Chapter 2
Major Points of Discussion surrounding Development Issues and Japan’s Statements

Summary
Chapter 2 provides an explanation of the major points of discussion surrounding development, including the discussions carried out at the international conferences described in Chapter 1 and other discussions by the international community, along with Japan’s approach concerning those points.

As explained in Chapter 1, in international conferences on development in 2003, discussions were held on the best specific measures to take in order to implement international agreements, etc. In particular a variety of discussions have been held and measures taken by the international community to realize the Millennium Development Goals (MDGs).

Japan believes that the MDGs are important development goals to develop the basic conditions for future prosperity of the human race and that it is urgent for recipient countries, donor countries, and international organizations to make concerted and unified efforts to achieve them. Japan’s revised ODA Charter states that “Japan will participate in this process, and endeavor to play a leading role” and places poverty reduction as the first priority issue.

On the other hand, Japan is aware that international cooperation in sectors not directly included in the MDGs is also important. For example, there is the issue of domestic security and safety, which is a prerequisite for development, and in order to deal with this issue, peace-building and counter-terrorism measures are important. In addition, human resources development including secondary and higher education, socioeconomic infrastructure including information technology (IT), environmental issues other than water, and other issues are also important. Japan believes that addressing these issues is important from the perspective of achieving the MDGs as well.

The new current of thought in 2003 was to once again place the focus on the importance of the role played by economic growth, especially infrastructure development, in sustainable economic growth and achievement of the MDGs through improvement of the investment environment, etc. Based on the notion that poverty reduction through economic growth is important, in addition to sectors that directly benefit the poor, such as education and health care Japan has been providing assistance for economic sector support, such as economic infrastructure development, supporting revitalization of trade and investment, development of legal systems, human resources development, fostering of the private sector, and promotion of technology transfer. Based on this approach, Japan has been advocating the importance of growth through a virtuous cycle of collaboration among ODA, private capital, trade, and others, on the international stage and has formulated initiatives such as the Initiative for Development in East Asia (IDEA). Japan’s statements and role concerning the importance of economic growth in poverty reduction was highly evaluated in the Organisation for Economic Co-operation and Development-Development Assistance Committee (OECD-DAC) Peer Review of Japan.

As the development issues of developing countries became major issues in the international community, the major European and the US donor countries announced expansion of development assistance in 2002, but the issue that more financing for development is necessary has still been raised in the international community. Japan also believes that financing for development is important, but that in order to ensure sufficient financing for development, it is necessary to mobilize all financial resources, such as investment, trade, etc., in addition to ODA and the domestic financial resources of the developing country, and in order to ensure that such limited funds are used efficiently and effectively, it is necessary to improve the governance of the developing country and increase its capacity to absorb assistance.

Adopting the approach described above, Japan is actively addressing development issues in the international community. For example, in order to achieve the MDGs and other internationally shared development goals, Japan is working on issues such as ensuring financing for development, partnership and collaboration with other donor countries, international organizations, and recipient countries, formulation of development strategies in developing countries, in particular, the Poverty Reduction Strategy Papers (PRSPs), and the improvement of assistance effectiveness including harmonization of aid modalities and procedures, policy coherence, and response to debt issues in developing countries.

ODA Photo Studio 4: A class at an agricultural high school in Samarkand, Uzbekistan (Photo: Japan Bank for International Cooperation (JBIC))

Key Points
Section 1

• The MDGs are important international goals. At the same time, cooperation for sectors not directly included in the MDGs is also important. This includes peace-building, counter-terrorism measures, human resources development such as at the intermediate school and higher education level, and socioeconomic infrastructure, including IT.
• Japan believes that poverty reduction through economic growth is important. Japan is providing cooperation for the promotion of trade and investment through economic sector support and others.
  
