Japan's Development Assistance

Foreign Aid and the Post-2015 Agenda

Yasutami Shimomura, John Page, Hiroshi Kato, Yasutami Shimomura, John Page, Hiroshi Kato

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN:
  9781349564415
  9781137505378
• eBook ISBN:
  9781137505385
• Topic: Politics & International Relations
• Subtopic: Development Economics
• Index: Politics & International Relations

Once the world's largest ODA provider, contemporary Japan seems much less visible in international development. However, this book demonstrates that Japan, with its own aid philosophy, experiences, and models of aid, has ample lessons to offer to the international community as the latter seeks new paradigms of development cooperation.

1

Japan’s ODA 1954–2014: Changes and Continuities in a Central Instrument in Japan’s Foreign Policy

Hiroshi Kato

1.1 Introduction

This chapter attempts to give a retrospective overview of Japan’s bilateral official development assistance (ODA)¹ over the last 60 years from 1954 through to 2014, in the context of the post-2015 development challenges. It provides a chronological review of its development (Section 1.2), a discussion of major characteristics (Section 1.3), examples of some representative projects that vividly display such characteristics (Section 1.4), and, finally, a brief conclusion (Section 1.5).

Through these sections, this chapter attempts to illustrate that (1) for Japan, ODA was a very—and perhaps the most—important foreign policy tool from the post–World War II through the post–Cold War era and up to today, and that, as such, (2) it has served a wide range of purposes over the different decades, not only “developmental” purposes in the narrow sense of the word but also diplomatic and economic policy objectives vis-à-vis developing and developed countries alike. It also argues that (3) despite the constant changes of its objectives and implementation instruments over the decades, there have been some consistencies in Japan’s ODA policy and practices, resulting in significant achievements in Asia and elsewhere, and (4) Japan’s ODA could offer substantial insights into developmental goals of and approaches to development in the post-2015 era.

1.2 Chronological review

1.2.1 The 1950s: Era of war reparations and economic recovery

In the middle of the 1950s, war reparations constituted an important part of Japan’s international cooperation.² Six years after the end of World War II in 1945, Japan was accepted back into the international community with the signing of the San Francisco Peace Treaty in 1951, which entered into effect in 1952. In returning to the international community, Japan was obliged to pay war reparations to compensate for the damages it caused during the war. To save foreign currency, reparations were implemented through payments in yen by the Japanese government to Japanese firms, who sold Japanese goods and services to Southeastern Asian countries. This reparation program helped Japanese firms to regain access to markets in Southeast Asia. The payments of these reparations continued from 1955 until 1977, with total expenditures amounting to $1.5 billion.

Other forms of cooperation than war reparations also gradually commenced. Technical cooperation started in 1954, with Japan’s accession to the Colombo Plan backed by strong support from the United States (Hatano 1994). The first yen loan was provided to India in 1958. The Yen Loan Program was invented as an effective means of boosting exports, a policy agenda most urgently felt among the policymakers of Japan at that time.³

1.2.2 The 1960s: ODA expanded as a means of economic growth

The 1960s saw rapid progress of Japan’s ODA system, reflecting the government’s will to expand it to Southeastern Asian countries and to support the country’s rapid economic growth policy (known as the “income doubling policy”). This policy was welcomed by the United States, for whom economic development and political stability in non-communist Southeast Asian countries had become an issue of critical importance in the context of the then raging Cold War.

The decade also saw steady development of administrative infrastructure for Japan’s ODA. In 1961, the Overseas Economic Cooperation Fund (OECF) was established to provide developmental finance to developing countries. In the same year, Japan was admitted to the Development Assistance Committee (DAC). Three years later, in 1964, Japan was admitted to the Organisation for Economic Co-operation and Development (OECD), again with strong support from the United States. Earlier in 1962, Overseas Technical Cooperation Agency (OTCA), which was later to merge with the Japan Emigration Service (JEMIS) into Japan International Cooperation Agency (JICA) in 1974, was established. A program similar to the Peace Corps in the United States, a Japanese version of an overseas volunteer program, Japan Overseas Cooperation Volunteers (JOCV), was inaugurated in 1965.⁴

1.2.3 The 1970s: ODA policy changes in the wake of various shocks

In the 1970s, Japan was hit by several shocks, and the scope and purpose of its ODA programs began to diversify. This was also a period when Japan had to rethink and modify its policy toward Southeast Asian countries.

