Japanese ODA at 50: An Assessment

Special Report #128
Japanese ODA at 50: An Assessment
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Since Japan began aiding Asia-Pacific countries in 1954, official development assistance (ODA) has been the cornerstone of Japanese foreign policy. Japan has provided $221 billion to 185 countries and regions. Yet, after peaking in 1997, Japan's ODA budget has fallen by 30 percent in seven years, largely as a result of Japan's difficult fiscal situation.

Saori Katada gave an overview of some of the successes and challenges of Japanese aid over the past half century. Japan helped nurture Asian growth by channeling the vast majority of its aid to near neighbors. Japan was often criticized as being "self-serving" because ODA infrastructure projects were tied to procurement of Japanese goods and services. While this is no longer the case, Katada argued that recent pubic attitudes could hamper Japan's ability to provide generously in line with its economic recovery. The percentage of Japanese people who feel ODA should be "positively promoted" has fallen to 19 percent from 39 percent.

Shiro Sadoshima, reflecting the Japanese government's position, also discussed Japan's role in East Asian development. He argued that Japan facilitated the stunning industrial expansion of China, the Asian "tigers," and others. According to Sadoshima, Japan's "obsession" with infrastructure paid off for Asian nations—for example, in Indonesia Japanese ODA accounts for 20 percent of the highways, 30 percent of the dams, and 50 percent of the foundation for telecommunications. Sadoshima argued that because of such successes, Japan's ranking in Foreign Policy's "Commitment to Development Index" is inaccurate (Japan ranked last among rich countries).

Juichi Inada explained how the legacy of World War II has influenced Japanese aid philosophy, so that both government and public are wary of intruding on the sovereignty of recipient nations. Thus, Japan developed the request-based (yôsei shugi) system, which (at least in principle) responds to official requests originating in recipient nations. However, Inada maintained that the concepts underpinning Japanese aid are changing. Many Japanese are now arguing that "political" activity, such as democracy building, is proper and desirable in maximizing ODA's impact.

Yoshio Okubo, Japan's executive director for the World Bank, discussed Japan's work with the World Bank, and argued that multilateral financial institutions offer advantages that enhance the impact of ODA. For example, the international experience and expertise of World Bank staff contribute to Japanese ODA's effectiveness. In turn, financial contributions and Japan's own stunning "rags to riches" experience are valuable resources for the World Bank.

All speakers indicated concern at the reluctance of the Japanese public to increase ODA. However, all expressed hope that Japan's ODA establishment will continue to improve its effectiveness and to be a strong positive force for poverty reduction in coming years.