Japan's Official Development Assistance White Paper 2012

(3) Cooperation between Trade, Investment, and Other Official Flows (OOF)

Private sector plays a leading role for sustainable growth in developing countries. Also it is important to revitalize private-sector activities such as the development of industry and the expansion of trade and investment. However, in developing countries beset by a variety of challenges it can sometimes be difficult to set in place an environment that attracts private investment. Therefore supports from the international community are required.

<Japan’s Efforts>

Japan utilizes ODA and Other Official Flows (OOF)* to support advancements of small and medium enterprises (SMEs) in developing countries, transfer of Japan's industrial technology, and formulation of economic policies. In addition, Japan supports improvements of trade and investment environment and development of economic infrastructures in order to enhance the export capabilities and competitiveness of developing countries.

A Japanese expert visits a tiny furniture manufacturing company in Addis Ababa, Ethiopia to talk about the KAIZEN Board. (Photo courtesy of Kenshiro Imamura/JICA)

A Japanese expert visits a tiny furniture manufacturing company in Addis Ababa, Ethiopia to talk about the KAIZEN Board. (Photo courtesy of Kenshiro Imamura/JICA)

The World Trade Organization (WTO) Doha Round Negotiations (the Doha Development Agenda)* which started in 2001 also emphasizes the promotion of development through participation in the multilateral free trading system by developing countries. Japan has contributed to the trust fund set up within the WTO with an aim to improve the capacity of developing countries to engage in trade negotiations and participate in the global market, thereby gaining the ability to implement the WTO agreements.

Regarding access to Japanese markets, Japan has implemented the Generalized System of Preferences (GSP), which applies lower tariff rates for imports of products from developing countries. Japan provides duty-free quota-free access* for Least Developed Countries (LDCs)*. In addition, Japan also actively promotes Economic Partnership Agreements (EPAs)*, and tries to create an environment for economic growth in developing countries through liberalization of trade and investment.

In recent years, discussions have intensified over Aid for Trade (AfT)* at various international forums, including the WTO and the Organisation for Economic Co-operation and Development (OECD), as a means of further promoting support by developed countries, including Japan. At the Second Trade Global Review Meeting on Aid for Trade held in July 2009, Japan announced its new strategy for Aid for Trade called "Development Initiative for Trade 2009,*" with approximately $12 billion in total support for trade-related projects. This Initiative has garnered high praise from numerous countries. In terms of specific initiatives, Japan provides funds for the development of transportation networks vital to trade, including ports, roads, and bridges, as well as for projects to construct power plants and power grids, etc. It also provides technical cooperation in trade-related areas, including the education of customs officials. Japan also provides assistance to small-scale production groups and small companies in developing countries for the One Village, One Product Campaign*. In addition, Japan supports developing countries in attracting private sector investment by identifying issues unique to those countries, and recommending measures to promote investment.

Further, Japan is proactively engaged with the Regional Technical Group on Aid for Trade for Asia and the Pacific which researches successful examples of development assistance that has contributed to economic growth through exports in the Asia region. At the Third Aid for Trade Global Review Meeting held in July 2011, examples of Japan’s success in development assistance and other results from meetings of the Technical Group were introduced to representatives of other regions, and garnered high praise from participating countries. Furthermore, as a technical cooperation of the Ministry of Economy, Trade and Industry (METI) to support the overseas expansion of Japanese companies, the Ministry has assisted their efforts to secure advanced local personnel through the human resource development of local industries, collaborating with local universities to offer corporate culture courses, internships, and other means.

