The Development Bank of Japan published the "Kansai Handbook 2025 Edition," a comprehensive regional economic report analyzing economic, industrial, and social conditions across the Kansai region (Osaka, Kyoto, Hyogo, Nara, Wakayama, and Shiga prefectures).
Kansai Economic Zone Characteristics
Japan's second-largest economic region demonstrates significant economic scale and industrial diversity, with the Kansai economic zone's industrial structure, demographic trends, and economic activities analyzed through detailed national comparative perspectives. Osaka serves as the primary economic center alongside historical capitals Kyoto and port city Kobe, creating unique multi-center metropolitan configuration.
Regional gross product totaled 78.4 trillion yen in 2024, representing 14.2% of national GDP with population of 18.7 million residents (14.8% of national total). Economic growth rate reached 3.1% annually, exceeding national average due to strong service sector performance, manufacturing recovery, and international tourism revival.
Industrial Structure and Economic Competitiveness
Manufacturing sector contributes 23.8% of regional output, with pharmaceutical and biotechnology industries leading at 34.7% of manufacturing value-added. Major pharmaceutical companies including Takeda, Shionogi, and Daiichi Sankyo maintain significant research and production facilities, positioning Kansai as Japan's pharmaceutical industry center.
Steel and metals processing through facilities in Kobe and Osaka generates 12.4% of national steel output, while precision machinery manufacturing accounts for 18.9% of regional industrial production. Electronics and semiconductor component production maintains strong competitive positioning despite global market challenges.
Service sector dominance at 68.2% of regional economy includes financial services concentration in Osaka, tourism services throughout the region, and logistics services leveraging port and airport infrastructure. Financial sector includes regional banks, securities firms, and insurance companies serving nationwide markets from Kansai headquarters.
Innovation Ecosystem and Research Excellence
The region hosts 89 universities including Kyoto University, Osaka University, and Kobe University, generating world-class research in life sciences, engineering, and social sciences. Research and development investment reached 1.47 trillion yen in 2024, with pharmaceutical R&D accounting for 23.7% of national pharmaceutical research expenditure.
Startup ecosystem includes 156 business incubators, 67 venture capital organizations, and comprehensive entrepreneur support networks facilitating technology commercialization and new business development. Government-supported innovation programs include Osaka Innovation Hub and Kyoto Research Park providing infrastructure for emerging technology companies.
Cultural Heritage and Tourism Industry
Tourism industry demonstrates exceptional recovery with 67.4 million visitors in 2024, including 8.9 million international tourists generating 2.34 trillion yen economic impact. Cultural attractions include UNESCO World Heritage sites, traditional craft centers, culinary destinations, and modern entertainment facilities creating diverse tourism offerings.
International recognition includes Osaka Expo 2025 preparation activities stimulating infrastructure investment, hospitality sector development, and international business opportunity expansion. Tourism infrastructure improvements total 234 billion yen through 2025, enhancing visitor capacity and experience quality.
Transportation Infrastructure and Connectivity
Comprehensive transportation network includes Kansai International Airport (44.2 million passengers annually), Osaka Port (international trade gateway), and extensive railway systems connecting regional centers with national networks. Shinkansen connectivity provides rapid access to Tokyo, while regional transportation systems ensure efficient intra-regional mobility.
Logistics infrastructure supports regional manufacturing and international trade through port facilities, airport cargo capacity, and strategically located distribution centers serving domestic and international markets.
Future Development Vision and Strategic Priorities
Long-term development strategy emphasizes maintaining position as Japan's second economic center through innovation leadership, international business attraction, and sustainable urban development. Strategic priorities include life sciences industry expansion, digital transformation facilitation, and sustainable tourism development.
The handbook concludes that Kansai region's combination of economic scale, cultural significance, innovation capacity, and infrastructure advantages ensures continued importance in Japan's economic landscape and international competitiveness.