PhD Candidate, Department of Political Science, Duke University.

Abstract

This paper explores recent trends in the international community's view of how aid can be most effective, particularly as articulated and implemented by the World Bank, and evaluates aspects of Japan's aid program in this context. The comparison is important and interesting because of one similarity and one difference between the World Bank and Japan. The similarity is that they are both the largest donors in their respective donor categories—the World Bank as a multilateral donor and Japan as a bilateral donor—and therefore have large influence in international development cooperation. World Bank lending totaled about $15.3 billion in fiscal 2000 (concessional lending from the International Development Association was $4.4 billion of that). Japan's bilateral aid totaled $8.6 billion in 1998 and $10.5 billion in 1999. The major difference between them is, however, exactly that one is multilateral and the other bilateral. As a multilateral donor, the Bank is pressured by many international groups— mainly its member countries and non-governmental organizations—to succeed in its mission of alleviating world poverty. As a bilateral donor, Japan's aid program is more subject to domestic pressure, both to spur development in poorer countries but also to support domestic (mainly commercial) interests as well. Because a donor's approach to aid has an impact on its actions—and thereby on the effectiveness of its aid in promoting development—this paper begins by examining the Japan's and the World Bank's philosophies on aid and how they have been influenced by evolving conceptions of poverty and how to reduce it. The paper then moves on to look at the donors' actions, examining how sectoral allocations of the World Bank and Japan have changed over time, and whether they are generally in line with the philosophies they have been advancing. The third section goes one level deeper, looking at the mechanisms by which aid is delivered, focusing in particular on recent international emphases on country ownership, less intrusive mechanisms for aid delivery, and donor selectivity (i.e. giving aid to those countries who will use it best). It will be shown that one the essential components of the international development community's strategy for improving aid effectiveness is to put much more responsibility on the recipient country for managing aid. However, this will no doubt present problems for countries with limited capacity, which almost by definition include most poor countries. Therefore the fourth section examines technical assistance—donor efforts at building capacity—and looks at the record of Japan and the World Bank in this area. A final section offers some conclusions and recommendations.