became clear at the beginning of the new millennium that the number of children was in long-term decline, the idea was launched to cooperate with the neighbouring municipalities in order to secure a basic school system1 by combining traditional forms with alternative concepts such as branch schools and mixed-age classes. Despite the good intentions, the project was doomed to failure as it clashed with the vested interests of some local authorities. Hence, the branch agency of the Johanngeorgenstadt's 12-class Gymnasium (grammar school) had to be closed in 2003 and the 10-class secondary school followed in 2006. 5.1.6. Policy options and strategies for the local government Johanngeorgenstadt's development over the past 25 years since German reunification can be characterised as a process of trial and error. Recognising the town's precarious situation, in 1997 the Free State of Saxony offered to support a collaborative development concept for Johanngeorgenstadt and seven other rural municipalities. The initiative for the “Central Ore Mountains around Johanngeorgenstadt” aimed at a common economic perspective and better accessibility for the involved communities as well as a programme of environmental rehabilitation. In spite of some rivalry between the municipalities, the initiative produced a number of good results. A steering committee of regional representatives, mainly the mayors of the municipalities involved, decided to establish a “Region of Competency for Health, Sports and Recreation” based on existing flagship projects such as a large hospital in Erlabrunn and a supra-regional sports centre in Breitenbrunn, as well as the mountain tourism industry based in

1 €nder. Therefore, in the Staff costs of teachers are covered by the German La question of maintaining schools the local authorities depend on decisions made by the federal states.

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 and the city of Yabu in Japan. Fig. 3. Location of Oya

Johanngeorgenstadt. The most important result was a statefinanced rehabilitation programme for the uranium brownfields. Reflecting the German government's increasing awareness of the problems of demographic change, the region launched a new project in 2002 for the “Reorganisation of settlements under conditions of shrinkage”. Running until 2005, it was based on a broad analysis of demographic trends and their impact on public finances, residential housing, social infrastructure (particularly schools) and technical infrastructure (water and wastewater networks, electricity and district heating networks) (Wirth and Bose, 2007). The result was an action plan featuring a number of core projects. However, this collaborative initiative finally failed due to a lack of agreement between the communities on the questions of schools and public housing companies. This was a major setback for Johanngeorgenstadt in view of the town's scarce conceptual, organisational and financial capacities. Recent discussions to find a solution to its problems have revolved around a potential merger with one of the neighbouring municipalities.  5.2. Japanese case study: Oya 5.2.1. Geographical location and characteristics  Oya is a small mountain town of 4000 residents made up of a number of scattered settlements in two narrow river valleys. It is go prefecture, a 2-h drive located in the northern part of the Hyo be. In 2004 it merged with three from the city of Ko adjacent towns to form the new municipality of Yabu2 with a population of 26,500 (see Fig. 3).

2 In spite of its relatively small population, Yabu is a city (shi) in an administrative sense, although cities in Japan normally have a population of more than 50,000.

5.2.2. Population development  has suffered from a declining and ageing popFor decades Oya ulation, a typical feature for small towns in the rural periphery. From 9313 residents in 1965, when mining and sericulture were still mainstays of the local economy, its population dropped to 3769 by 2015 (Fig. 2). It is forecast that the population will fall further to only 3437 by the year 2025. As of 2010, 38 per cent of the town's population were 65 years or older e a figure that is expected to rise to 43 per cent by 2030 (KSHJMK, 2004).

5.2.3. Structural change and current economic structure In the 1950s the most important local industries were mining (copper, tin and zinc) and sericulture as well as rice production, livestock breeding and forestry including the production of char shi henshu  iinkai, 2004: 296e299). Following the coal (Oya cho economic boom of the 1960s, many younger people left the town to  find employment in the rapidly developing industries in the Osaka be-Kyo to metropolitan area. During the same period, the town of Ko  Oya succeeded in attracting a number of new industries such as bookbinding, the production of electrical parts and clothing, thereby providing some new jobs. Sericulture and forestry completely lost their former importance and many people became part-time farmers with less than one hectare of farmland, so that by the 1970s only a few full-time farmers remained (Interview 8, 2013). In 1987 the town's last mine was shut down (this had been Japan's largest tin mine), effectively bringing the tradition of min ing to an end in Oya. As the town experiences regional socio-economic decline, the outlook for the local economy is bleak. The reason is that it suffers from a lack of integration in global markets and is disconnected from dominant processes in the central regions. The farming sector is largely occupied by part-time or hobby farmers engaged in rice,