  

Section 2

• In discussions in the international community in 2003, the focus was on the importance of the role played by economic growth, especially in infrastructure development, in poverty reduction, sustainable economic growth and achievement of the MDGs.
• It is important to mobilize all financial resources for the development of developing countries.
• For the effective implementation of the PRSPs, consistency with the sector programs and strengthening of the recipient country’s public financial management capacity are necessary. In the PRSPs, it is also important for the localized MDGs to be reflected and for policies to be prioritized in the PRSP.
• For effective implementation of assistance, Japan is promoting partnership and collaboration with other donor countries, international organizations, and recipient countries.
• Japan is actively participating in discussions, etc for the harmonization of procedures. In promoting harmonization, Japan is placing importance on “the need to ensure partner country ownership,” and “the importance of adopting a country-based approach,” And “the need to ensure diversity of aid modalities.”
• Japan believes that development must be considered from a comprehensive perspective. Japan is working on coherent policies including the promotion of economic growth through strengthened collaboration between ODA and Other Official Flows (OOF), and consultations among concerned ministries in the policy decision-making process.
• Concerning the debt issue, Japan is the world’s largest contributor to the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
  
  

As stated previously, in international conferences on development held in 2003, discussions were held on the specific measures to take in order to implement the MDGs, the Monterrey Consensus and others.

Chapter 2 explains the major points of discussion surrounding development issues, including discussions at OECD-DAC and the annual general meetings of the World Bank, International Monetary Fund (IMF). First of all, Section 1, explains a brief review of the major points of discussion in development-related international conferences in 2003, and Japan’s basic approach to development issues in general. And then Section 2 explains the particularly important issues of these major discussion points individually, introduces discussions in the international community, and explains Japan’s basic approach.

Section 1. Major Points of Discussion Surrounding Development Issues and Japan’s Basic Approach

1. Major Points of Discussion Surrounding Development Issues

Development-related discussions on the international stage throughout 2003 reaffirmed the commitments to the MDGs, the World Trade Organization (WTO) Doha Ministerial Declaration, the Monterrey Consensus, the Johannesburg Plan of Implementation, etc., discussed the specific measures for the international community to take in order to address development issues to realize these commitments, putting emphasis on the necessity of identifying specific actions necessary for the international community to accelerate progress toward the MDGs, etc. and thus on the necessity for action to be coordinated between developing countries, developed countries and international organizations.

The major points in this series of discussions are as follows⁸ .

1. Improving coordination between the MDGS, which are international goals, and the poverty reduction strategies formulated by each developing country.

2. Ensuring comprehensive financing for development including ODA, external and domestic investment and trade, etc.

3. Policies for the HIPCs on debt relief and reduction of debt to sustainable levels for HIPCs.

4. Studies of Pro-Poor Growth: policies to ensure that the poor benefit more from the fruits of economic growth.

5. Reaffirming the importance of infrastructure development in sustainable economic growth.

6. Harmonization of the assistance strategies and implementation procedures of donor countries centered on the development programs of developing countries themselves, in particular PRSPs.

7. Strengthening of the public financial management capacity, improving the predictability of financing for development, and strengthening the capacity of developing countries to absorb assistance.

8. Improving the investment environment, and strengthening the governance of the recipient countries, such as eradication of corruption.

9. Improving policy coherence taking into account the interdependence between domestic policies of developed countries and development of developing countries, such as trade, investment, agriculture, health, and education.

10. The forms of humanitarian and reconstruction assistance for post-conflict states, in particular Iraq.

8. Refer to http://www.imf.org/external/np/cm/2003/041303.htm, http://www.imf.org/external/np/cm/2003/092203.htm, http://www.oecd.org, etc. for details.

2. Japan’s Basic Approach

Concerning the various points of discussion listed above, Japan has also made its own statements. Here, the range of development issues and Japan’s approach concerning poverty reduction through economic growth is explained as Japan’s basic approach concerning development issues.

(1) The Range of Important Development Issues

As stated in Part 1, the international community is currently facing a variety of development issues. In this context, in order to strengthen measures to address those development issues, progress has been made in international sharing of development goals and development strategies; in particular, a variety of discussions and efforts are being carried out in the international community to achieve the MDGs.

