This chapter empirically examines the evolution of regional economic disparities in Japan using prefecture-level data. Despite the continued concentration of population and economic activity in the Greater Tokyo Area, regional inequality in per capita gross value added (GVA) has steadily declined over the long term, a pattern that appears to contradict conventional agglomeration theories. To resolve this paradox, we decompose real GVA per capita into labor productivity, the employment rate, and the labor force participation rate and assess the relative contribution of each factor to regional inequality. The analysis shows that regional variation in labor productivity is the dominant driver of disparity, with significant productivity gains in nonmetropolitan areas accounting for much of the observed convergence. Two structural factors help explain this trend. First, improved transport connectivity has shortened the time-distance to Tokyo, enabling spatial spillovers that enhance productivity in peripheral regions. Second, differences in industrial composition, particularly the prevalence of manufacturing, have shaped divergent growth trajectories. Regions with high concentrations of manufacturing exhibit robust productivity growth, whereas service-oriented regions have experienced relatively limited gains. These findings align with the concept of Borrowed Size, offering a spatial economic perspective that extends traditional agglomeration theory. The chapter lays the theoretical groundwork for subsequent empirical analyses of productivity, efficiency, and innovation.