Section 1 Policy Dialogues and Enhanced Country-by-Country Approach (Country Assistance Program)

Views articulated by the Council on External Economic Cooperation³ (a consultative body to the prime minister) and those in the final report of the Council on ODA Reforms⁴ share a common thread in the emphasis they place on an enhanced country-by-country approach. This position is rooted in an awareness that more efficient and effective forms of aid need to be pursued, with a shift of new assistance from volume-oriented to results-oriented ones⁵ and also with an accurate understanding of the recipient country's development priorities, particularly in areas where Japanese assistance can be expected to make a significant contribution. It also echoes an awareness of the necessity of respecting and more effectively harnessing the views and experience of diplomatic missions and aid agency offices with local expertise, adapting MoFA and aid agency frameworks accordingly⁶, and pursuing better integrated undertakings at the country level. The heightened emphasis on a country-based approach is associated with an effort to change the request-driven⁷ approach of aid project formulation into a more collaborative approach with recipient countries.⁸ Naturally, collaborative forms of aid will demand far-reaching policy dialogues with each recipient country.⁹

Up to now, Japan has been in the practice of sending high level missions on economic cooperation to key recipient countries for the purpose of working out guidelines on country aid through policy dialogue, and with attention to sectors that deserve aid priority.¹⁰ As a new step, though, it has begun drawing up mid-range aid programs that set targets for priority sectors and issues, and effectively bundle the projects required to achieve those targets. At present, the government is studying country assistance programs for the next five years for about 9 countries (in Asia, the Middle East, Africa, and Latin America) to be announced.

Section 2 Aid Coordination

1. The Coordination of Aid with Other Donor Countries and International Organizations

Recipient countries themselves are normally expected to play a coordination role whenever the aid provided by donor countries and international organizations requires such attention. In reality, though, donor countries and institutions often become actively involved in this process because recipient countries usually do not have enough capacity to handle the coordination-related affairs on their own. Actually, efforts in coordination have intensified now that the global total in disbursed aid is tapering off.¹¹ The objective is to heighten the efficiency of aid by avoiding overlap and enabling donors to exercise their competitive strengths. To give some examples, UNICEF and WHO have assumed a collaborative lead in efforts to eradicate polio and improve the health of children, while the World Food Programme (WFP) has headed up efforts to coordinate food aid by donor countries and international organizations. Although coordination efforts of this kind are sometimes conducted in the capitals of donor countries or the headquarters of international organizations, it has become increasingly important to hold discussions for this purpose at the local level, in developing countries themselves. One undertaking that has become common in several African countries is the sector program approach¹², which seeks to coordinate aid for specific development objectives and with attention to undertakings in specific sectors.

Japan, moreover, has become actively involved in the bilateral coordination of aid with other leading donor countries. For example, within the Common Agenda framework context of population issues, HIV/AIDS, and child health, Japan has been working together with the U.S. to put together an AIDS prevention program for Viet Nam and an anti-malaria program for Zambia. Japan and the U.S. have also been collaborating in efforts to eradicate poliomyelitis¹³, combat Guinea worm disease (dracunculiasis) in Africa, and implement programs to eliminate iodine deficiency and other micronutrient related disorders. It should also be noted that Japan holds regular dialogues with a number of other countries for aid coordination purposes, including the U.K., France, Germany, the Scandinavian countries, Canada, Australia, the Republic of Korea, and EU.

Also, as a major contributor of funds, Japan has been actively engaged in coordination with the World Bank and other multilateral lenders.¹⁴ In particular, it has participated in cofinancing arrangements for specific projects, structural adjustment facilities, and other programs in the developing world, and pledged to provide bilateral assistance within the framework of the consultative group (CG) meeting hosted by the World Bank. Not only that, but Japan has also urged recipient countries and donors alike to cooperate with efforts by the international community at large to pledge appropriate forms of assistance to countries with a particular need.¹⁵

Japan has also been active in coordinating its aid with undertakings by agencies of the UN. For example, it has effectively bundled bilateral assistance with UNDP funding for human resources development to achieve a complementary effect together with gains in overall aid efficiency.¹⁶ Further, it is anticipated that the polio eradication program Japan is pursuing in collaboration with WHO will soon allow the Western Pacific region to be declared completely free of polio.

2. DAC's Development Partnership Strategy and the World Bank's Comprehensive Development Framework

The Development Partnership Strategy¹⁷ was put forward in 1996 by the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD). Among its fundamental principles, the Development Partnership strategy calls for self-reliance and self-help efforts (ownership) by the developing countries and partnerships between the developing and industrialized countries. Additionally, it defines several clear-cut targets¹⁸ for achievement.

The core tenets of the strategy have already earned a steadily widening base of support from members of the international community. Accordingly, the task ahead will be to discuss areas where collaboration can be expected to contribute to the achievement of specific development targets. A major step toward implementation of the partnership strategy was made in February 1998 with the announcement of a core set of indicators for the measurement of progress toward stated targets. These indicators had been jointly worked out by the OECD, the UN, and the World Bank. Japan itself has been actively engaged in the task of promoting the widespread dissemination and implementation of the strategy's concepts. It has sponsored a variety of conferences and seminars, including the July 1998 Conference on Poverty Reduction Strategy, and, to put the partnership strategy into practice, has been striving to reinforce levels of coordination at project sites in a number of recipient countries. Adopted by TICAD II¹⁹ in October 1998, the Tokyo Agenda for Action proved eminently successful in describing ways for developing countries, donor countries, and international organizations to apply the DAC strategy's concepts and targets to the African development setting.