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vegetable (also organic) and mushroom growing as well as breeding cattle (Interview 3, 2009). The manufacturing sector continues to benefit from a business location policy of the 1960s, so  that some plants are still located in Oya. However, the industrial base is dominated by small businesses in a variety of fields such as bookbinding, metal processing, and the manufacture of electrical parts and foodstuffs. Similar to other rural areas, since the 1990s the town has found it difficult to attract new businesses due to fierce competition from new industrial hotspots in East and Southeast Asia. While the secondary sector is still stronger than in comparable mountain towns, the services sector has slowly risen in importance, with the health and welfare sector, wholesale and retailing now providing the largest number of jobs (Interview 7, 2013). 5.2.4. Local government finance and the municipal merger The municipal merger of the town was influenced by the logic and incentives of the neoliberal regional policy reforms (the socalled Trinity Reforms) introduced by the Koizumi administration of 2001e2006. The intergovernmental system for fiscal redistribution was reorganised and the rules of municipal income redistribution changed to the disadvantage of local governments in rural areas with a weak tax base. Due to the alarming reliance of the four towns concerned on fiscal transfers (73 per cent of income in 2002) gikai, 2002: 7) and the expectation that (Yabu-gun Gappei Kyo municipal tax revenues would suffer a double blow from falling populations and substantial reductions in fiscal transfers, the local administrations opted to merge. The hope was to improve efficiency by concentrating public services and to exploit synergy effects, allowing cuts to be made in local government staff and expenditures. 5.2.5. Basic public services Against a backdrop of demographic change, the municipality of Yabu will struggle to safeguard the provision of basic public ser vices in Oya. In 2006 it was decided to close three of the four existing elementary schools. While the junior high school was  branch of the Yo  ka high school closed in 2010. The spared, the Oya number of people using the bus service serving the whole area is expected to decline, so that the local government will probably have to subsidise it. It is also anticipated that the costs of snow and ice removal during the hard winters that hit the mountain town will rise substantially, since an increasingly elderly population will be unable to do this work themselves. Furthermore, rising healthcare costs will place increasing pressure on the municipal budget, making additional cuts in other public services highly likely. 5.2.6. Policy options and strategies for the local government The local authorities of the municipality of Yabu are proponents of “small government”, specifically the concentration and downsizing of infrastructure, particularly schools, and the devolution of certain tasks to volunteers at the sub-municipal level. The city authorities are trying to rein in spending by cutting local government staff and adapting public infrastructure to a smaller population (Interview 6, 2009). As one would expect, the post-merger focus of local planning and decision-making has shifted to the new municipal government  but at Yo ka, the largest of the of Yabu, which is not located in Oya four formerly independent municipal towns. Strategies for regional revitalisation and measures to cope with an ageing society now therefore target the entire city area and are no longer directly  tailored to the particular needs of Oya. It is already clear that the impact of the Trinity reforms and ensuing merger wave will lead to  a further peripheralisation of Oya, as the name of the town will increasingly disappear from maps and official statistics and will be

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hard to find on the internet. Conventional policies to attract new businesses have failed to  persuade larger enterprises to settle in Oya over the past few decades, although there are a few cases of smaller plants opening in the town. Measures adopted to promote the manufacturing sector include the fostering of existing businesses, the offer of factories to rent and the conversion of empty school buildings for industrial use (Interview 10, 2013).  are attempts to Characteristic of current efforts to revitalise Oya market the town's cultural heritage such as the Akenobe mine (Interview 4, 2009), the tradition of silk farming, local arts such as wooden sculptures (Interview 14, 2013) and a handful of local beauty spots. The aim of these policies is to promote exchange by  in order to gradually raise bringing people from urban areas to Oya the town's attractiveness by means of external impulses (Interview 15, 2013). 6. Interpreting the patterns of small town decline and strategic alternatives 6.1. Similarities and differences between the two cases From the previous discussions we can discern some common alities between Johanngeorgenstadt and Oya, in particular the challenges they face:
Peripheral location in a mountainous environment with poor transport links to the nearest large city. 
Extreme demographic shrinkage and ageing. In Oya the population sank by 64 per cent in 50 years, whereas in Johanngeorgenstadt it fell by 49 per cent in only 21 years. The average age in both towns is considerably higher than the national level. Population forecasts predict further shrinkage and ageing.
Decline of traditional economic mainstays such as mining. Economic activities are primarily small scale and are accompanied by a shrinking job market, declining value creation and low private investment in the local economy. While both towns provide some tourist services, they only have an average level of attractiveness as tourist locations and thus full-time jobs in tourism are rare.
The strained finances of local governments, specifically a high level of debt (particularly in the case of Johanngeorgenstadt), low tax revenues and a dependency on financial transfers. This financial weakness hampers public investment.
Problems in maintaining public services as a result of the weak financial situation and cost inertia. Cuts are being made to public infrastructure, e.g. the closure of schools.
Local governments have a low capacity to act; they are dependent on state subsidies and have lost a degree of fiscal selfreliance. The final step in this loss of independence is a municipal merger, which has already been accomplished in the  and is scarcely to be avoided in Johanngeorgenstadt. case of Oya There are some differences in accessibility, specialisation of the local economy and inter-municipal cooperation, but they seem not to be crucial (Table 1).  The cases of Johanngeorgenstadt and Oya exemplify the situation of other small towns that have failed to adequately adjust to economic structural change. These two municipalities have been unable to benefit from fundamental changes at the macro level, such as the emergence of the knowledge economy, specialisation of SMEs and new trends in tourism. Local actors have had no means of influencing these underlying forces that are seriously disrupting the local economy. The findings of both case studies confirm that the towns in question have entered a negative development path. It

