Section 3. Contributions to Settling the North-South Problem


1. A settlement of the North-South problem is indispensable for the improvement of the welfare of mankind and for the development of a new and rich world civilization, This is one of the greatest problems facing the world today. It has historical importance in that the manner of solving the problem will exert a great influence on the future direction of history.

The developing countries' own efforts and the advanced nations' continued cooperation over the past quarter of a century to solve this problem have not yet produced satisfactory results. After a lapse of this much time the gap between the advanced nations and the developing countries still remains wide. The developing countries are experiencing various difficulties in their "takeoff" for development, while the advanced countries feel a sense of disappointment over the results of development in the past and have considerable doubt about future development. The advanced nations' aid activities aimed at solving the North-South problem should be promoted from the standpoint that it is a historical mission of the whole international community to be carried out for its own future, not as a mere charitable undertaking. The world economy today is based on a structure of interdependence in trade, investment, resources, environment and all other fields, as was clearly brought into focus anew by the oil crisis since last year, In other words, the development of the whole world economy is possible only through the strengthening of this interdependence, and a solution to the North-South problem as well must always be considered in terms of the development of the entire world economy.

2. On the basic understanding mentioned above, Japan has positively taken part in international efforts for settling the North-South problem.

As for economic cooperation, the total flow of Japan's economic cooperation funds into the developing countries in 1972 was $2,725.4 million (on a net payment basis; same hereafter), ranking second after the United States for the second time since 1971. The amount increased to $5,844.2 million in 1973, registering a sharp 114.4 per cent increase over the preceding year. The proportion of total funds to Japan's GNP also jumped from 0.93 per cent in 1972 to 1.41 per cent in 1973, well over the international target of one per cent. The amount of its official development aid (ODA) showed a sharp increase of 65.4per cent from $611.1 million in 1972 to $1,011 million in 1973, and its proportion to the GNP rose from 0.21 per cent in 1972 to 0.25 per cent in 1973. The increase is attributable to big increases in bilateral grants, which rose from $170.6 million to $220.1 million, direct loans, which increased from $307.2 million to $545.1 million, and also contributions to international organizations, etc., which jumped from $133.3 million to $245.8million.

Of the bilateral grants, the value of technical cooperation increased from $35.6 million in 1972 to $57.2 million in 1973. But it remained at 5.7 per cent of total ODA. Aid through international organizations registered a sharp 84 per cent increase from $133.3 million in 1972 to $245.8 million in 1973, which was 24.3 per cent of ODA and, for the second consecutive year, more than the 20 per cent level recommended by the Pear-son Report.


Proportion of ODA in Total Amount of Economic Cooperation of Major DAC Members (1972)


As for terms of aid, the overall grant element (G.E.) of ODA committed by Japan in 1973 was 68 per cent, showing an improvement compared with 61 per cent in the preceding year. On the other hand, the average terms of yen credits (excluding relief for obligations) were a repayment term of 24.3 years with an initial grace period of 7.7 years, an annual interest rate of 3.55 per cent and a grant element of 48 per cent, which showed substantial improvement compared with those in the preceding year (an average repayment term of 20.4 years, an initial grace period of 6.2 years, an annual interest rate of 4.13 per cent and a grant element of 48 per cent). Untying loans is a major problem in the qualitative aspect of aid, and Japan has repeatedly expressed its intention of making efforts to positively expand untied loans. In 1973, it promised to extend six untied loans. By region, Japan had traditionally given over-whelming weight to its bilateral economic cooperation with Asian countries which received 54 per cent of total Japanese aid and as much as 98 per cent of ODA in 1972. In 1973, how-ever, Asian countries received 39 per cent of total Japanese aid and yielded its premier position to Central and South America (which took 46 per cent), Asia's share of Japan's ODA also dropped 10 per cent from the preceding year to 88 per cent, showing a trend of diversifying Japanese aid to other regions.


Proportion of Total Amount of Economic Cooperation and ODA in the GNP


Japan's economic cooperation has reached a level commensurate with its national power in quantitative terms, as explained above. However, there still remain not a few problems with respect to its contents. Especially, the value of ODA in 1973 was only 17 per cent of Japan's total economic aid (22 per cent in the preceding year), and its proportion to the GNP was 0.25per cent, which is far below the international target level of0.7 per cent and falls short of the 1972 international level of0.34 per cent. As for the qualitative aspect of ODA, Japan's ODA still falls short of the international target and the inter-national level with respect to the rate of grants and terms of Government loans.

It is necessary for Japan to make further efforts to offer cooperation commensurate with its national power as an important member, in both name and reality, of the international community.

The economic structure of Japan is deeply connected with other parts of the world, especially the developing areas, with respect to trade, resources, investment and many other fields, to an extent that is not paralleled by any other advanced country, This shows that Japan can enjoy peace and prosperity only through relations of mutual benefit and friendship with the rest of the world, Japan's cooperation in the economic and social development of the developing countries will lead to the maintenance and strengthening of its relations of mutual benefit and friendship with those countries. In this context, Japan must positively continue extending cooperation that will be truly appreciated by recipient countries.



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