Japan believes that the MDGs are important international development goals that develop the basic conditions for future prosperity of the human race and that it is urgent for recipient countries, donor countries, and international organizations to make concerted and united efforts to achieve them. For this reason, Japan’s revised ODA Charter states that “Japan will participate in this process, and endeavor to play a leading role” and places poverty reduction as the first priority issue. In this way, Japan is placing importance on measures to achieve the MDGs, in particular, poverty reduction and already carrying out a variety of measures to incorporate the MDGs into assistance policies. These measures include (1) support for basic human needs (BHN) such as education, health, water and agriculture which are the important elements forming the foundation of the MDGs (Refer for details); (2) ensuring availability of all forms of financing for development (Refer for details); (3) ownership of developing countries and partnership of the international community in its support (Refer for details); and (4) support contributing to economic growth, such as infrastructure development (Refer for details). In addition, the Japan International Cooperation Agency (JICA) incorporates MDG-related criteria into its project selection process.

On the other hand, development issues are extremely wide-ranging and include not only poverty reduction but also environmental issues, conflict prevention, peace-building, land mines, refugee problems, drug crimes, infectious diseases, and so on. Based on the recent experiences in Afghanistan, Sri Lanka, Iraq, etc., it is clear that development needs can be recognized within some issues that were not regarded as development issues previously.

For this reason, Japan believes that it is necessary to view “development issues” in a wider sense. The MDGs, in particular poverty reduction, are one of the seven priority issues in the United Nations (UN) Millennium Declaration, along with peace, security and other priorities. In order to respond to various threats and meet the development needs of developing countries, it is necessary to work toward resolution of a wide range of issues beyond the goals advocated by the MDGs. This idea is also indicated in the Final Report of the Commission on Human Security presented in May 2003 (refer to Box 2 in Part I). From this perspective, as noted above, Japan is placing importance on efforts to achieve the MDGs and in continuing in those efforts, is aware that international cooperation in sectors which are not directly included in the MDGs is also important.

The first of these issues not directly included in the MDGs is ensuring domestic security and safety, which is a prerequisite for development. As measures to tackle this issue, peace-building and counter-terrorism measures are important. Conflicts and terrorism hinder the building of the world in which people can live in peace and security, and deal a devastating blow to longstanding development efforts. In particular, to post-conflict countries, it is necessary to provide emergency humanitarian assistance, reconstruction assistance, and development assistance in a seamless manner.

“Human security” is the concept of aiming to protect people from diverse threats to their lives, livelihoods and dignity and the idea of strengthening the capacity of individuals and societies so that people can live in their own power in weakened states where the government cannot ensure security. This concept is also not included in the MDGs.

Japan had advocated “human security” as one of the basic policies and “peace-building” as one of the priority issues in the revised ODA Charter. For the security and prosperity of the international community, it is important to advance security and development together. Japan believes that the concept of “human security” can be the foundation to connect security and development and that it is necessary to actively promote these issues utilizing ODA. Japan recognizes that these measures are important also from the perspective of achieving the MDGs. This is because without a stable domestic and international environment, not only will it be impossible to achieve the MDGs, such as the goal to “halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day,” but efforts themselves in addressing these issues will be difficult.

In addition, Japan believes that human resources development including secondary and higher education, socioeconomic infrastructure including Information and Communication Technology (ICT), environmental issues other than water, and other issues are also important development issues in developing countries and that they contribute indirectly, and sometimes directly, to the achievement of the MDGs, and is providing support in these sectors.

