STUDY ON ECONOMIC EFFECT OF PROJECTS IN MUNICIPALITIES WHERE U.S. MILITARY BASES LOCATE

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The fiscal policy to maintain the U.S. military bases brought the following result. First, Okinawa Prefecture and municipalities have the weakest financial power in Japan. Second, some municipalities hosting bases have a high degree of dependence on fiscal expenditure of the central government.Particularly, in Nago City that has a site of the relocation of Futenma Air Base, many kinds of funds related to the bases increases rapidly recently. Third, in spite of a large sum of fiscal expenditure which aimed at the economic recovery, the economical situation of Nago City hasn't improved. Besides, the fiscal condition of Nago City becomes worse.Nago city is also the biggest beneficiary of a 100 billion stimulus plan for northern Okinawa. Japanese government funds related to the bases have jumped from comprising 6.5% of the Nago municipal budget in FY1996 to 29.4% in FY2001. In spite of the massive influx of money, the goal of solving economic depression has not been achieved. Instead, the injection of large amounts of public funding into costly construction projects have resulted in a huge increase in local government bonds outstanding. The figure was 1.6 times larger than general revenue resource, such as local taxes and local allocation tax, in FY1994. After that, it steadily increased to 2.2 times in FY2003. In addition, if the relocation of Futenma Air Base to Henoko is fulfilled, it will be expected to bring serious environmental disruption.On the other hand, moral hazard in the fiscal management has been spreading in some municipalities. For example, Irabu town assembly resolved the invitation of the Self-Defense Force two years ago. Its purpose is getting a large sum of central government expenditure like Nago City.