Official Development Assistance (ODA) as a Japanese Foreign Policy Tool

Abstract

Over the past five decades, Japan initially received from and subsequently provided economic assistance to the developing world. The amount of Japanese aid over the years has surged commensurate with the recovery and growth of the Japanese economy, making Japan the top world donor in the 1990s. According to the latest statistics, in 1997, it disbursed bilateral aid totaling ¥793 billion ($6.55 billion), down 11.2 percent from the previous year. Conversely, disbursements of Japanese aid through multilateral institutions totaled ¥340 billion ($2.81 billion). The Japanese government has not provided aid for charity reasons but with a purpose, most notably as a foreign policy tool. While various explanations of this practice have been made by Japanese and non-Japanese scholars, the reasoning behind it has also evolved over time. Domestically, the government has to explain to its taxpayers the reason Japan provides economic assistance to other countries and these explanations have also evolved. With the protracted economic slump and intensifying fiscal crisis, this job is tougher than ever. Nonetheless, the public has shown fairly strong support for official development assistance (ODA) disbursements. Meanwhile, notwithstanding the large sums of aid offered by Japan, from time to time it has also sparked criticism from both aid recipients and other quarters. This chapter looks at how Japan's engagement in economic assistance, particularly ODA, has evolved over the years in quality and quantity to make Japan the top world donor in the 1990s. It will also scrutinize how the rationale behind ODA has shifted as Japan reconstructed and developed its economy and as the Cold War ended. It concludes by querying the problems, need for reform, and future challenges of Japanese ODA, particularly at a time when Japan can no longer treat the quantitative expansion path it did in the past due to budget retrenchment. How, furthermore, does Japan intend to use its ODA as foreign policy tool in the coming millennium?