Evolution, spatial selforganisation and path dependence: Tokyo's role as an international financial center

Japan's markets for money, capital and foreign exchange are among the biggest worldwide. For many years, Tokyo's role as the leading financial center in Asia has been unchallenged. However, recently, other places in the region such as Singapore and Hong Kong have invested heavily to strengthen their competitiveness, and countries like Malaysia and Thailand stand in line to follow their example. This raises two questions: First, how can the emergence of financial centers be explained in general? Second, what are Tokyo's longer-term prospects and how are they affected by the various influences? The study draws the attention to the role of evolutionary forces and the way by which micromotives and the interaction of many agents produces macrobehavior. In this preliminary paper representing a very early stage of research, financial markets are considered as emergent systems characterised by a high degree of complexity. Starting from an analysis of the strengths and weaknesses of a basic concept of the New Economic Geography possible alternatives to capture the idea of evolving financial markets are discussed. Then a tentative classification of financial places in Asia and, in particular, Tokyo's future role is given.