Official Development Assistance of Japan: Criticism and Suggestions

Koichi MERA (Professor, University of Southern California)

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Japan has been providing the largest amount of Official Development Assistance among donor countries for the past ten years. Those Japanese who know this fact may be feeling good about it, particularly when they talk about ODA with foreign nationals. However, to my regret only a small proportion of Japanese and people in developing countries are aware of this fact. . In addition, only a handful of government officials of developing countries appear to be aware of this. On the whole, there is much criticism of views toward Japanese ODA among development specialists despite the size of the ODA in monetary terms. They tend to criticize Japanese ODA for a host of reasons, including that a large part of the money provided is in the form of loans rather than grants, Japan tends to pour money into large infrastructure projects rather than providing technology transfer or technical assistance, Japanese money is often tied to Japanese suppliers, Japanese ODA is expensive because the yen appreciates over time, and Japanese aid is hardware-oriented rather than software-oriented. Although some of the criticisms listed above may no longer be valid due to revisions made to ODA policy in the past, the ODA of the Japanese Government deserves critical reviews for good reasons. This is because it is not satisfying very well the demands of not only the Japanese people but also the people of the recipient countries.

My main argument in this paper is that the ODA policy of Japan has been determined and developed by a small group of administrative officials within the Government and the industry groups related to it, and that it does not reflect the interest of the donors (i.e., the Japanese voters) nor the recipients--the people in developing countries. In other words, it is misdirected and very much wasted.

During the early years of the post-war period, major developed countries recognized that developed countries have a moral obligation to help less developed countries. The establishment of the IMF and the World Bank was one of its manifestations. The OECD then became a forum for discussion of development aid issues by developed countries. Japan has been a follower in these discussions. At one time, quantitative targets were set for the total amount of ODA that each developed country should be providing relative to its GNP, and Japanese bureaucrats interpreted the targets as the qualifying criteria for being a decent country. Bureaucrats worked hard to increase the ODA budget till the country would be first among developed countries in the amount of ODA provided. But Japan did not have in the past and still does not have a large stock of development aid specialists. Therefore, the Government has been giving emphasis on big infrastructure projects, as if the only objective of ODA is to disburse large sums of money to the developing world. To reduce monetary costs to the country, Japan has continued to provide mainly loans instead of grants. When the Government was criticized for its hardware and loan orientation, it started modifying its policy. Quantitatively Japan is still the top-ranked ODA country despite recent and anticipated declines in the amount of ODA.

In the formation of ODA policy, Japanese trading companies played a significant role. They tried to use ODA money for promoting exports from Japan. This is another reason that Japanese ODA is hardware-oriented and big project-oriented. Japan is interested in selling power generators, subway cars, and construction machinery. In this way, government bureaucrats and the trading industry together have formed basic ODA policy. This does not necessarily imply that the money spent by Japanese ODA is a total waste. In fact, it is true that many projects built by Japanese aid have been contributing to the development of the recipient countries. However, there would have been better results if a different policy had been pursued.

What was missing in Japanese ODA was participation in general. There was virtually no participation by the general public in the formation of ODA policy within the country (until only very recently, i.e, August 2001). It was discussed only within a small circle of government officials, politicians, and experts. In addition, there was no participationby citizens in the recipient countries, even if there was some participation by high-level government officials in these countries. Not much information has been given to Japan ODA recipient populations.. Japanese ODA field officers were not allowed to make decisions on any significant matters, and most decisions were made in the relevant Ministries in Tokyo.

This lack of participation in policy-making by stakeholders at various levels has lead to the following results. Within Japan, the general public is barely informed about the nature of ODA and its impacts, and, therefore, ODA is perceived as a sheer waste of national resources. Bureaucrats fortunately were not accused for the waste because the general public was mostly unaware of the waste of resources in the past. However, recently this "happy" situation is changing because the public has started paying serious attention to public spending, partly due to the recent and prolonged economic stagnation. Reflecting this sentiment, Prime Minister Koizumi has chosen ODA as a top item for slashing the budget. The ODA budget for 2002 will be 10% less than the year before, a drastic reduction in Japanese standards.