The first two of the shocks were economic: one was a sudden embargo of US soybeans for the Japanese market, a decision made by President Nixon in June 1973, and the other was the first oil shock in October the same year. These two incidents forced the Japanese government to acknowledge the country’s food and natural resource insecurities, and hence the need to develop comprehensive security policies. The establishment of JICA in 1974 is said to have been prompted by this series of shocks. Japan’s ODA policy was modified accordingly—now it was expanded to partners beyond Southeast Asian countries, such as to Middle Eastern countries.

The third shock that took place in the 1970s was political and diplomatic, and this occurred when Prime Minister Kakuei Tanaka made a visit to Southeast Asia in 1974. He was greeted with angry riots both in Bangkok and in Jakarta, protesting against the over-presence of Japanese firms in Southeast Asia. This prompted the government to review its approach to Southeast Asia, and a new policy was subsequently crystalized when Prime Minister Fukuda made a visit to the area three years later in 1977. The policy was what later came to be called the “Fukuda Doctrine,” in which Fukuda pledged that Japan, a country committed to peace, would never become a military power and that Japan would build up a relationship of mutual confidence and trust with Southeast Asian countries in wide-ranging fields. Following this policy, Japan’s ODA policies toward Southeast Asian countries expanded both in volume and in coverage in subsequent decades.

The 1970s was an era when Japan’s status as a developed country, and its accompanying responsibilities, came to be recognized and felt by Japan itself and other members of the developed world—especially the United States, with whom Japan had come to have several issues. The first was the issue of burden sharing; the United States wanted Japan to do more in economic cooperation—rather than in the military domain—and pushed Japan to expand its ODA program. To comply with this request, Japan decided to double its ODA budget in 1977. The second area was trade friction, stemming from the ever-widening US trade and payment deficits with Japan. It was under these circumstances that Japan decided to untie its aid and make its projects accessible to countries except for the Easter bloc countries, including, most importantly, American firms.⁵ A third issue concerned alignment with US geopolitical strategy. Successive Japanese administrations decided to support countries in harmony with US strategy, such as Pakistan, Turkey, Egypt, and Sudan.

1.2.4 The 1980s: Road to the top—Further expansion of ODA

Japan’s ODA continued to expand in volume and develop in its range of activities during the 1980s. With the repeated introduction of its ODA medium-term targets (1981, 1985, and 1988), the volume expanded almost linearly. Elevated further by the appreciation of the yen against the dollar after the Plaza Accord in 1985, Japan finally became the world’s top ODA donor in 1989, surpassing the United States.

Reflecting Japan’s policy toward more mature relationships with Southeast Asian countries, several important projects were launched during this period. One was a comprehensive human resource development package for the ASEAN member countries, amounting to $100 million, announced by Prime Minister Suzuki in 1981. This plan was to establish one human resource development center in each of the then ASEAN members. Another landmark project was the Eastern Seaboard Industrial development project in Thailand, which later helped Thailand develop an industrial complex, attracting 1,400 firms and creating more than 300,000 job opportunities. The 1980s saw also the expansion of Japan’s ODA to China. Prime Minister Ohira made a visit to China in 1979, making a pledge of cooperation of 50 billion yen. Following this, cooperation with China steadily increased up to the 1990s.

1.2.5 The 1990s: Fulfilling responsibility as the top ODA donor

While enjoying the status of a top ODA provider, Japan experienced a major setback in the early period of the 1990s: the humiliating experience following Iraq’s invasion of Kuwait. Japan’s inability to make contributions in personnel in response to the crisis, in addition to its monetary contribution, which in itself was later disparaged as “too little, too late,” simply served to strengthen the international impression that Japan was a mercantilist, self-centered country. Learning from this diplomatic “defeat,” the government became strongly aware of the need to contribute more to the resolution of international conflicts. In 1992, the government passed the International Peace Cooperation Law, which enabled it to send its Self-Defense Forces (SDF) to join the United Nations peacekeeping operations.

