Section 3. Cooperation for Stability and Growth in the Developing Countries


 1.   Japan's responsibility for Economic Cooperation in the International Community


(1)  As the second-largest economy in the free world, and as an important free and democratic nation, Japan sees it natural to contribute as positively as possible to the building of an international society of peace and stability. In particular, contributing to the stability and growth of the developing countries suffering from continuous economic crisis, through extending assistance to their economic and social development, is the most important responsibility for Japan, as a peace-loving nation and as a nation dependent on external economy more heavily than other countries.

  At the same time, to assist the developing countries' efforts toward reinforcing their political, economic and social strength through these cooperations contributes to the peace and stability of recipient countries and the world, and consequently, to the peace and prosperity of Japan.

(2)  Being aware of such significance, Japan has set the medium-term target on official development assistance (ODA) twice, and has endeavored to expand steadily its ODA in line with the Target.

  On September 18, 1985, the government set the Third Medium-Term Target for a seven-year period beginning in 1986, since the term for the Second Medium-Term Target ended at the end of 1985.

  The Third Target aims at increasing the total ODA amount during the seven year period from 1986 to 1992 to more than 40 billion dollars. It also requires the Japanese Government to attempt to double the 1985 amount in 1992, as well as to improve ODA quality as much as possible. The new target can be described as more ambitious than previous ones.

  The Third Medium-Term Target was introduced by Foreign Minister Abe in his general statement at the 40th Session of the United Nations General Assembly soon after it was set, and also by Prime Minister Nakasone in October at the occasion commemorating the United Nations 40th anniversary as the expression of Japan's renewed determination to the international community. It was highly appraised by both developed and developing world.

(3)  On the other hand, Japan, now the second largest donor after the United States, has continued to give special consideration to the ODA budget in spite of financial constraints, and the public become more interested in the way, how ODA is implemented. It is under these conditions that the government held meetings of "Advisory Committee on effective and efficient implementation of ODA (ODA Advisory Committee)" as part of its earnest efforts to make the assistance more effective, efficient and positive.


 2.   1985 ODA Performance and Budget for Fiscal 1986


(1)  Japan's ODA increased steadily in 1983 and 1984 (an increase of 24.4 percent and 14.8 percent over the previous year respectively). In 1985, it totaled 3-billion 797-million dollars (disbursement basis) a decrease of 12.1 percent from 4-billion 319-million dollars recorded in 1984; 905.7-billion yen, a decrease of 11.7 percent from 1-trillion 25.8-billion yen recorded in the previous year. The ODA/GNP ratio also dropped to 0.29 percent from 0.34 percent in 1984.

  The decrease in 1985 was attributed mainly to a substantial drop in multilateral ODA which totaled 1-billion 240-million dollars, 34.4 percent decrease from 1984 (1-billion 891-million dollars). The decrease of multilateral ODA occurred is related to the schedules of payment to multilateral development agencies, especially the International Development Association (IDA), and the International Bank for Reconstruction and Development (IBRD).

  On the other hand, bilateral ODA totaled 2-billion 557-million dollars, 5.3 percent increase from 2-billion 427-million dollars in 1984.

  Especially, grants (financial assistance in grants and technical cooperatio showed a notable increase of 11.4 percent over the previous year and amounte to total 1-billion 185-million dollars. As a result, the share of multilateral OD in the total ODA dropped to 32.7 percent in 1985 from 43.8 percent in 1984.

  With the ODA in 1985 totaling to 3-billion 797-million dollars, th accumulated ODA records between 1981 and 1985 amounted to 18-billion 70million dollars. As a result, 84.6% of the amount of the Second Medium-Tern Target (which was to double the ODA volume for the years 1981-1985 over the disbursed ODA of $10.68 billion for the years 1976-1980) was achieved.

(2) Despite harsh financial circumstances under which the general expenditure saw no increase for these four years (0.0 percent decrease over the previous fiscal year in fiscal 1986), the initial year for the Third Medium-Term Target, 622-billion was allocated for ODA in the general account of the budget. The increase of 7.0 percent over the previous fiscal year was the largest among the major budget items. With this budget appropriation secured for ODA, a good start has been made toward the achievement of the Third Medium-Term Target.

  The ODA in general account of 1986 budget for the Ministry of Foreign Affairs rose by 7.2 percent over the previous fiscal year, amounting to 295-billion yen, approximately half of the total ODA in general account.

  In addition to the expansion and improvement of ODA in both qualitative and quantitative terms, the ODA budget for the Ministry places emphasis on (i) "the software aspect" of economic assistance centering on technical cooperation, (ii) aid which will respond adequately to the diversified needs of developing countries, including the transfer of advanced technology and the private sector's, technology expansion of the exports of developing countries, and cultural and educational cooperation among others, (iii) effective and efficient aid, and (iv) aid to Africa focused on the fields of agriculture and forestry.


 3.   Effective and Efficient Assistance

  Japan's economic assistance has been implemented in line with set objectives and highly appreciated by developing countries. However, it should be pointed out that, a phenomenon of "stagnation of assistance" is prevailing in the world and that, domestically, special consideration is given to ODA budget despite tight financial conditions as mentioned above. Under this situation, it has become increasingly important to implement assistance more effectively and efficiently.

  The Ministry of Foreign Affairs has held meetings of "the Advisory Committee on effective and efficient implementation of ODA (the ODA Advisory Committee)" consisting of 16 eminent intellectuals under the guidance of the Foreign Minister, since April 1985, to consider these issues. This council submitted a report to the Foreign Minister in December 1985.