(2) Poverty Reduction through Economic Growth

As stated above, Japan is working to achieve the internationally shared development goals such as the MDGs, in particular poverty reduction. Japan believes that in order to implement sustainable poverty reduction to achieve these international development goals, it is important to aim for poverty reduction through economic growth. Specifically, in addition to supporting sectors that directly benefit the poor, such as education and health care, Japan believes that it is necessary to actively support the economic growth of a country through supporting assistance for the economic sector, such as economic infrastructure development, promotion of the revitalization of trade and investment, development of legal systems, human resources development, fostering the private sector, promotion of technology transfer, etc. Behind this idea is the belief that financing for development is important, that also it is necessary to utilize a variety of funds including private investment as well as development as development assistance in order to ensure sufficient financing for development, and that it is necessary to improve the governance of developing countries and increase their capacity to absorb assistance in order to ensure that such limited funds are used efficiently and effectively. When doing this, Japan believes that because the conditions vary by developing country, it is not necessarily appropriate to apply the approach being applied in a specific country or region across-the-board in other countries or regions, but rather that it is necessary to take measures utilizing diverse methods adapted to the conditions in each country or region.

Japan has been stating these viewpoints in discussions on development in the international community, obtaining the full understanding from developing countries, and through fora such as policy consultations, etc., calling for these viewpoints to be reflected in the development policies of developing countries and their formal requests, etc. to Japan for economic cooperation.

Japan’s idea that economic growth is essential for poverty reduction has become internationally recognized. For example, it is reflected in the formulation of the PRSPs in Viet Nam and Mongolia, and in discussions at the World Bank, in OECD-DAC, etc. (Refer for details.)

These beliefs of Japan’s concerning development derive from its experience of sound macroeconomic management based on ownership through loans from the World Bank and other organizations, realization of economic growth through infrastructure development, etc., and of its experience of achieving post-war reconstruction and of subsequently providing assistance primarily to East Asia as a donor country and achieving satisfactory results.

Prime Minister Junichiro Koizumi advocated IDEA in January 2002 to review the current development situation based on the development experience of East Asia described above and consider the ideal form that development should take in future in order to achieve further prosperity and progress in the East Asian region. The first IDEA Ministerial Meeting (IDEA I)⁹ was held in Tokyo in August 2002 with the participation of foreign and development ministers from the ASEAN+3 countries and it emphasized the importance of ownership of development. The importance of properly addressing the economic fundamentals (macroeconomic, exchange rate and financing policies) was also recognized. Looking back on their development experience, it was once again confirmed by the participants that human resources development had been the key to development, that coordination of trade and investment was the distinguished characteristic of the economic development of East Asia, that economic reforms directed to the goal of development had been the engine, and that it was valuable to comprehensively utilize trade and financing along with ODA in that process. As a follow-up to IDEA I, Japan held a side event at the World Summit on Sustainable Development (WSSD) to present detailed information about IDEA and held the IDEA Fukuoka Symposium¹⁰ in August 2003 to explore the East Asia development experience from an academic perspective. At this symposium, which was attended by experts from ASEAN+3 and Africa (Ghana), etc. (including some government employees), discussions were held in a private capacity about issues, such as the diversity of the East Asia development model, the importance of domestic economic and social reforms, expansion of East Asian regional cooperation, and utilizing the experience of Asia in Africa. The importance of attracting private sector investment, the role of the government in development, and infrastructure, institutions, and human resources development were indicated once again. The content of these discussions was also presented on the occasion of the Third Tokyo International Conference on African Development (TICAD III) held at the end of September 2003.

Panel Discussion at the Initiative for Development in East Asia (IDEA) Fukuoka Symposium

9. For the overview and evaluation of IDEA I and information about the joint ministerial statement, refer to the MOFA homepage at: http://www.mofa.go.jp/mofaj/kaidan/g_kawaguchi/idea_02/gh.html, and http://www.mofa.go.jp/mofaj/kaidan/g_kawaguchi/idea_02/kyodo_s.html respectively.
10. For the overview and evaluation of the IDEA Fukuoka Symposium and details about the chairman’s summary refer to the MOFA homepage at http://www.mofa.go.jp/mofaj/gaiko/oda/index.html