Introduction

Japan's Economic Cooperation

Preface

    The cooperation provided to developing countries by Japan and other developed countries takes many forms: for example, furnishing the funds or technologies needed to achieve improved socioeconomic outcomes in developing countries, or providing relief to the victims of disaster in developing countries. Cooperation which contributes to stability and improvement in welfare and living standards, and assists in the resolution of global-scale problems through the development process, is collectively known as economic cooperation.
    Economic cooperation appears in a variety of manifestations, and has become increasingly diverse in recent times, examples being official development assistance (ODA) furnished primarily by government, cooperation provided by private-sector corporate entities, cooperation provided by local government bodies and non-governmental organizations (NGOs), and combinations of the foregoing.
    While ODA may vary in format and in the regions and sectors given priority -differences which are attributable to the historical and cultural backgrounds of donor countries- the OECD Development Assistance Committee (DAC), comprising members from the major donor countries, has formulated the following definition. ODA is;

(1) Assistance provided by government or public sector agencies;

(2) Assistance which primarily aims to contribute to economic development or improvement of welfare in developing countries;

(3) In relation to the provision of funds, assistance for which the grant conditions are not onerous for developing countries, and for which the grant element (a function of the interest rate, repayment term, and repayment grace period; an index that demonstrates the ease of borrowing funds, as viewed from the developing country's perspective) is at least 25%.

    Japanese ODA is provided in accordance with the ODA Charter, which was adopted by Cabinet in 1992. The fundamental ideas enunciated in the ODA Charter, humanitarian consideration, recognition of interdependency in international society, environmental conservation, and assistance for self-help efforts, have been widely accepted in the global community.
    In 1996, the Japanese government provided a sum total of $9,439 million in Official Development Assistance (ODA), the sixth successive year in which Japan has led the world in dollar terms. However, Japan's ODA/GNP ratio was 0.20%, coming in below the DAC average and placing it 19th among the 21 DAC member countries. Japan's grant ratio and grant element, parameters that indicate the "softness"of the assistance, continue to be the lowest among the DAC member countries.
    Naturally, the ODA/GNP ratio is not the only benchmark by which a country's international contribution is measured. It must also be judged by the quality of the assistance and the softness thereof, and ultimately, by how the assistance will help economic and social development in recipient countries. However, continuing to improve the quality of assistance in accordance with internationally recognized indicators will also be indispensable in achieving recognition in the international community.
    Summing up, Japan's economic cooperation can be broadly categorized into the following four categories.

(1) Official Development Assistance (ODA): Comprises grant aid, technical cooperation, capital subscriptions and contributions to international organizations, and ODA loans provided by the Japanese government.

(2) Other Official Flows (OOF): Consists of public-sector export credits and direct investment with funds provided by the Export-Import Bank of Japan and other agencies.

(3) Private Flows (PF): Includes export credits, direct investments, and other initiatives provided by the private sector.

(4) Grants made by nonprofit organizations.

Of the above four categories, (1) and (2) are designated as government forms of economic cooperation, while (3) and (4) are classified as private forms of economic cooperation.

Type of Japan's Economic Cooperation

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