The early 1990s witnessed a rapidly spreading awareness of the need to promote good governance as an essential for effective development. Good governance is an essential foundation for the implementation of effective aid. At the same time, though, the promotion of good governance is itself one objective of aid. This section defines principles of good governance and presents an overview of the efforts Japan has made to promote good governance through ODA, as well as some of the issues remaining to be addressed.

Good governance is a concept encompassing the affairs of national politics, economics, and social management. It is concerned chiefly with the issues of government effectiveness in promoting national development and improvements in public welfare, the utilization of authority to these ends, and government legitimacy and human rights guarantees. In its orientation paper on participatory development and good governance, DAC describes parliamentary democracy, methods of exercising authority for the distribution of economic and social resources, and government capacity in the arenas of policy formulation and implementation all as pivotal necessities for good governance.¹⁰

Two trends have been cited as explanatory reasons for the abrupt surge of good governance as a key concept in the development agenda for the 1990s. One stems from the reflection that many of the structural adjustment programs supported by the World Bank and IMF in the 1980s did not have much effect on economic recovery, and instead created extra hardships for the poor. Several factors were cited for these failures, including an entrenched fabric of government corruption, inadequate levels of transparency in government decision-making, a lack of accountability to the public, disregard for or neglect of the legal system, and inefficiencies in public sector operation. In effect, these were among the main factors considered to be obstructing the fair and efficient use of development funds. Such observations were behind the growing emphasis on steps to assure good governance as a solution.

The other trend that contributed in large part to the widespread embrace of principles of good governance was the global transition toward democratization and market-based economic operation. Many former socialist countries, for instance, have taken steps towards democratization and market economies. A number of Latin American and African countries turned to the democratization process as a political means of jumpstarting their stalled economies. China and Viet Nam, moreover, initiated sweeping programs of economic reform.

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Section 1 Japanese Efforts to Aid Good Governance

1. The ODA Charter

Japan's ODA Charter incorporates provisions that address the issue of good governance. One basic philosophy of the ODA Charter is that Japan will implement its ODA to help ensure the efficient and fair distribution of resources and good governance in developing countries, thereby promoting the sound economic development of the recipient countries. As such, the Charter emphasizes the awareness that good governance is a foundation for sound economic development. Moreover, the principles of the Charter state "(3) Full attention should be paid to trends in recipient countries' military expenditures, their development and production of mass destruction weapons and missiles, their export and import of arms, etc,. From the viewpoint that developing countries should place appropriate priorities in the allocation of their resources on their own economic and social development," and "(4) Full attention should be paid to efforts for promoting democratization and introduction of market-oriented economy, and the situation regarding the securing of basic human rights and freedoms in the recipient country." In effect, these two Charter principles alone enumerate various factors with a fundamental bearing on the achievement of good governance (namely, military expenditures, democratization, the adoption of market-oriented economies, and the securing of fundamental human rights and freedoms).

Basically there are two approaches to the promotion of good governance in the process of implementing aid. One is to suspend or significantly curtail aid and thereby demand changes or improvements in policy by recipient countries whose actions are manifestly contrary to the principles in Japan's ODA Charter. Actual examples of a military nature are discussed elsewhere in this document.¹¹ The other is to provide assistance that is specifically designed to help the recipient country cultivate or reinforce those elements on which good governance is based.¹² Following is an overview primarily of the second approach.

2. Expanded and Reinforced Efforts in the Field of Intellectual Support

Most developing countries striving to democratize or adopt market-oriented economies face a serious shortage of various human resources and expertise in the establishment and operation of various governmental systems including economic systems. Japan to date has provided various forms of assistance in this area to countries in Central and Eastern Europe, Central Asia, the Caucasus region, and Indochina, as well as to Mongolia and China. In particular, it has sought to share its experiences and historical background in legal, administrative, and parliamentary systems, receive trainees into domestic training courses on market economic operation, administrative management, and other subjects, and dispatch experts to serve as policy advisers. Furthermore, it has provided assistance for studies on policies and programs suited to actual circumstances in these developing countries.

From FY1995, Japan introduced the Program to Support the Formulation of Key Government Policies as a means of implementing systematically the types of cooperation mentioned above. Developing countries engaged in nation building for transition to market-oriented economies face the urgent necessity of facilitating institution building and the formulation of key governmental policies that will form the foundations for future fiscal, financial, and industrial policies, human resources development, environmental conservation, social security, agricultural policy, and regional development. To meet such reeds, this program was created as a new form of technical cooperation that can assist human resources development required by these undertakings. Japan has extended direct assistance to the core government institutions in several developing countries by placing teams of personnel from Japanese universities, research institutes, private think tanks, and the central government and its agencies on short- and long-term assignments as experts. Also, it has been running training programs in Japan for developing countries' human resources (future counterparts). Although program duration is usually limited to three years, Japan has already implemented assistance of this kind for Poland (industrial policy), and is currently engaged in similar programs for Viet Nam (legal system development), Uzbekistan (human resources development for economic transition), Jordan (industrial policy), and Cambodia (legal system development). Additionally, a decision was recently made to build the Japan-Mongolia Center for Human Resources Development Cooperation, a facility that will be responsible for training the personnel who will lead Mongolia's transition to a market economy. Studies are now under way on the feasibility of establishing other centers of this kind in selected Central Asian and Indochinese countries.

