Measuring Labor Productivity and Market Viability of Rural Tourism Activities in Japan

This paper evaluated diversified rural tourism activities from the perspectives of economic viability and endogenous utilization of rural resources and investigated labour productivity of eight rural tourism activities. First, we presented a conceptual framework on how to evaluate economic viability and the endogenous mobilization of rural resources. Second, we empirically evaluated economic viability, the supply shift effect of endogenous utilization of rural resources and labour productivity with regard to rural tourism. The main findings are as follows. First, examination of the three main activities, i.e. accommodation, restaurant operation and direct selling of farm products, showed that both full-time and part-time labour input contributed more effectively to better annual sales in those three activities than in the other activities examined, such as farm experience services. This means that those activities are viable whereas activities that provide farming experience services did not show evidence of a viable farm business. Second, we could not confirm the supply shift effect of endogenous innovative use of rural resources. Overall, we found that rural tourism in this country is undersupplied at a social optimal level. In the long run, institutional conditions for market formation and management skills for endogenous innovation in utilization of rural resources should be more intensely developed as a part of rural resource management policy.

Keywords: Rural tourism, farm diversification, labour productivity, production elasticity, multifunctionality of agriculture, market viability, rural resource management.