Inclusive wealth footprint for cities in Japan: regional clusters for sustainable development

Cities play a crucial role in regional sustainable development through trade linkages with surrounding economies. This study extends the inclusive wealth (IW) conceptual framework for footprint analysis, offering a comprehensive production-consumption perspective to measure regional sustainability. We empirically analyse the IW footprint for 1880 municipal-level economies in Japan by using their territorial IW accounting. We measure sustainability in the hierarchical value chains across cities and prefectures. Our findings suggest the unsustainability of production and consumption across cities in Japan, as the biased wealth clustering in cross-prefecture value chains led to wealth inequality. Additionally, we observe the distorted natural and human capital utilization characterized as the general depreciation of natural capital and shortage of human capital, which arise by the value chain participation. Our results underscore the importance of capital management and regulation in value chains. Sustainable development policy interventions must focus on optimizing inclusive capital asset management to maintain a non-declining level of wealth. This research unveils the intricate relationship between cities and their surroundings, providing valuable insights for policymakers aiming to enhance regional sustainability.