TOPICS 13. Intellectual Support for Viet Nam

3. The Economic Crisis in Asia and Intellectual Support

The currency and economic crisis that occurred in Asia in 1997 reaffirmed the importance of the intellectual support Japan has been rendering to those East Asian countries that faced various economic difficulties. This is due to the fact that their efforts to make more effective and complete their overall economic and social systems, including financial systems, had not been able to keep pace with their rapid economic growth. Support for structural reform is also essential to realize recovery in medium-term economic growth in Asia. Intellectual assistance such as human resources development and creating more effective and complete overall governmental systems, including the legal system, has a major role to play. In December 1997, Japan announced the Japan-ASEAN Programme for Comprehensive Human Resources Development, and pledged to assist in the training of some 20,000 personnel over the next five years.¹³ It has also placed policy advisers on assignment in Thailand, Indonesia, and Laos to assist those countries with adjustments in economic structure, the development of systems for trade, finance, and equity market operations, and the surveillance and management of financial institutions. Japan will face the necessity of steadily implementing soft forms of assistance which has been already announced as part of its assistance measures for Asian countries' economic recovery.¹⁴

4. Support for Democratization

Efforts toward democratization and transition to market-oriented economies tend to be closely synchronized in practice. Japan has furnished aid of various kinds expressly for the purpose of promoting democratization. For example, it has provided technical cooperation for the development of legal and judicial systems, and has conducted training programs for judicial personnel, administrators, and law enforcement officers as a means of fostering democratic principles and protecting and promoting human rights. Japan has also enlisted financial and technical assistance to aid the development and utilization of electoral systems. On the occasion of the Lyon Summit in 1996, Japan reflected on the contributions it had made to the democratization process to date, and announced its Partnership for Democratic Development (PDD), an initiative intended to strengthen support provided for democratization efforts in the developing world.

In order to support the implementation of democratic elections, Japan extends such support as the dispatch of personnel, financial assistance and the supply of equipment and materials. In the five year span from FY1994 to July 1999, it furnished assistance for elections in some 40 countries worldwide. Most recently, for general elections in Indonesia, Japan supplied financial assistance and dispatched a team of 20 JICA experts to the country's election commission (KPU). These steps were taken on the understanding that restoring public confidence in the government through free, fair, and smooth elections would be of immense value to the goals of political stability and economic growth in Indonesia.

In March 1999, the government sponsored the Seminar on Democracy and Good Governance for Tadzhikistan in Japan to provide leaders in the field of rehabilitation and development in that country with a good opportunity to deepen their understanding of democratization, and social and economic development together, despite their traditional political differences.

Additionally, to promote the foundations for civil society, Japan has provided opportunities for education in democratic principles, training for future leaders, and other measures in assistance with a focus in human resources development, training in mass media functions, human rights education, expertise support through the assignment or invitation of scholars, and assistance designed to expand the political participation of women.

5. Measures against Corruption

Given that ODA is funded by tax revenues and other public sources of funding, its appropriate implementation is indispensable, and corruption cannot be tolerated. Illegal practices undermine not only Japanese public support for ODA, but also the governance, administrative capacity, and reliability of the recipient country.¹⁵ In 1997, the OECD adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Japan deposited the instrument of acceptance on October 1998, and amended the Unfair Competition Prevention Law as a means of ensuring domestic compliance with provisions of the OECD convention. The Convention took effect in February 1999, thus paving the way for punitive action whenever foreign public officials are implicated in cases of bribery inside Japan. Also, acting on the recommendations of a high-level DAC conference, in FY1998 Japan added stronger anticorruption clauses to the legal documentation it exchanges with recipient countries when pledging to provide financial assistance, and also took steps to clarify the anti corruption oriented nature of clauses on proper use in existing documentation.¹⁶

Section 2 Expanded Aid for Good Governance and Remaining Issues

Democratization and good governance can be expected to assume ever-growing importance as issues relevant to the implementation of aid in the years ahead. In terms of pursuing proper, effective, and efficient aid, and also of earning sustained public understanding and support for ODA in general, it is essential that Japan devote close attention to governance-related trends in developing countries and redouble its efforts to encourage good governance through the provision of aid. The challenges of development have become increasingly diverse and complex. Against that backdrop, it will be necessary for Japan to devote attention to a variety of issues outlined below as it strives to utilize aid as a means of promoting good governance.

In providing aid for introducing democracy and the adoption of market-oriented economies, it must be borne in mind that such undertakings target the very foundations for a country's domestic administration.

Japan's ODA Charter devotes attention to various principles articulated in the UN Charter (particularly those concerned with sovereign equality and non-intervention in the domestic affairs of other countries). Accordingly, in furnishing aid for the promotion of good governance, it is imperative that Japan bear in mind that the mission is not to impose new systems on recipient countries, but rather, to assist them in developing human resources necessary for the establishment and operation of a set of systems that they have already adopted in principle.

It is, moreover, essential that Japan respect the initiatives of developing countries and, in its partnerships with them, show adequate consideration for their values as well as the diversity of their societies, cultures, and traditions. In helping Viet Nam develop its legal system, Japan attained results by expanding the scope of cooperation after first nurturing an atmosphere of mutual trust, chiefly through personnel exchanges and the presentation of Japanese case studies. It will remain necessary to devote attention to details of this kind in the years ahead.

Japan has traditionally commissioned researchers to codify the knowledge and experience it has gained through the pursuit of its own democratic principles and economic advancement. However, in the interest of expanding future levels of aid, it conceivably would be effective to repackage and present these achievements in a form that recipient countries find easier to assimilate. At the same time, though, it will also be necessary to encourage more Japanese scholars and experts from varied backgrounds to become interested and participate in the activities of intellectual support.

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