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Japan INTERNATIONAL ECONOMIC COOPERATION AND AID
Japan emerged as one of the largest aid donors in the
world
during the 1980s. In 1991 Japan was the second largest
foreign aid
donor worldwide, behind the United States. Japan's ratio
of foreign
aid to GNP in this year was 0.32 percent behind the 0.35
percent
average for the OECD's Development Assistance Committee
member
countries, but ahead of the United States ratio of 0.20
percent.
The foreign aid program began in the 1960s out of the
reparations payments Japan was obliged to pay to other
Asian
countries for war damage. The program's budget remained
quite low
until the late 1970s, when Japan came under increasing
pressure
from other industrial countries to play a larger role.
During the
1980s, Japan's foreign aid budget grew quickly, despite
the budget
constraints imposed by the effort to reduce the fiscal
deficit.
From 1984 to 1991, the Official Development Assistance
(ODA) budget
increased at an average annual rate of 22.5 percent,
reaching
US$11.1 billion by 1991. Part of this rise was the result
of
exchange rate movements (with given yen amounts committed
in the
budget becoming larger dollar amounts). During the 1980s,
foreign
aid rose at a lower, but still strong, rate of between 4
percent
and 12 percent annually in the government budget, with an
average
annual rate of growth from 1979 to 1988 of 8.6 percent.
Such assistance consisted of grants and loans and of
support
for multilateral aid organizations. In 1990 Japan
allocated US$6.9
billion of its aid budget to bilateral assistance and
US$2.3
billion to multilateral agencies. Of the bilateral
assistance,
US$3.0 billion went for grants and US$3.9 billion for
concessional
loans.
Japan's foreign aid program has been criticized for
better
serving the interests of Japanese corporations than those
of
developing countries. In the past, tied aid (grants or
loans tied
to the purchase of merchandise from Japan) was high, but
untied aid
expanded rapidly in the 1980s, reaching 71 percent of all
aid by
1986. This share compared favorably with other Development
Assistance Committee countries and with the United States
corresponding figure of 54 percent. Nevertheless,
complaints
continued that even Japan's untied aid tended to be
directed toward
purchases from Japan. Aid in the form of grants (the share
of aid
disbursed as grants rather than as loans) was low relative
to other
Development Assistance Committee countries and remained so
late in
the 1980s.
Bilateral assistance was concentrated in the developing
countries of Asia, although modest moves took place in the
1980s to
expand the geographical scope of aid. In 1990 some 59.3
percent of
bilateral development assistance was allocated to Asia,
11.4
percent to Africa, 10.2 percent to the Middle East, and
8.1 percent
to Latin America. Asia's share was down somewhat, from 75
percent
in 1975 and 70 percent in 1980, but still accounted for by
far the
largest share of bilateral aid. During the 1980s,
increased aid
went to Pakistan and Egypt, partly in response to pressure
from the
United States to provide such aid for strategic purposes.
Japan had
little involvement in Africa, but the severe drought of
the 1980s
brought an increase in the share of development assistance
for that
continent.
The five largest recipients of Japanese ODA in 1990
were in
Asia: Indonesia (US$1.1 billion), China (US$832 million),
Thailand
(US$448.8 million), the Philippines (US$403.8 million),
and
Bangladesh (US$370.6 million). Earlier in the 1980s, China
had been
the largest single recipient for several successive years.
These
large aid amounts made Japan the largest single source of
development assistance for most Asian countries. For the
Association of Southeast Asian Nations
(ASEAN--see Glossary)
countries, for example, Japan supplied 55 percent of net
ODA
received in 1987, compared with 11 percent from the United
States
and only 10 percent from the multilateral aid agencies.
The largest use of Japan's bilateral aid is for
economic
infrastructure (transportation, communications, river
development,
and energy development), which accounted for 31.5 percent
of the
total in 1990. Smaller shares went to development of the
production
sector (17.1 percent) and social infrastructure (19.7
percent). In
general, large construction projects predominate in
Japan's
bilateral foreign aid. Within the category of social
infrastructure, education absorbed 6.7 percent of the
bilateral aid
in 1990, water supply and sanitation made up 3.4 percent,
and only
2 percent went for health. Food aid (0.4 percent of total
bilateral
aid in 1990) and debt relief (4.3 percent) also were
included in
Japan's official development assistance.
Data as of January 1994
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