Recently, the World Bank proposed its Comprehensive Development Framework (CDF), a set of ideas aimed at fostering stronger partnerships by donor countries and institutions while respecting recipient country ownership of the development process.²⁰ Basically, to achieve sustainable economic growth and alleviate poverty, the CDF proposes that development frameworks be built over a period of 10-15 years on the basis of recipient country ownership and partnerships by all parties to the development process (recipient country governments, donors, the private sector, and civil society in general). Secondly, it notes that considerations for social, structural, and humanitarian factors be accorded equal weight with the findings of macroeconomic studies. Third, it calls for a birds-eye assessment of the development initiatives, levels of transparency, accountability, and principles of disclosure implemented by the government of each country under study (with projects arranged by donor and sector in a matrix format). And fourth, it places top priority on developing country ownership and emphasizes that the pace of work to address each development issue be based on decisions by developing countries themselves. These viewpoints are consistent with the positions underpinning the Development Partnership Strategy as well as the views articulated at TICAD II, both of which Japan firmly supports. Accordingly, Japan is prepared to support the CDF, and to actively assist in putting it into effect.

Section 3 South-South Cooperation and Regional Cooperation

1. The Value of South-South Cooperation

Recent years have witnessed the provision of development assistance by economically robust countries such as Singapore and Thailand (sometimes described as "emerging donor" countries) to other, relatively less-developed countries. This has been termed South-South cooperation because it entails the provision of assistance from one developing country to another (both of which belong to the developing world, or the "South"). South-South cooperation has demonstrated steadily improving effectiveness in alleviating intra-regional gaps in the economic and technology dimensions, fostering stronger intra-regional trade and investment, and functioning as a modality for closer intra- and inter-regional cooperation in general.

One noted advantage of South-South cooperation is the ability to transfer more appropriate technologies due to the fact that donor and recipient typically share highly similar natural conditions, cultural fabrics, and levels of economic development. Technology transfers between developing countries tend to be more efficient because developing countries are often able to implement programs of technical cooperation at lower cost than developed countries. Consequently, in some cases it may be more effective to utilize the expertise and training institutions available in developing countries. Growth of emerging donor countries is expected to increase aid donors in the years ahead. In view of the potential advantages, it is now Japanese policy to actively support efforts in South-South cooperation.

2. Support for South-South Cooperation

To promote efforts in South-South cooperation, in May 1998 Japan sponsored a gathering of emerging donor countries in Okinawa. The Tokyo Agenda for Action (adopted by TICAD II in October 1998) emphasizes that South-South cooperation between Asian and African countries will be an effective means of facilitating African development. To that end, Japan has decided to promote more cooperation of this kind through its contributions to the UNDP.

Japan has actively enlisted a variety of schemes to assist projects in South-South cooperation. Projects in third-country training²¹, for example, provide host countries with financial and technical assistance for programs that are designed to train personnel from neighboring countries. Third-country expert frameworks²², moreover, involve the recruitment of experts from one developing country for aid-related assignments in other developing countries. In FY1998, third-country training programs were hosted in 25 countries, including Thailand, Singapore, Brazil, Chile, and Egypt, and provided training to a total of 1,906 personnel. Another example of South-South cooperation is the Cambodian Refugee Resettlement and Rural Development Program, under which Japanese experts and JOCVs have been working together with experts from Indonesia, Malaysia, the Philippines, and Thailand to implement rural development initiatives in Cambodia. Japan provides financial support for third-country expert assignments from ASEAN countries through the UNDP Policy and Human Resources Development Fund.

Also, as a means of helping emerging donor countries become leading donors in their own right, Japan has put together the Partnership Program. This defines mid-range targets for the number of third-country training courses as well as the sharing of the associated cost burden, and provides a comprehensive framework for joint assignments of experts. Working through frameworks of this kind, Japan to date has engaged in collaborative aid ventures with Singapore, Thailand, Egypt, Tunisia, and Chile.

3. Undertakings in Regional Cooperation

In some areas of the world, broader, regional undertakings in development constitute a more effective approach to the implementation of aid. Various undertakings of this kind are already in progress, and have been designed to provide benefits across regions spanning several developing countries.

For example, a broader, regional orientation will conceivably be a more effective approach to the development of the Mekong River basin (on the Indochinese Peninsula) and also of greater value to the goal of fostering closer, collaborative ties among countries within the basin's compass. Japan has been an active supporter of efforts by the Mekong River Commission, one of the frameworks under which this region's development is being promoted. Furthermore, it has sought to contribute in various other ways. In February 1995, for example, it hosted the Forum for Comprehensive Development in Indochina (in Tokyo). That gathering had the participation of countries from the region, and provided opportunities for a meaningful discussion of balanced development strategies for Indochina at large. With regard to cross-border infrastructure development projects, in cases where participatory countries have different income levels, the government of Japan has started, in FY1998, to charge all the countries concerned the concessional interest rate applicable to the country with the lowest income level. This measure is aimed at facilitating the implementation of such projects as a vehicle for broader regional cooperation.

Many island countries in the Pacific and the Caribbean share similar social, economic, and cultural attributes and are also characterized by small populations and territories. Japan has utilized projects in selected countries within these regions as springboards for technology transfers to neighboring countries, and additionally, has placed technical experts on rotating missions to multiple countries in each region. Pacific island countries are geographically widely scattered. As one undertaking aimed at compensating for this drawback, in FY1998 Japan teamed up with Australia and New Zealand in providing grant assistance (including grant aid for grassroots projects) to Fiji and Samoa for the purpose of reinforcing the capacity of South Pacific University to provide distance broadcast education programs to countries throughout the region.

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