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is conceivable that the already poor outlook could worsen further due to vicious cycles at work in local development. Against this gloomy background, it is important to cast a light on the involvement of the two towns in regional development initiatives. One of the main counterstrategies applied in both cases has been inter-municipal cooperation. For Johanngeorgenstadt this can be considered to have failed, even if the underlying concepts have  municipal cooperation has produced some positive effects. For Oya taken the drastic form of municipal amalgamation, whereby the aim was to consolidate local finances through synergy effects and efficiency gains. In particular, public infrastructure has been adjusted to a declining and ageing population, e.g. by closing or merging schools, a trend that can also be observed in Johanngeorgenstadt. Inter-municipal cooperation has, however, produced ambivalent effects in both cases. While based on rational and integrative concepts, such cooperation can lead to an actual or anticipated asymmetrical allocation of benefits between the participating municipalities. Such a winner-loser constellation undermines the usefulness of this strategy. In addition to inter-municipal cooperation, other strategies can be observed. The general policy trend detected in both the German and the Japanese case study has been to maintain a basic level of public services, i.e. with regard to healthcare and education, and simultaneously be prepared to take advantage of new development opportunities. Such complementary policy measures include the creation of a positive environment for existing businesses, the promotion of tourism and measures to strengthen local identity and local communities. However, the fact that such strategies are only partial solutions can be seen in the case of the tourist industry. There are few full-time jobs in tourism in either Johanngeorgen stadt or Oya, and both towns face fierce competition from locations with similar attractions. Nevertheless, prospects for the modest and sustainable growth of environmentally friendly tourism are good. 6.2. Strategic alternatives It is time to return to the four options outlined in Section 3.3. The first of these was a strategy of austerity and non-intervention on the part of the national authorities. Yet if towns or regions are to rely on their internal capacities to initiate economic development rather than state largesse, there must be sufficient demand for their products or services. Such demand is low in the presented case studies; furthermore, both towns are situated in structurally weak regions that lack powerful industrial or IT clusters. Thus  neither Oya nor Johanngeorgenstadt can expect an influx of external investment to improve their fortunes. Against this background, it is hardly conceivable that small towns like Johanngeor could benefit from this option. genstadt and Oya The second strategy of regional development, namely strong state intervention in the lagging regions to reduce disparities, was previously the dominant strategy in both our cases. However, the findings show that this approach has been unable to halt the towns' gradual decline. The most effective intervention strategy can be said to be the former East German government's industrial interventionist policies that helped Johanngeorgenstadt overcome the sudden demise of mining activities from 1960 to 1990. However, the strategies of a command economy, which essentially insulate home markets from international competition, can scarcely be adopted by modern democracies. It is important to emphasise that approaches aimed at dynamic economic development are wholly unsuited to the needs of small towns in the rural periphery such as those under investigation in this article. Assuming that there is sufficient political will to continue to support such towns in the future, it is necessary to rethink whether doctrines of growth are an appropriate means to tackle small town decline.

