From culture to capacity: Exploring neo-endogenous dynamics in culture-based development in the Japanese municipality of Higashikawa, the “Town of Photography”

We explore how the Japanese national regional development program, Furusato Nozei Hometown Tax Donation System, is implemented innovatively in the Japanese rural municipality of Higashikawa. Originally launched as a regional development program, the Furusato Nozei system evolved into a multi-stakeholder network as private sector platform companies started to coordinate donation transactions and constructed an online marketplace of return gifts offered in return for donations. Drawing on the theory of neo-endogenous development, we conduct a thematic analysis of interview data collected from local actors of Higashikawa, including representatives from the municipality and local enterprises, and from representatives of private platform companies operating in the Furusato Nozei system. Our findings show that the exogenous interventions of the Furusato Nozei system bring extra-local resources to the municipality but also pose governance challenges related to coordination and integrity. The municipality overcomes these by interpreting the exogenous inputs of the Furusato Nozei system through the lens of the municipality’s cultural initiatives, within which the municipality’s local development objectives are framed, resulting in endogenous responses characterized by the Higashikawa Shareholder System . The results illustrate the importance of municipalities as intermediaries in mobilizing local and extra-local resources. We conclude that cultural initiatives provide municipalities with a holistic approach to rural and local development, foster capacity building, and enhance a municipality’s governance capabilities. • Neo-endogenous development increasingly involves cross-sectoral actors and multiple scales. • We investigate the Japanese Furusato Nozei system implemented in the municipality of Higashikawa. • Results show neo-endogenous dynamics guided by the municipality and its cultural initiatives. • Municipalities play a crucial intermediary role in guiding neo-endogenous processes. • Culture fosters local capacity building and governance and unites cross-sectoral actors.