Along with these moves, the government embarked on a number of efforts to win greater support from the public for ODA domestically and also toward improving its position within the international community. The promulgation of the ODA Charter in 1992 was intended to articulate to political leaders and the public of Japan the raison d’être of ODA and also to its foreign partners—especially the United States.⁶

In the international arena, Japan tried to fulfill its responsibility as the world’s top donor by providing international public goods and services. One such effort was the organization of a large-scale international conference on Africa (Tokyo International Conference on African Development: TICAD) in 1993, in an attempt to once again highlight Africa, amidst the “aid fatigue” prevalent among the Western donors.⁷ During this period, Japan also took a leading role in the state-building process of Cambodia, and 1,200 SDF troops were sent to participate in the peacekeeping operations in the country. Japan was also active in supporting the process of transition to the market economy of former communist bloc countries like Mongolia.

In terms of the international development debate, Japan sparked debate on views on development and development strategies based on the orthodox neoclassical economics theory (see chapters 2, 7, and 16 by Kodera, Page, and Abe and Katsu, respectively). Japan also played an active role in the process leading up to an OECD development strategy, “Shaping the 21st Century: The Contribution of Development Co-operation” (OECD-DAC 1996), adopted in May 1996. This strategy is said to have paved the way for the adoption of the Millennium Development Goals at the Millennium Summit in 2000 (Hattori 2003).

Toward the end of the decade, when the Asian currency and financial crisis hit the region in 1997, Japan stepped in with a bold support package toward the crisis-hit economies, amounting to a total of US$80 billion, including some special ODA yen loan facilities.

1.2.6 The 2000s: The period of soul-searching

Despite these efforts by the government both within and out of the country, the support for and the budget allocated to ODA continued to decline throughout the 2000s. This contrasted with other donors, who started, especially after 9–11, to boldly enhance their commitment to international poverty reduction as part of their fight against terrorism. The continued decline of Japan’s ODA during this period was largely because of the prolonged recession and the alarmingly high level of public debt.

Still, efforts were made to fulfill its responsibilities as one of the world’s leading—if not the top—ODA providers and a strong ally of the United States. Thus, Tokyo hosted the International Conference on Reconstruction Assistance to Afghanistan in January 2002 and subsequently embarked on a series of projects aimed at the state building of the country as well as the improvement of the socioeconomic conditions of the people.⁸

The 2000s also saw several important developments concerning the policy and administration of Japan’s ODA. First, in 2003, the ODA Charter was revised (see MOFA 2003). Reflecting the then prevailing critical view of the public toward ODA—given the prolonged domestic economic slump—the revised charter had to stress how ODA can be important to the national interest of Japan, although the use of the term “national interest” was carefully avoided. The new charter also enshrined the concept of human security as one of its guiding principles.⁹

Subsequently, important changes were made to the implementation bodies of ODA. First, in 2003, JICA was turned into what was called an “independent administrative institution” (IAI), a genre of public body that is expected to exercise an increased degree of autonomy and flexibility in implementation, while the planning functions remain within government. Concomitant to this change was the appointment of Sadako Ogata as president of the newly IAI-turned JICA. With this new legal status and new leadership, the new JICA embarked on a number of reforms, the most important of which perhaps was the mainstreaming of the human security concept into JICA operation...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Tables, Figures, and Boxes
• Foreword
• Preface and Acknowledgments
• Notes on Contributors
• List of Abbreviations
• 1. Japan’s ODA 1954–2014: Changes and Continuities in a Central Instrument in Japan’s Foreign Policy
• 2. Japan’s Engagement with Multilateral Development Banks: Do Their Professional Paths Really Cross?
• Part I: Origin and Institutional Foundation of Japan’s Bilateral ODA
• Part II: Japan, Asia, and Africa: Adapting Aid to Changing Contexts
• Part III: Instruments and Footprints
• Part IV: Japan and the Multilateral Institutions
• Part V: Quo Vadis: The East Asian ODA Model and the Post-2015 Development Agenda
• Index