  The report stressed the need to give careful consideration in every stage of cooperation, and to extend "hearty assistance," pointing out (i) sufficient preliminary studies in the preparatory stage of assistance, (ii) the coordination between technical cooperation and financial cooperation and flexible treatment to local costs (costs to be covered by recipient countries) in the stage of implementing assistance, (iii) the improvement and expansion of follow-up evaluation activities and (iv) follow-up aid including the provision of spare parts and the dispatch of experts for maintenance at a certain post stage.

  The report also pointed out "the importance of software aspect" on the grounds that technical cooperation should play a major role in providing sincere and hearty assistance. The report, therefore, stressed the great importance to recruit and train competent experts to be engaged in implementing assistance. As a concrete measure, the report suggested the establishment of "an International Development University." It also stressed the need to improve and enhance aid executing system, to step up support for non-governmental organizations (NGO) engaged in aid activities, and to promote public relations and educational activities including "development education." These suggestions in the report are tantamount to a call to improve and strengthen Japan's "infrastructure for implementing assistance", including the recruit and training of competent experts.

  The Foreign Ministry intends to positively consider the opinions expressed in the report of the implementation of ODA and also plans to hold meetings of the ODA advisory council when needed.

  After the change of government in the Philippines in February 1986, there has been much arguments and many press reports regarding Japan's assistance to the Philippines, especially regarding adequate implementation of assistance. In April, "special investigative committees on economic assistance to the Philippines" were established within both Houses of Parliament.

  Japanese government has extended its assistance, including that to the Philippines, in accordance with legitimate procedures and is of the view that the assistance was properly implemented. However, if future investigations and studies should point out what to be improved, the Government would be in a position to endeavour to improve it.


 4.   Positive and Active Assistance

  Now that Japan is a major donor after launching economic cooperation more than a quarter century ago, it is urged to improve the existing system when necessary, and is further urged to make efforts to take the initiatives in international developments of economic cooperation.

  As part of its efforts in this direction, Japan has been long providing various forms of aid to Africa suffering from serious food shortages. For the fiscal year 1985, the government set the goal that "it aims at extending about 60-billion yen in bilateral grant, an increase of about 8-billion yen over the previous fiscal year, and intends to respond flexibly to the tune of roughly US $100 million" and it successfully surpassed the goal.

  The plan aims at realizing in Africa "a green revolution" which was a success in Asia anal Latin America, and to this end, it provides comprehensive measures, giving due consideration to environmental problems on agriculture. The plan included measures of anti-decertification and establishment of a "Green Peace Corps" to promote tree-planting campaigns. The foreign ministers' meeting of the Summit participating countries held in September 1985 approved "a report on assistance to Africa" drawn up by experts of these countries. The report included the principal elements of "the Green Revolution for Africa. "According to this plan, Japan has extended grant aid coupled with project-type technical cooperation to Kenya (Jomo Kenyatta College of Agriculture and Technology) and Tanzania (an agricultural development project in Kilimanjaro Region) in the field of agricultural research. Japan also sent Survey Missions to Senegal, Tanzania and Zambia in February 1986, as a preparatory stage of extending cooperation in the field of tree planting. Thus, the government has made efforts to steadily implement the plan.

  On the occasion of the earthquake in Mexico in September 1985 and the volcanic eruption in Colombia in November 1985, Japan also promptly extended emergency aid to these countries. Especially in the case of Mexico, Foreign Minister Abe, who was visiting Latin American countries at that time, changed his itinerary and promptly paid a visit to Mexico and announced that Japan would extend a 50-million dollar loan as financial means for reconstruction works.

  At the volcanic eruption in Colombia, Japan sent a Japan Medical Team for Disaster Relief (JMTDR) to the country without delay and also dispatched an emergency team consisting of former Japan Overseas Cooperation Volunteers. However, it was pointed out that the number of personnel for relief activities dispatched immediately after the disaster was small compared with other countries. As a result of subsequent studies by the government, Japan improved the preparedness of its international disaster relief scheme, by establishing "the Japan Rescue Team for Disaster Relief" in December 1985 and the system of dispatching the teams of the Japan Overseas Cooperation Volunteers in emergency, in addition to the JMTDR.


 5.   Problems among Industrialized Countries Concerning Economic Cooperation


  Friction occurred among industrialized countries in 1985 again concerning economic cooperation. Britain called in question a yen loan Japan pledged to extend to Turkey for "the second Bosporus Bridge construction project" in April 1985.

  In September, the United States announced that it would establish a 300-million dollar fund to counter mixed credits by other countries.

  OECD has been studying ways to alleviate the negative effects on trade and assistance caused by commercial use of aid money. As part of its achievement, the Ministerial Council of the OECD decided, in April 1985, to raise the minimum grant element required for mixed finance and other ODA loans from 20 percent to 25 percent.

  Future developments of discussions in OECD could exert a major influence on Japan whose bilateral governmental loan (yen loan) accounts for a large portion of the total ODA. Japan intends to steadily implement its basic policy of general untying of loans announced in the Japan-U.S. joint statement in 1978.

  As for mixed finance, Japan takes policy to conduct case-by-case studies within the framework of international agreement and taking into consideration the relations with the recipient developing country, only when the request for aid of the project concerned deserves considerations and there is a special need to ensure monetary conditions equivalent to those of other industrialized countries (described as "matching"). Japan has been extremely prudent, even in carrying out this policy.


to table of contents