Humankind has achieved an unprecedented level of development during the second half of the 20th century. In developing countries, average life expectancy has increased by more than 20 years, while adult literacy rates, which in the 1950s stood below 50%, rose to about two-thirds. However, some 1.3 billion people continue to live in extreme poverty, 1.1 billion people do not have access to safe and clean water, and more than 800 million people are suffering the effects of malnutrition and starvation. Clearly much remains to be done. Many countries have taken large strides toward democratization and the implementation of market-oriented economic systems since the end of the Cold War. Yet during the same period, in some regions of the world, conflicts and domestic confrontations have taken on a greater intensity, often instigated by conditions of poverty and lack of development.

With dramatic advances in information technology and economic liberalization, important improvements in economic efficiency have been attained, together with a rapid growth in international interdependence. However, this wave of globalization has left many countries behind, exacerbating the gap between the rich and the poor. The Asian economic crisis of 1997 unveiled the structural vulnerability of developing economies and underlined the need for new assistance. Furthermore, the Asian economic crisis served to spotlight the close and inseparable economic ties between Japan and the East Asian region (including Southeast Asia). As such, Japanese assistance for structural reform, economic rehabilitation, and social stabilization in East Asian countries constitutes an extremely important and direct link to the prosperity of Japan and is also an important factor in the formulation of Japan's economic policies.

Global warming and other environmental problems could potentially have a negative impact, not only on individual countries but on the Earth in its entirety. Indeed, there are numerous problems that demand a concerted effort on the part of the international community, including the problems of population growth, AIDS, food, energy resources, and drug abuse. These are problems that are intricately linked to the developing world.

With the approach of the 21st century, the industrial countries of the world face the common challenge of supporting developing countries to achieve sustainable and environmentally sound development. As the world's second largest economy and the largest donor of official development assistance (ODA), Japan shoulders the important responsibility of contributing to sustainable social and economic development in developing countries. This is a role through which Japan can win the confidence and appreciation of the international community. Furthermore, as a nation whose prosperity is closely linked to world peace and stability and that is highly dependent on the importation of resources, energy, food, and other basic materials, ODA plays a very significant role in ensuring Japan's own stability and prosperity. As such, economic assistance promotes Japan's best interests, including the maintenance of peace.

Japan is experiencing fiscal and economic difficulties and there have been major changes in the domestic and international environment for aid. It is necessary to further consider, in a more integrated manner, how to implement ODA in light of these factors. Under such circumstances, it is important to earn public understanding and support for the ODA program in order to continue to respond to the high expectations of the international community. To achieve this understanding and support, assistance must be adequately implemented in accordance with the basic philosophy and principles spelled out in the Official Development Assistance Charter (ODA Charter)¹ and efforts must be continued to improve the effectiveness and efficiency of aid programs. Moreover, proper accountability must be established vis-a-vis the Diet and the general public, and Japan's ODA program must be coordinated with its foreign policies and with other important policies pertaining to the national interest.

While Japan's ODA program has generally received high marks, it is a fact that the original objectives of ODA projects are not always met and that certain improvements are necessary. This is attributable, in part, to the inherent difficulty of undertaking ODA while working jointly with countries with vastly differing histories, cultures, customs, laws, and linguistic backgrounds.

In view of the above, the Government of Japan herein sets down its basic approaches in regard to ODA, and identifies overall priority issues and sectors as well as those by region. Undertaken with a five-year time frame in mind, this medium-term policy will be subject to review and modification in response to changing domestic and international conditions.

1. In 1996, the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development issued its "Development Partnership Strategy" in "Shaping the 21st Century: The Contribution of Development Cooperation." The guidelines for future development cooperation were based on the analysis of 50 years of development cooperation by industrial countries and on the role of assistance in the international community. This document identifies the improvement of living standards as the main objective of development cooperation and formulates specific goals for social development, such as halving the proportion of impoverished populations by the year 2015.² Japan played a leading role in the preparation of the Development Partnership Strategy and continues its efforts to set such an approach in motion in the international community. As a result, the Development Partnership Strategy is now becoming a common guideline for development cooperation with developing countries. Japan will continue to manage its ODA in a manner consistent with its ODA Charter and with an eye to the goals of the Development Partnership Strategy.
2. The key to realizing the goals of the Development Partnership Strategy lies in the self-help efforts and the initiatives of developing countries as they work toward economic take-off. Japan will emphasize "good governance" through the improvement of the policy management capabilities of developing countries and will work to support their initiatives in this area. Japan will also encourage developing countries to ensure proper implementation and transparency in aid projects. On the premise of such self-help efforts and initiatives, Japan will endeavor to develop partnerships through cooperation and coordination with other donor countries and international organizations.
3. The provision of aid must be based on the proper evaluation of the development agendas and the needs and wishes of individual countries. Various forms of aid must be effectively combined to ensure a proper match to the developmental stage of the recipient country. Likewise, it is necessary to undertake policy dialogues with developing countries and utilize prior studies to design effective and efficient aid projects that conform to national conditions and needs. Special attention must be paid to ensure that vested interests do not emerge in aid-receiving sectors and recipient countries. Whenever necessary, Japan will review its aid schemes, such as ODA loans, in light of changing conditions.
4. A comprehensive approach is needed to enhance the impact of aid. Specifically, the available resources of pertinent entities such as developing countries, donor countries, international organizations, the private sector, and non-governmental organizations (NGOs) must be appropriately utilized. Similarly, cooperation and an appropriate division of roles and responsibilities among these entities must be established. In view of the growing importance of trade and investment and other private-sector activities observed in Asia, Latin America, and elsewhere, efforts must be made to improve the environment for private-sector activities and the inflow of private funds. In this respect, special attention should be paid to equitable and efficient resource allocation, the amelioration of disparities, and the provision of assistance to sectors not benefiting from private flows.
5. Economic growth is a necessary measure for the improvement of welfare, and "human-centered development" is indispensable to the realization of sustainable development. Consequently, Japan will provide assistance for balanced economic growth and social development. Based on this human-centered approach, special attention will be given to the needs of the least developed countries (LLDC).³ Due attention will also be focused on "human security" and the protection of individuals and communities from various dangers and threats, including environmental destruction, starvation, drug abuse, organized crime, infectious diseases, human rights infringements, regional conflicts, and anti-personnel mines.
6. The provision of ODA must be based on the understanding and support of taxpayers and the general public. For this purpose, Japan will actively endeavor to increase national involvement in and visibility of Japanese aid and promote better awareness of Japan's assistance programs in recipient countries. Japan will also continue to contribute through multilateral agencies, which provide certain advantages not available through bilateral aid. Furthermore, efforts will also be made to further utilize Japan's experiences, technology, and know-how, taking into consideration increased opportunities for Japanese businesses to participate in ODA projects and encouraging broad-based public participation in development cooperation through universities, think tanks, local governments, and NGOs. Through such efforts, Japan will maintain its vitality within the global community, continuing to enjoy harmonious development in the future and winning the confidence and appreciation of the international community.

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