Japan's Policy on
Official Development Assistance
to Latin America and the Caribbean

1. Official Development Assistance with Latin America and the Caribbean

Within the context of its program of official development assistance (ODA), Japan is actively extending cooperation to Latin American and Caribbean countries; the emphasis is on support for the democratization which has made progress in the region in recent years, for market-oriented economic reforms to help sustain democracy, and for efforts to deal with global problems such as environmental issues.

(1) Support for democratization and economic reform

(a) Democratization

The series of presidential elections held in Latin American and Caribbean countries since 1994 has strengthened the trend of democratization in the region. Japan actively supported the election process in a number of countries with funds and personnel (including the dispatch of election observers through such institutions as the United Nations and the Organization of American States). Japan has also cooperated in the development of the relevant human resources by holding seminars for research on democracy and training courses on election administration techniques. In addition, Japan is expanding its assistance to countries actively pursuing democratization so as to encourage their efforts.

(b) Economic reform

The 1980s have been labeled "the lost decade" for economic progress in the region, but the 1990s are turning out to be a period of economic stability and development. Thanks to the promotion of market-oriented economic reform policies, the Latin American and Caribbean countries' macroeconomic indicators have improved greatly, and now they are generally performing soundly. However, problems do remain--though differing in degree from country to country. Areas where further action is expected include (1) macroeconomic policy to maintain high growth rates while holding inflation in check, (2) correction of regional differences and income disparities, (3) development of export industries and medium- and small-sized businesses, (4) further improvement of infrastructure, (5) correction of structural poverty problems, and (6) improvement of public safety. Japan intends to offer active support for individual countries' efforts in such fields.

(2) Environment and other new areas for assistance

(a) Environmental issues

Japan is actively extending both technical cooperation and financial assistance to help Latin American and Caribbean countries in dealing with the serious and variegated problems of the environment, such as depletion of the Amazon rain forest, urban air pollution, wide-area water pollution, and the spread of slums due to the overconcentration of population in cities.

(b) Drugs

In addition to bilateral cooperation centering on the acceptance of trainees and the implementation of third-country training programs, Japan is providing financial assistance to the Inter-American Commission for Drug Abuse Control (CICAD) of the OAS and to the United Nations Drug Control Program (UNDCP).

(c) Women in Development

Examples of Japan's cooperation in the area of women in development (WID) include a project for the joint development with the United States of a training program to promote women's education in Guatemala, which is being undertaken within the framework of the Japan-U.S. Common Agenda. In line with the "WID Initiative" that it announced last year at the Fourth World Conference on Women, Japan is also striving to expand its assistance in three areas, i.e., education, health, and participation in economic and social activities.

(3) New elements for future cooperation

Japan will stress the following new elements for economic cooperation with Latin American and Caribbean countries in the future:

(a) Meeting infrastructure requirements

Further economic growth in the region can be expected to create even greater demands for infrastructure improvements. It will be difficult to meet all these demands just with domestic public funds and foreign assistance; active use must also be made of the private sector.
In this light, Japan intends (a) to use such forms of ODA as yen loans and technical cooperation as a means of supporting basic infrastructure programs implemented by individual countries, (b) to implement policy consultation for the sake of building development-planning and legal frameworks and otherwise creating the proper conditions for infrastructure projects, (c) to make use of public-sector resources other than ODA (such as the Export-Import Bank of Japan and the trade insurance).

(b) Grass-roots cooperation

In order to offer assistance closely meeting various needs of the developing countries, Japan is implementing a program of grass-roots grant assistance, in the range of $50,000-$100,000 each, for social development projects implemented by nongovernmental organizations, local governments, and others. This scheme has won high marks as a form of assistance that, while small in scale, is provided flexibly.
So far this program has been directed at countries with low per capita incomes, and for this reason many Latin American and Caribbean countries have not been eligible. In the future, however, Japan intends to extend this type of assistance also to countries with relatively high income levels (up to around $5,000 in GNP per capita) in consideration of the existence of regional differences and income disparities. Grass-roots grant assistance for these countries will be extended to projects that will directly benefit impoverished groups through the provision of basic requirements, such as medical care.

(c) South-South cooperation

Recently an increasing number of countries in the region are extending cooperation to neighboring countries (South-South cooperation). Japan intends to offer active support for such activities. In concrete terms, Japan intends to support countries shifting to aid donors by conducting such activities as third-country training programs to relay the results of its technical cooperation experience to other developing countries and the third-country experts program, through which experts of developing countries are dispatched jointly with Japanese experts to other developing countries.

2. Achievements of Japan's Official Development Assistance to Latin America and the Caribbean

In 1995 Japan provided $1,141.55 million in official development assistance to Latin America and the Caribbean. This represented 10.8% of the total bilateral ODA figure for the year of $10,551.44 million (net-disbursement basis). The region's share has been in the 8%-11% range, except in 1988.
By aid category, in the early 1970s about 70% of Japan's ODA to Latin America and the Caribbean was in the form of ODA loans; technical cooperation accounted for about 20%, and grant aid made up only a few percent of the total. Since then, the shares of both technical cooperation and grant aid have grown. In 1995 the breakdown was ODA loans, 38.7%; technical cooperation, 32.9%, and grant aid, 28.4%. The higher-than-average percentage for technical cooperation is a special feature of Japan's aid to Latin America and the Caribbean; it reflects the relatively high income levels of many countries in the region.
ODA loans have been directed largely at agriculture and economic infrastructure related to transportation, energy, and communications. The annual total of loans provided was formerly on the level of $100 million, but since 1989 the figures have increased greatly based upon the efforts of Latin American and Caribbean countries for promoting democratization and introduction of market-oriented economies. In 1991, the amount jumped to $462.97 million. In the following years up to 1995 the figure has been on the level of $200-plus million to $400-plus million. Japan's cooperation has become increasingly diverse. The field of cooperation includes not only the improvement of infrastructure but also environmental protection. Japan's cooperation with Brazil and Mexico is particularly focused on environment-related purposes.
Technical cooperation has been an active area in ODA directed at Latin America, reflecting the region's large amount of needs and its ability to absorb technology. In 1995 Latin America came second, after Asia, in the ranking of received amounts of technical assistance by region. Brazil and Mexico placed among the top 10 recipients by country.
Grant aid to Latin America has been directed largely at such areas as public health and medical care, public welfare and the environment, transportation, communications, agriculture, and forestry; there have also been numerous cases of cooperation in marine production and in cultural fields. Total grant aid to the region implemented in 1995 came to $324.02 million, an increase over the previous year's level. In order to respond to diversified needs, Japan is also moving to apply the system of grant aid for grass-roots projects to countries including those not eligible for regular project type grant aid.