The third option e endogenous development, based on creative capital, social and financial equity, sustainability and quality of life e can be interpreted today as an early attempt to overcome the negative trends of peripheralisation. It was directed towards reducing the state dependency of the affected regions on the one hand and increasing the economic and social self-dependence of the regions on the other. Though there are a lot of cases where this approach has arguably been more or less successful, it is obvious  that it is not suitable for all regions. In Johanngeorgenstadt and Oya there was no concrete evidence that decision-makers in the municipal authorities had the necessary commitment to spearhead the activities of local and regional stakeholders and thus to develop endogenous potentials to a noteworthy degree. It is a fact that the towns in question have remained patients of regional policy to this day. This leads to an alternative, as outlined in the fourth policy option: negating quantitative growth as the objective and opting instead for environmental, socio-cultural and economic liveability and social well-being as proposed by concepts like Slow City and Life Beyond Growth. When we look at the examples of Johann georgenstadt and Oya we can see that, in a certain sense, life beyond growth has already become a reality: fewer jobs, smallscale businesses with low development potential, out-migration, ageing. It is thus clear that in these two cases the growth-path was already left behind decades ago. But this happened not as the result of a political strategy. Rather it is the outcome of political concepts that were not able to meet the needs of the weakest links in national economies. Obviously, many small towns are among them. Alternative development strategies of the sort referred to here require a policy shift towards a development path where the state maintains basic public services such as education, healthcare and public transport, while offering leeway for diverse development options to be investigated and implemented. It is an attractive development perspective in that it can provide towns or regions with sufficient strength to overcome economic crisis and to increase their competitiveness, not only in an economic sense, but also in the sense of public-private partnerships or participation in networks. The aim is to empower individuals and groups of people by ensuring they have the necessary skills to build stronger and more adaptable local communities. Often these communities can foster local markets and business activities, such as by the promotion of direct interaction between producers and consumers. In  the cases of Oya and Johanngeorgenstadt this would mean promoting the sale of local food, creating larger and sustainable tourist sectors and securing the provision of services from local people for local people. Of course, such measures will scarcely be sufficient to rescue regions undergoing long-term economic decline. They must therefore be implemented within a framework of social transfers to ensure that basic needs are met regarding education, medical care, public transport and local cultural services. 7. Conclusion The aim of this study was to assess the consequences of peripheralisation for small towns in developed countries by conducting case studies in Germany and Japan. Finally we come back to the research questions asked at the beginning. The most common development patterns in small towns are a decline of the economy and a shrinking and ageing population. Both components are closely connected, and thus overlap with and intensify each other: decreasing job opportunities are responsible for commuting and out-migration; the resulting loss of particularly young and qualified members of the workforce leads to the mostly small enterprises having problems hiring qualified staff. As external impulses are

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Table 1  Differences between and specificities of Johanngeorgenstadt and Oya.

Accessibility by car Accessibility by public transport Economy (past) Economy (present) Municipal cooperation Municipal amalgamation External shocks

Johanngeorgenstadt

 Oya

1 h drive from Chemnitz, the next major city Fairly good; train station, bus service Furniture, textiles, machines, tourism, mining Tourism, healthcare, services, handcraft Regional development concept (1997e1999) Merger probably inevitable in the future German reunification 1990

 be-Kyo to metropolitan area 2 h drive from the Osaka-K o  ka; infrequent bus service Moderate; nearest train station in Yo Mining, sericulture, forestry, charcoal, rice, livestock breeding Health and welfare, bookbinding, manufacturing, foodstuffs No comprehensive municipal cooperation prior to merger Merged in 2004 Rise of other East Asian economies

weak, the downward spiral can proceed and the local actors e whether public or private e are hardly able to develop concepts to counter the decline because the creative, administrative, and financial capacity is low. As a result, the central functions of small towns like public utilities, jobs, access to public transport, culture and education, which are typical features of lower order centres, are eroded. Small towns of this type are in danger of losing their status as lower order centres and their independency through municipal mergers. The general direction of regional policy in Germany and Japan, the countries of special interest in this article, has not been adverse to small towns in the periphery since the 1960s. In both countries we can find a regional structural policy that is sensitive to growing spatial disparities. In Germany with its federal state system, this tendency is rather marked, also strengthened by the regional policy of the European Union, which fosters cohesion and supports the regions. But Japan has developed elaborate concepts for the periphery as well. The problem is that growth-oriented economic systems produce peripheries. Against this background, the regional structural policy of the national states has proved to be less helpful  than could be expected for towns like Johanngeorgenstadt and Oya trying to deal with and possibly recover from decline. We have discussed the development options of small towns in peripheral regions in the context of four general options that can be seen as a framework adequately representing the spectrum of eligible options. A primarily market-driven strategy, often connected with neoliberalism, seems to be unsuitable to meet the needs of small towns in decline, as it favours urban agglomerations and produces rather than supports peripheries. More to the point seems to be a state-driven Keynesian approach, developing mechanisms to support weak regions and reduce regional disparities. Small towns can profit from such programmes when there is sufficient demand for products and services. Nevertheless, in the cases examined here the local economies were not able to draw comprehensive benefit from the impulses. Endogenous concepts with a stronger bottom-up component emerged in many countries, stressing the competences, capacities and capabilities of the towns and regions themselves, e.g. the regional development concepts in Germany and the One Village, One Product movement in Japan. However, these concepts did not play a major role in either  Johanngeorgenstadt or Oya, possibly because of a lack of local resources and capacities. Lastly it was discussed whether strategies negating quantitative growth like Slow City and Life Beyond Growth could be suitable for the investigated type of small towns. They are based on local products, tend to develop the natural and cultural amenities, build on the knowledge of the population, highlight tradition and identity, and are oriented towards small towns’ attractiveness. This requires strategies that involve local stakeholders and stress the environmental, socio-cultural and economic dimension of liveability and social well-being. Last but not least, we come back to the role of the state and how its responsibility is related to self-responsibility at the local/regional level. The strategies described above differ clearly in terms of the