In the recipient countries, the Japanese government has been less informative about its ODA activities than other donor countries. This is in contrast particularly to U. S. policy. The U. S. Government encourages ODA workers to disseminate information about their projects so that as many people in recipient countries as possible will be informed about the projects and will recognize U. S. contributions to the country. Therefore, even if the amount of aid is small, Americans are encouraged to inform recipients about their aid activities through mass media and other means. As most U. S. aid activities are in the form of technical assistance, the activities themselves are the expressions of American ways of thinking and policies. In other words, ODA is a way of communicating American knowledge and ideals to the recipients. On the other hand, Japanese are quietly building infrastructure that would be useful when it is completed, but very few recipient countries know which country has been helping. The Japanese government does not announce its aid policy beyond very general terms, and experts working in ODA activities are discouraged from make public announcements because such information may be misinterpreted. Recipient countries cannot gain knowledge because Japanese aid just leaves hard infrastructure in the country without providing corresponding software to the recipients.

It should be mentioned, however, that there are a large number of experts sent to ODA recipient countries by the Japanese International Cooperation Agency. Indeed, they are providing technical assistance to specific organizations. I know personally many who are dedicated to the job and contributing significantly to the development of skills in the recipient countries. But their contributions are restricted because Tokyo imposes strict guidelines on their activities. In addition, some of the experts are in fact sent to the country to "retire" rather than to "work." On the whole, Japanese experts are less qualified than those in other developed countries, and thus are given less responsibility. The separation of technical assistance from capital project activities is also reducing the effectiveness of the technical assistance activities.

From the foregoing discussion, it should be clear to readers that a large sum of ODA money that has been spent by the government of Japan has not been well received either by true donors or by recipients. This is because the government has increased its ODA budget without considering the meager technical assistance capacity of Japanese experts and without establishing a true objective for ODA.

The second point would require an explanation. The reason that Japanese ODA has fallen to this miserable situation is the lack of its own policy to the developing world. At one time, quantitative targets were taken as the holy objective. As Mr. Saburo Kawai has written, ODA has been taken as the obligation for any developed country. Another argument for ODA is "self-defense." This argument says that for a country that has committed not to use military power for resolving international conflicts, large ODA is dispensable. Neither argument would be supported by Japanese voters. Even if ODA is an obligation for developed countries, no country should waste resources. Large size does not guarantee high respect. In fact, despite maintaining the largest ODA in recent years, respect for Japan from other countries is falling. It is the total impact of ODA that counts.

Japanese voters' approval for ODA is imperative. ODA as a substitute for military power is not persuasive. Of course Japan has to maintain good relationships with other countries. But ODA does not guarantee good relationships. If the government of Japan announces publicly that Japan maintains ODA for the purpose of maintaining good international relationships, and if other countries perceive it as true, some countries will initiate international crises as a tool for obtaining a larger share of ODA from Japan. It is not the quantity of ODA that buys friendship, but it is the diplomatic policy of the country that determines international relationships.

What sets Japan apart from other countries is the lack of established Japanese government policy for ODA. If Government policy is not to interfere with domestic policy of the recipient countries, then the Japanese government should be explicit about this. If government policy is to teach recipients the Japanese way of thinking, then it should make this clear to them. At the moment, the policy is entirely unclear. Only the quantitative targets and substitutes for military power remain. These propositions will not be supported by the Japanese people.

It is not my objective in this paper to criticize Japanese ODA. Rather I would like to contribute to it by providing constructive remarks. Japan has been following the pattern laid out by advanced countries. Japan has to adjust to the rules set by other countries, but it has its own political and cultural characteristics. The result in the past was rather disastrous. What I would recommend to the government of Japan is to gain confidence to its own ideals and policies. The Government should develop ODA policies in consultation with the constituency. The Koizumi Administration has started "town meetings" for ODA. Their first meetings started in August in Tokyo and Kobe. It is a welcome development. Policies cannot be maintained without support by a large proportion of voters.. What is important in recent discussions in Japan on ODA is the use of the words and national interest. At last Japanese citizens have realized that any tax money has to be spent for national interests. Such spending should not be decided by any international meeting of organizations such as the UN, OECD, IMF, or World Bank.

The Koizumi Administration initiated ODA Reform Discussion Meetings in May 2001. This is a welcome event. "Town Meetings" are held as part of this effort. I am looking forward to the conclusions they reach. I sincerely hope that Reform Committee members preach their stories to the audience but also listen to all views, and try to draw conclusions consistent with voters' views. I presume that many the voters are tired of government's low profile in giving aid, and of not receiving any thanks in return. They may prefer to have the government holding a clear policy that would benefit Japanese people as well as recipients.

One policy that would be important for improving Japanese ODA is to intensify human interactions among Japanese and people in recipient countries. Without close contact and interactions, either side will not learn much. When such contacts are backed up by clear Government policies, international relationships will improve. Because the new Koizumi administration is quite different from its predecessors, its ODA policy can be quite different from previous ones. After more than a half century of being a follower in ODA, Japan is advised to establish its own ODA policy.