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Japan's muddled development cooperation
Thursday, 30 June 2011 05:14

Japan received a right scolding from the OECD in its recent report on Japan’s development cooperation policies – and quite rightly so.  Japan must increase both the quantity and quality of its official assistance to developing countries.


There was once a time, in 2000, when Japan topped the world for the value of its official development assistance (ODA).  But over the past decade, Japan’s ODA has been on a downward slope.  It now amounts to $9 1/2 billion and ranks fifth among the OECD countries after the US, France, Germany and the UK -- even though Japan still remains the OECD’s second biggest economy by a long shot.


Japan never topped the world for ODA as a share of Gross National Income.  That prize goes to the development good guys like Sweden, Norway, Luxembourg, Denmark and the Netherlands which meet the United Nations’ target of 0.7 per cent of GNI.  And today, Japan is basically at the bottom of the OECD ladder with its ODA worth just 0.18 per cent of GNI.  Only Italy and Korea are behind it.  And in Korea’s case, it is only a new donor, and will probably overtake Japan in the coming years.


Back in 2005 at the Gleneagles G8 Summit Japan promised to increase its ODA to help achieve the Millennium Development Goals.  This promise is now broken big time, to the tune of four billion dollars.  We have to recognize that Japan is not the only one to break this promise.


In short, Japan has become stingy.  Does this make sense?


There are some Japanese who would say that Japan’s Asian neighbors no longer need ODA.  This is not true.  Asia still has the world’s largest number of poor people.  And when you see that Japan has given so much aid in recent years to China and India, you really wonder if they are targeting poverty reduction or trying to develop business for Japanese enterprises.


But it is more complex than that.  Japan as one of the world’s leading countries should have a global responsibility for development.  This includes helping poor developing countries which will have to adapt to the effects of climate change.  Japan also needs good relations with developing countries in Africa, Latin America and the Middle East for their supplies of energy and other natural resources.


Perhaps one of the most important reasons for Japan to take development cooperation seriously is that while Japan is slowly retreating from helping developing countries, China is doing just the reverse.  I know that Japan has massive external debt problems, but it must not hide in its shell and let Chinese influence dominate Asia.


The OECD has also identified a number of ways in which Japan should improve the “quality” of its ODA.


On average, only around 17% of Japan’s total ODA is channeled through multilateral institutions like the World Bank and the Asian Development Bank.  In recent years, Japan has reduced its multilateral funding to United Nations agencies by more than half, and further cuts are planned for 2010.  This move is not at all helpful for the UN, many of whose important agencies depend on voluntary contributions.  Nor is it helpful for Japan which is still seeking a permanent seat on the UN Security Council.  And even for these puny amounts, Japan often requires lots of paper work which carries high transaction costs and duplicates the accountability structures of the multilateral organizations.


Over 80 per cent of Japan’s ODA is “bilateral”, rather than going through multilateral organizations.  This allows Japan to get more political kudos from giving.  It also means that Japan has more political leverage over recipient countries.  Should we not be encouraging developing countries to take ownership of their development process, rather than pushing them around and imposing our Japanese ways on them?  We Japanese just can’t let go.  Japanese bureaucrats are ‘control-freaks’.  There are too many complaints of paper-work and approval being blocked in Tokyo.  While field offices have some delegated authority for some schemes, headquarters is still involved at numerous stages for others.  Especially when several countries are giving aid to one developing country, the recipient must be allowed to take control and coordinate all the assistance. 


When aid is bilateral, it is easier to force the recipient country to spend the aid in the donor country.  This is known as “tied aid”, something which is too, too common with Japanese aid.  This is one of the reasons why so much of Japan’s assistance targets infrastructure projects.  Once again, who are we trying to help, Japanese big business or the developing countries?  Another scam in tied aid is all the Japanese “experts” that we impose on developing countries to provide technical assistance.  We want to share the secrets of Japan’s success, even though our economy has been failing for more than two decades! 


A modern trend is to channel aid through non-governmental organizations, both from donor and recipient countries.  These NGOs often have great expertise for implementing projects.  Using NGOs can be a way to get around corrupt developing country governments.  And it can help the development of strong civil societies and democratic institutions.  But only 3 per cent of Japan’s aid goes through NGOs.  Japanese bureaucrats simply don’t like NGOs.  One of the key roles of NGOs is to be a watchdog on government institutions.  But the last thing that our modern day samurai wants is some NGO, which represents the citizens (by God!), checking up on him.  As you could predict, the few tiny different NGO funding schemes are managed by the Ministry of Foreign Affairs and by Japan International Cooperation Agency (JICA) in a highly bureaucratic and time-consuming way.


Another area where Japan gets a yellow card is “policy coherence for development”.  Incoherence exists when policies like agriculture, fisheries, trade or migration have adverse effects on developing countries.  And in all these areas, Japan does much more harm than good to developing countries, and this harm probably outweighs the beneficial effects of its declining financial aid.


Incoherence in Japanese development cooperation is also due to the fact over 13 ministries and agencies are involved, in theory coordinated by the Ministry of Foreign Affairs.  Around two-thirds of Japanese ODA is managed through this ministry and JICA.  But the Ministry of Finance virtually runs its own independent development cooperation policy through its contributions to the World Bank, International Monetary Fund and regional development banks.  One of the big problems of Japan’s development cooperation policies is the time-wasting bureaucracy that poisons the whole Japanese government through the layers and levels of approval.  Japan’s grant aid includes many different sub-schemes, each involving different procedures.  To quote the polite OECD, “at program level, results-based management is still in the early stages.


Most regrettably Japan’s development cooperation policies are symbolic of the nation as a whole – it is falling further and further behind.



Development aid rose in 2009 and most donors will meet 2010 aid targets


Development : Japan raises the quality of its aid but should also increase the quantity


Japan International Cooperation Agency



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