role of the state level on the one hand and that of the regional/local level on the other hand. State policy is decisive for a fair distribution of welfare via fiscal equalisation schemes, development programmes for lagging regions and the maintenance of acceptable standards in basic infrastructures. But it cannot replace local or regional responsibility for building local capacities and forming strategies, as mentioned above. This means that a good combination of both can provide acceptable living conditions for people in small towns in the periphery. The contribution of this article to the scientific debate is to open up discussion about small town decline to include alternative development options. This is necessary as the serious development problems of small towns in decline are still underestimated in many countries. Originally, the comparative approach chosen here was not planned but developed out of the insight that processes of peripheralisation in the two countries are surprisingly similar. With this pioneering effort of bringing together the results of similar parallel case studies from a European and an East Asian country we have tried to show that this type of socio-spatial inequality is a result of global shifts and could occur in a similar form in other developed countries. Since this paper is the first comparative study on small towns affected by peripheralisation, further research will be required to substantiate the points made and to prove that the concept is applicable on a worldwide scale. References Andersson, M., Karlsson, C., 2004. Regional innovation systems in small & mediumsized regions. A critical review and assessment. In: Johansson, B., Karlsson, C., Stough, R.R. (Eds.), The Emerging Digital Economy: Entrepreneurship, Clusters and Policy. Springer, Berlin. Atkisson, A., 2012. Life beyond Growth. Alternatives and Complements to GDPmeasured Growth as a Framing Concept for Social Progress, 2012 Annual survey report of the Institute for Studies in Happiness, Economy, and Society. ISHES, Tokyo, Japan. http://lifebeyondgrowth.wordpress.com (accessed 31.01.16.). €sius, E., 2009. Der Anteil des R€ Barlo aumlichen an sozialer Ungleichheit und sozialer Integration: Infrastrukturen und Daseinsvorsorge. Soz. Fortschr. 58, 22e28. Batini, N., McKibbin, W.J., Callen, T., 2006. The Global Impact of Demographic Change. International Monetary Fund, Working Paper, Washington. €ndliche Politik im demographischen Wandel. Aus Zeitgesch. 56 Beetz, S., 2006. La (21e22), 25e31. Bernt, M., Bürk, T., Kühn, M., Liebmann, H., Sommer, H., 2010. Stadtkarrieren in peripherisierten R€ aumen. Problemstellung, theoretische Bezüge und Forschungsansatz. Working Paper, Leibniz-Institut für Regionalentwicklung und Strukturplanung, Erkner. Bertelsmann Foundation, 2006. Demographiebericht Johanngeorgenstadt. Ein Baustein des Wegweisers Kommune. Bertelsmann Foundation, Gütersloh. Bogumil, J., Kuhlmann, S. (Eds.), 2010. Kommunale Aufgabenwahrnehmung im Wandel: Kommunalisierung, Regionalisierung und Territorialreform in Deutschland und Europa. VS-Verlag, Wiesbaden. €lsche, J., 2006. Deutsche Provinz: Verlassenes Land, verlorenes Land. In: Spiegel Bo online, 14 March 2006. http://www.spiegel.de/politik/deutschland/deutscheprovinz-verlassenes-land-verlorenes-land-a-404888-2.html (accessed 11.07.16.). €umige Entwicklung des BunBROP, 1975. Raumordnungsprogramm für die großra desgebietes (Bundesraumordnungsprogramm). Voigt-Druck, Gifhorn. €ufiger BevBurberg, P.-H., Wieneke, G., 1989. Infrastrukturversorgung bei rückla € lkerungsdichte unter besonderer Berücksichtigung der Mobilit€ o at von

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