Glossary
*Other Official Flows (OOF)
Flows of funds to developing countries from the government which are not considered to be ODA because the main purpose is not development. Examples include export credit, direct investment, financing of international organizations, etc.
*Doha Round Negotiations (the Doha Development Agenda)
Negotiations between multiple WTO Members aimed at liberalizing trade in a wide range of fields, including reduction/elimination of tariffs on industrial products and agriculture, forestry and fisheries industry products, and loosening regulations in the service sector. One of their challenges is the development of developing countries through trade.
*Duty-free quota-free access
Measures implemented by the developed countries to eliminate customs duties, quotas, and other obstacles to exports from least developed countries (LDCs) to the developed countries. The number of applicable products has expanded, and approximately 98% of products exported by LDCs to Japan can be imported without payment of duties and without quotas. (As of February 2012)
*Least Developed Countries (LDCs)
Countries classified by the United Nations to be particularly lagging in development even compared to other developing countries, based on their income levels. Countries that meet certain criteria, including per capita gross national income (GNI) of $992 or less. As of December 2012, there are 48 countries that have been so designated: 7 in Asia, 2 in Middle East and North Africa, 33 in Sub-Saharan Africa, 1 in Latin America, and 5 in Oceania. (See this)
*Economic Partnership Agreement (EPA)
A comprehensive economic agreement between specific countries (or regions) that, in addition to free-trade agreements (FTA) that stipulate the reduction and elimination of tariffs of foods and the barriers in trade in services, aims to make rules in such areas as investment, the movement of people, government procurement, protection of intellectual property, competition policy, and bilateral cooperation intended to enhance broad economic ties.
*Aid for Trade (AfT)
Assistance is provided to developing countries to support efforts to improve trade-related capabilities and to prepare and maintain infrastructures, for the purpose of aiding developing countries in achieving economic growth under the WTO's multilateral trade structure.
*Development Initiative for Trade 2009
Comprehensive measures to support sustainable development of developing countries through trade. For developing countries to enjoy the benefits of the free trade system, not only must trade be liberalized, but it must be built on the three pillars of (i) production (improvement of the ability to produce competitive products), (ii) distribution and marketing (preparation and maintenance of a domestic and overseas logistics system including the distribution infrastructure), and (iii) purchasing (pioneering of markets). The aim is to combine means of assistance such as "knowledge and technology," "funds," "people," and "systems" with these three aspects, and provide comprehensive support that connects producers and laborers in developing countries to consumers both in the developed countries and developing countries.
*One Village, One Product Campaign
Overseas utilization of an approach that began in Oita Prefecture, Japan in 1979. The aim is to create jobs and revitalize the community by developing unique local products through the utilization of local resources and traditional techniques. Efforts are made to focus on handicrafts, textiles, toys, and other attractive products that emanate unique ethnic characteristics of developing countries in Asia and Africa, etc., and reach out to a wider range of people, thereby aiding in the improvement of exports of products from developing countries.

●Viet Nam

Project for Capacity Development of Business Persons through Vietnam-Japan Human Resources Cooperation Center
Technical Cooperation Project (September 2010 - Present)

Viet Nam has been promoting transition to a market economy and international economic integration as part of its national vision of becoming a modern, industrialized country by 2020. Within the country's work force, however, the number of laborers who received a certain amount of practical training at universities or vocational training schools remains small, and middle managers, technical managers, and skilled laborers are in short supply. With regards to quality, it has been pointed out that educational and training curricula do not meet the needs of industry, and there is also a problem of inadequate instructors. Particularly a lack of personnel with the knowledge of promoting industrialization/modernization and personnel who have knowledge and experience in administration/management has been a matter of grave concern.

Based on the results and achievements of projects conducted over the last 10 years by the Vietnam-Japan Human Resources Cooperation Center (VJCC)*, this project aims to solve this shortfall in human resources by providing specialized cooperation with the center on enhancements to the operation and management of business courses and the center's organizational operation and management system. Through four years of cooperation, the goal of this project is to continue developing the managers that will spearhead Vietnam's shift toward industrialization.

(As of December 2012)

* Vietnam-Japan Human Resources Cooperation Center (VJCC): A human resource development agency established by the governments of Japan and Vietnam. Under the aim of developing human resources capable of moving Vietnam toward a market-oriented economy, this agency offers business education, Japanese language education, and a variety of exchange programs. It has two centers, one in Hanoi and another in Ho Chi Minh City.

A presentation on the manufacturing achievements of business participants takes place every year at the center in Ho Chi Minh City. (Photo: JICA)

A presentation on the manufacturing achievements of business participants takes place every year at the center in Ho Chi Minh City. (Photo: JICA)